Corporate Responsibility Needs Local Responsibility

What the B-Corp Standard Misses

For a decade, I’ve taught a class at the Bard MBA in Sustainability Program called “Sustaining Mission,” where I take students through the nuts and bolts of how to promote corporate social responsibility (CSR). One of the challenges I’ve faced is that the textbooks and metric systems have common gaps. For example, they ignore the potential importance of labor unions. They overlook the pernicious impacts of replacing employees with contract workers. They downplay the effects of mergers and acquisitions. And, most egregiously, they give local ownership and small-scale business models almost no weight whatsoever. These blind spots are disappointingly true of the B-Corp label, the most widely used and respected CSR measurement system (though its 1,243-page “Book of Knowledge,” capturing B-Lab’s deliberations over recent revisions, contains many seeds of local economy “guidance” that could be positively nurtured).

Marginalizing the importance of local ownership and scale makes no sense, for many reasons. To share just a few:

• HUMAN SCALE - At the end of the day, one of the best ways of ensuring CSR is to humanize relationships. Employers should know intimately how their actions affect workers, communities, and the surrounding ecosystems. Ditto for investors. Absentee owners and investors can—and do—hide from the consequences of their actions. Local owners usually face the music because reputations matter at the local level.

• EXTRACTIVE MODELS - Most small-scale, local businesses are by definition not extractive. They rely on local resources, local labor, and local ingenuity to produce local goods and services. Locally owned businesses spend more of their money locally, which maximizes the multiplier effect on income, wealth, and jobs. Nonlocal businesses, including chain stores and branch factories, spend most of their money in the far-flung city where they are headquartered, which sucks profits and multiplier effects out of their host communities.

• LOCAL COOL - An important part of CSR should be respecting the history, culture, and DNA of a place. Local businesses do this naturally. One of our articles in this issue notes how Zingerman's, a model locally owned company in Ann Arbor, MI, has been nominated by peers as the coolest company in America. Outside businesses do cool clumsily, like when Barnes and Noble sets up a small table for “local authors.”

• BOTTOM LINE FEVER - Much of CSR treats scale as uniformly positive (though, to its credit, the new B-Corp rating system puts higher standards on larger companies). The bigger you get, some believe, the more employees you can treat well and the more farmland you can protect. In fact, as a company grows, it tends to hire professional managers who are more attentive to outside investors and more inclined to slash “extraneous” CSR programs. Etsy started as a highly responsive company to the needs of community artisans, and as it got bigger, it jettisoned most of its community programs and even dumped its B-Corp label.

• M&A MADNESS - Particularly pernicious for communities are large companies that gobble up once important local businesses. Private equity is now doing this across the country, acquiring everything from emergency rooms to nursing homes. Most mergers and acquisitions, in fact, are economic failures, bringing down the long-term value of the new company in exchange for short-term profiteering. Local businesses, by definition, refuse to play this destructive game.

To clarify: I’m not saying that large companies are uniformly bad actors or that they shouldn’t try to engage in CSR practices. But part of a fair evaluation system should include how these companies affect the communities in which they operate and how many benefits they actually bestow locally.

Exemplifying these points is our lead story this issue on how Unilever finally killed the last vestiges of Ben & Jerry’s, which it acquired in 2000 and then recently spun off into the Magnum Ice Cream Company. Magnum is now defunding Ben & Jerry’s Foundation, a stalwart supporter of Vermont causes for four decades. Unilever has long been regarded as a great global CSR success story and—voila!—behold the results.

In other news, you will find stories below about new calls from business leaders for local investment, new tools for finding local investment funds, and new arguments for rebutting lefties who weirdly assert that loving local land means wearing Nazi brown shirts (seriously).

Many thanks to those of you who responded to my plea to subscribe and donate, and keep this grand journalistic experiment going. We’re nearing the halfway mark of our year-end goal! If you didn’t have time to hit “Subscribe Now” because you were on a beach somewhere, please do so now!

— Michael Shuman, Publisher

Publication of The Main Street Journal depends on your support. If we can reach 600 subscribers by the end of this year, we can continue delivering The Main Street Journal in 2027. (Below is a chart of our progress toward this goal.) If you like what you’re reading, please consider becoming a paid subscriber today. Paid subscribers can attend our monthly “Mondays with Michael” and receive a free consult on their projects.

NEWS

• Ben & Jerry’s Foundation Suspends Operations (VermontBiz, July 15) as Unilever’s new corporate entity, The Magnum Ice Cream Company, removed trustee and board members and cut off foundation funding.

• 13 Founders Whose Businesses Changed America (Inc., July 3) also crowned Zingerman’s as the coolest small company in America.

• Attention Business Leaders: It’s Up to Us to Invest in Our Local Communities (Fast Company, July 10) calls for us to act as a springboard for local growth and prosperity: “Elected officials and business leaders across the U.S. have a responsibility to prioritize investing in our local communities. Even when it’s the more labor-intensive path.”

• Expanding the Alternative Ownership Ecosystem (Transform Finance, July 9) offers updates to its database of funds supporting Alternative Ownership Enterprises (AOEs), including the addition of AllHold Capital in Philadelphia.

• Wall Street Wants to Change the Rules for Your 401(k) (ProPublica, July 8), putting Americans’ retirement funds at risk.

• Do Land-Based Economies Lead to Fascism? (Local Futures, July 7) debates journalist George Monbiot’s lumping of local economies with fascism. Helena Norberg-Hodge of Local Futures quickly untangled the two.

SPONSOR CORNER

The National Coalition for Community Capital (NC3) is dedicated to educating, advocating, and activating community capital and serves as MSJ’s fiscal sponsor. Thank you for being a part of a growing movement! Contact NC3 for support in integrating local investing in your work: info@nc3now.org.

PARTNER NEWS & VOICES

• What if We Just Paid the NIMBYs? Kevin Jones (July 18)

  • Join Kevin’s conversation on MSJ’s Paid Subscriber Slack Housing Channel

• Banks Report Record Profits While Millions of Americans Take On More Debt, Washingtonians for Public Banking (July 16)

• Interested in Learning About Social Co-ops? U.S. Federation of Worker Cooperatives (July 9)

• Meet the Inaugural PurposeBuilt100™ Winners, Superpowers for Good (July 1)

• How a $500K Investment Is Lifting Philadelphia Families Out of Poverty, ImpactPHL (June 29)

• The Exit Nobody Planned For, New Majority Capital (June 26)

RESOURCES

• Social Enterprise New Deal, Social Enterprise Republic of Ireland (July 14)

EVENTS

• July 28 - 29: Minnesota Cooperative Summit: Meeting the Moment - In-Person Event (Duluth, MN)

• July 29: Is Employee Ownership Right For You? - Virtual Event

• July 30: Built for a Better World - Virtual Event

• July 31: Thinking Local - A Conversation on Business Succession - In-Person Event (Portland, OR)

• August 10: Mondays with Michael - Virtual Event

• August 11 - 13: Funders on Farms: Investing in a Resilient Food System - In-Person Event (Ancram, NY)

• August 25 - 27: SuperCrowd26 - Virtual Event

• September 15–16: Neighborhood Economics - In-Person Event (Galveston, TX)

JOBS BOARD

• American Sustainable Business Network: Communications Coordinator

• Black Farmer Fund: Community Engagement Intern and Impact Lending and Relationship Associate

• Boston Impact Initiative: Director of Development and Investor Relations

• Cooperative Food Empowerment Directive: Communications & Outreach Coordinator

• Kiva: Investment Manager, Social Enterprises

• Mid Hudson Energy Transition: Program Director, Lending and Community Capital

• New Hampshire Community Loan Fund: Investor Relations Manager

About The Main Street Journal

The Main Street Journal aims to catalyze the movement of $50 trillion from Wall Street to Main Street, facilitating economic development and economic justice. It’s sponsored by the National Coalition for Community Capital, with grants from the Heron Foundation, Wallace Global Foundation, and the Bondi Foundation. We welcome feedback about everything, from our design to our content. Please send ideas to Jen Risley at jen@main-street-journal.com. 

Our Team:

• Michael Shuman – MSJ Publisher

• Paul Spinrad - Decent Tuesday Writer & Editor

• Jen Risley - MSJ Editor

• Wendy Wasserman - Strategic Advisor

PARTNERS

Abrams+Angell | American Independent Business Alliance | American Sustainable Business Network | Candide Group | Capital for Change | Capital Institute | Community Field Notes | Community-Vision Solutions | Cordata Capital | Council Fire | Crowdfund Better | Crowdfund Capital Advisors | Democracy Collaborative | Eleanor LeCain | Exit to Community Collective | Fair Food Network | Future Roots | Garlic and Roses | Impact Finance Center | ImpactPHL | Initiative for Local Capital | Institute for Local Self-Reliance | The Kassan Group |Longfellow Health Clubs | Mission Driven Finance | National Coalition for Community Capital | Natural Investments | Neighborhood Associates | Neighborhood Economics | New Majority Capital | Next Egg | Nonprofit Quarterly | Ownership America | Ownership Capital Lab | Ownership Matters | Partnership for Southern Equity | PathLight Law | Project Equity | Project for Public Spaces | Prospera Partners | Raise Green | Revalue | Rising Tide Capital | Schumacher Center for a New Economics | Shelterforce | Slow Money | SOCAP | The Super Crowd Inc. | Sustainable Business Network of MA | Transform Finance | Uwharrie Bank | Village Well | Zebras Unite

We welcome any nonprofit or for-profit entity committed to local investment as a partner. If your organization is interested, please contact Jen Risley at jen@main-street-journal.com.