When I became a Truman Scholar back in 1989, my vision of a career in public service was narrow:  I would work on policy issues in Washington, DC, then run for office and serve my society.  When politics started to seem bitter and ugly, I kind of gave up and joined the private sector.  As a private equity investor for 16 years, I came to believe more in the power of markets than the power of government.  But the pull of social justice issues kept me engaged, and as an engaged citizen, I also recognized the limitations of the market and its frequent misuse and destructive effects.  Business accounts for more than 75 percent of our nation's GDP.  What if this power could be harnessed to serve a higher purpose than the accumulation of personal wealth?

It was this question that made me decide to leave Wall Street and to co-found the nonprofit organization, B Lab, an organization dedicated to using the power of business to solve social and environmental problems.

Today, there is a critical mass of entrepreneurs, investors, consumers, workers, and policymakers seeking to create social and environmental impact through business. However, they face two systemic obstacles: 1) the absence of transparent standards which allow all of us to support “good companies” not just good marketing, and 2) the legal concept of shareholder primacy which makes it difficult for corporations to include employee, community, and environmental interests in decision making.

To address these problems, B Lab works on three interrelated initiatives:

• Building a community of Certified B Corporations that meet high performance and accountability standards
• Developing public policies that support for-profit social innovation
• Driving investment capital to this community of good businesses so that they can grow and increase their impact

Following is a little more info on each of these initiatives.

Certified B Corporations

Progress requires that we educate the public and business community that there is more to business than just financial profit. B Corporations meet rigorous standards of social and environmental performance, legally expand their corporate responsibilities to include consideration of the interests of workers, community, and the environment, and build collective voice through the unifying B Corporation brand. As of July 2010, there are more than 320 Certified B Corporations from more than 50 industries working for positive change.  Each of us, in all of our roles in life, have a responsibility to support this transformation in the way we view business. We must demand a more comprehensive approach to profit.

Policy

B Lab has two policy initiatives: 1) create benefit corporations in all 50 states and 2) promote tax, procurement, and investment incentives for businesses that create benefit for society as well as shareholders. Unlike traditional corporations, benefit corporations must create a material positive impact on society and the environment; consider how decisions affect workers, community and the environment; and publicly report their social and environmental performance using established third- party standards. We have seen recent success in our policy efforts at the municipal, state, and federal level. In 2010, Maryland and Vermont passed legislation to recognize benefit corporations. By 2011, seven other states may follow. Last year we achieved the first tax break for certified sustainable businesses in the city of Philadelphia, which will accelerate the growth of sustainable business. It is our hope that this policy will spread to other cities and reach the federal level.

Capital

Finally, to create real change, we must drive capital to businesses that provide a return on a triple bottom line performance.  We have developed the Global Impact Investing Rating System (GIIRS), which acts as an independent, third party assessment of the social and environmental impact of companies and funds. This ratings approach is similar to Morningstar investment rankings or S&P credit risk ratings. There are twenty-five private equity and venture capital funds, representing approximately $2 billion in assets, that have become GIIRS Pioneer Fund Managers and to have their funds and underlying portfolio companies rated in 2010. Using GIIRS, it will be possible to drive investment towards positive enterprise and strengthen this new sector of the economy.

A Call to Action

Despite these great accomplishments, there is a generation’s worth of work to be done. By harnessing the scale and talent of our business community and looking beyond short-term profit, we can rebuild local living economies, restore the environment, alleviate poverty, and create better working environments. Corporations that are purpose-driven and benefit all stakeholders, not just shareholders, are the key to a better, more sustainable future.

This brings me full circle to my Truman Scholarship and public service.  The social and environmental problems we face today require the kind of social innovation and rapid change that will only come from business and government working together to remove impediments and change the rules of the game.  I invite all of my fellow Truman Scholars, with their vast experience and leadership in both the public and private sectors, to reach out and offer their expertise. We need to leverage all our resources if we are to see systemic change.  There is so much important work to be done; now is the time to do it.

Andrew Kassoy (NY ’89) co-founded B Lab.