· B Corp certification is a third party verification available to any for-profit company. During the assessment process, B Lab looks at your impact on your environment, your community, your governance structure, how you treat your employees. If you qualify you are eligible for the certification.
· A benefit corporation is a for-profit legal structure, like a corporation. It is a way to integrate into the DNA of the company that you are dedicated to considering your impact, not just on your shareholders, but on your employees, your community, the environment. It is a part of your business decision-making, a brand new concept because in traditional corporate law, you’re supposed to only consider maximising shareholder value.
· The mindset of clients and the customers are changing; they want to trust the companies they deal with and are more values driven.
· The conventional system follows certain fallacies that doing well financially and doing good for society are mutually exclusive and separate. The traditional model of making all your money and then starting to donate is becoming obsolete. Corporations like Patagonia and Athleta are leading the way.
Gina: Today we have two guests on No Ordinary Business: Becki Ueno, Co-Founder and Partner of Sustainable Law Group and Evelina Marchetti, Founder and CEO of Evelina Eco Events. Good morning Becki and Evelina. Thanks so much for joining me today on No Ordinary Business!
Evelina: Hi Gina, thanks for having us.
Becki: Yes, thank you.
Gina: We are sitting in beautiful Manhattan Beach overlooking the ocean. What a great spot for us to have this conversation so thank you so much Evelina for offering to host our gathering today!
I wanted to focus our discussion on benefit corporations and B Corp certification. I should mention upfront that your respective businesses are both certified B Corps, and Evelina’s business is also incorporated as a benefit corporation. Before diving into those details, I’d love to hear a little bit about your journeys and how you got to where you are today. Becki, can you start by sharing a little bit about your path to sustainability?
Becki: Happy to. My law firm Sustainable Law Group is based in Los Angeles and in Ojai, California. My journey started from a very young age. I was always very passionate about nature and the environment. I grew up in Colorado spending every summer backpacking and canoeing and fell in love with that environment. I knew I wanted to do something in my career to protect the environment. My start was as a community organiser, organising around environmental and social justice causes. I eventually found my way to law school and was committed to going the litigation route; I really wanted to sue big corporations and ‘take the man down’ so to speak.
Once I actually got myself involved in class actions, I had a 180-degree change in my philosophy on life and gravitated towards positive impact and positive change. That was back in 2008 – 2009. The economy was tanking at that time but there was also a burgeoning sustainable business community in Los Angeles. I was laid off, just like half of the lawyers in Los Angeles at the time, and decided to go into business for myself and work exclusively with companies, individuals, and non-profits that I believed were furthering good causes and social change.
Gina: Evelina, what’s been your journey?
Evelina: I consider myself a global citizen. I was not born in the United States. My parents were in the Armed Forces and we lived in big forests and vineyards in Germany and Italy and that was a really beautiful time in Europe because everything was ecotourism focused before that term was even coined. I remember going out and getting the eggs from the chickens and picking up blackberries off of bushes with my sisters and making jam with my mother, which is now a beautiful memory.
When I was eight years old, we moved to Washington D.C. and my mother was working on Capitol Hill, while my father worked in the metropolitan area. I spent my entire formative years there and attended many events at the White House. I used to sing at the White House with this group called the “All Americans”. Through my performances I saw the backstage production as well as the front of the House as a part of the audience of these really high profile events. Being part of the production I saw so much waste, so many disposables and trash everywhere. There wasn’t really any recycling - I was always shocked because it was so different from how Europe was and that stuck with me.
I knew that I could help this issue and after college I came to California where there’s a lot of people like me and started to educate myself on sustainability. Here in gorgeous Southern California, you have access to everything organic and I was able to connect with some high net worth individuals that are in the sustainability sector and they hired me to start producing events for them and I started running a sustainable event production business.
Eventually, I met Becki when she was speaking at an event about B Corps and I realised that she was talking about me, that I’m a B Corp. I had never heard of B Corp or benefit corporation before but I realised that the way I ran my business was perfectly aligned. Becki helped me reincorporate and it was pretty seamless and…
Becki: And we are collaborating ever since.
Gina: Becki, could you just give a very high level overview of what B Corp certification entails?
Becki: Sure. So B Corp certification is a third party verification that you can get as a company. You have to be a for-profit. During the assessment process, B Lab looks at your impact on your environment, your community, your governance structure, how you treat your employees. If you qualify, if you get a high enough score in the assessment, you can get that certification. It’s kind of equivalent to getting an Organic certification in the food world. It’s become a more recognisable label on a lot of products. If you go to a grocery store, you can find lot of products with a B with a circle around it, that’s a certified B Corp.
Gina: And the B Corp certification is issued via a non-profit organisation called B Lab, is that right?
Becki: Yes, that’s right.
Gina: Evelina, I understand that not only did you pursue the certification to be a B Corp but you also changed your legal structure to become a benefit corporation.
Evelina: That’s right.
Gina: Becki, would you give an overview of what benefit corporations are and how they differ from B Corp certification? I know that it’s very commonly mistaken as being the same thing and it’s not.
Becki: That’s right. So a benefit corporation is a legal structure, like a corporation or an LLC. It’s an option in the US states that have benefit corporation statutes on their books. It is a way to integrate into the DNA of the company that you are dedicated to considering your impact, not just on your shareholders, but on your employees, your community, the environment. It is a part of your business decision-making. And that is a brand new concept because in traditional corporate law, you’re supposed to only consider maximising shareholder value.
Gina: You’re referring to the doctrine of shareholder primacy.
Becki: That’s right.
Gina: What I think is really compelling is that there is movement to adopt benefit corporation legislation in a number of countries around the world. I know that Italy has introduced a form of it. The UK actually has drafted legislation in place but I think Brexit has taken priority. Australia is looking at it. France too. There are a couple of countries in Latin America at various stages of introducing the legislation.
Evelina, why did you feel that it was important to become a benefit corporation as well as pursuing the B Corp certification?
Evelina: I think that for me, it’s pretty simple. My long-term vision for the company was to have shareholders that held the same values that I did. I thought the only way to make sure that we’re for-profit and for-purpose was to make sure that the company was structured as a benefit corporation. And our purpose is to use our business as a force for social, environmental, and economic benefit.
Gina: So you wanted to ensure that the protections were in place so that you could preserve the purpose or the mission of the company and not are beholden to shareholder pressures not aligned with your purpose or your mission?
Evelina: Absolutely! The bottom line with shareholders typically and historically is just profit, and so I wanted to attract shareholders that have a wider scope of what success looks like and likeminded colleagues and peers that can see the work that we’re doing and help scale it so that we can do more great work.
Gina: Becki, how does benefit corporation legislation afford protection to directors or leaders of companies that want to make decisions considering all stakeholders, not just shareholders?
Becki: The corporate structure of a benefit corporation specifically requires you to consider your impact on stakeholders. That is different from the corporate law that applies to a regular corporation, which is primarily born out of case law that requires that you maximise shareholder profit. Now that a benefit corporation exists in a statutory form, that takes precedence over case law. It requires decision makers, once you’ve adopted the benefit corporation’s structure to consider your impact on all stakeholders.
Gina: I imagine that this protection would be valuable on the sale of a business if directors based their decision to accept or reject an offer considering the impact on employees for instance, not just maximising profit for shareholders.
Becki: That’s right. You are vulnerable if you don’t maximise profit in a sale of a company but also in the general decision making of your operations. If your shareholders believe that you’re spending too much money on employee benefits, on donations to local charities, or you’re not spending as much time on just purely profit-driven motives then they actually can sue you for failing to maximise profits. And under the benefits corporation structure, it’s flipped on its head and you can be sued for not considering your impacts on the environment, employees, etcetera.
It’s important to know that the legislation is not written in such a way where you have to maximise positive impacts over profits. In the decision making process, under a benefit corporation, you can consider all options and impacts and still decide you are going to maximise profits or focus on employees. It doesn’t create an excessive burden on a company to consider those impacts but it does allow you to, unlike the traditional corporate law.
Gina: So is it fair to say that as a benefit corporation, you have the responsibility to consider impacts on all stakeholders, but you’re not compelled to make a decision in favour of one stakeholder over another? You may still make a decision that benefits the shareholders. Your responsibility is to consider the impact of your decisions on all stakeholders. Is it fair to sum it up like that?
Becki: That’s exactly right.
Gina: Evelina, how receptive are people in the marketplace to your approach? Are you finding that this is a priority for your clients as well?
Evelina: I think that I’m part of their awakening to show them that prioritising waste management at an event, is not a particularly expensive or hard thing to do, it’s just another component to the process. For first time clients, it’s a balance because they want specific results. But the challenge that I find in even answering your question depends who has hired me and in what country or state the event is being held because waste management comes down to the municipality and that’s where my job can get tricky. There’s different ways to divert wastes or to buy credits and to carbon offset, there’s all kinds of ways to make it happen, it depends on who the client is and where the event is taking place.
Gina: Can you give us an overview of how you go through this process?
Evelina: I really want to make sure that items from my events do not end up into a landfill and so really my process is to find out where the event is going to be, what time of year and what kind of recycling hauler they have, what kind of recycling centre they have, and whether they have a commercial composter. Then I look at who are the vendors that we’re working with. I sit down with all of them as a partner in this and we dialogue about what they do behind the scenes. I consult the caterers and all of the vendors and help them help us make this a zero waste event.
Gina: You produce events globally so what have been your experiences dealing in different parts of the world?
Evelina: We find like-minded people all over the world. For example, when I took a team to India to run this global campaign, through the power of technology, the Internet and Facebook, I found an organic farm run by incredible people that had everything in place. It was one of the easiest places, India, for my work and me. I didn’t really have to do much; it was really simple.
And also in Nicaragua, we found an ecotourism lodge and held the entire programme there on the beach. We had 135 children come in from the local villages and we did a beach clean up. I don’t think it’s very challenging to find people, talk logic to them, and take care of the planet while we meet the goals of my clients for their events.
Gina: Becki, your firm’s focus on sustainability is very unique. I’m not sure I’ve encountered another law firm before that prioritises sustainability. Can you share a little bit about how you integrate sustainability and your mission into your business model as a law firm?
Becki: As lawyers, the word sustainability means providing legal counsel that will provide lasting impact, positive impact for our clients. We treat how we operate as lawyers in a completely different way. We don’t necessarily use the same tactics that a traditional law firm would use. We don’t do ‘scorched earth’ type things, we don’t yell and scream, we don’t bully, we don’t do all the things that unfortunately lawyers are now synonymous with. We really try to look at each negotiation as an opportunity to bring our clients and the other party together and to create a lasting relationship. Usually, we are not handling disputes at the litigation level; we’re bringing people together. We’re creating new relationships with our clients in the contracting we do. That’s what we’re looking at in terms of sustainability, making sure that these relationships are sustainable for the long term and that companies are sustainable or the non-profits are sustainable for the long term.
Gina: How does your client due diligence or vetting process work to identify if a prospective client is aligned with your values and mission?
Becki: Our due diligence process is already self-selecting because a client looking for a law firm like ours is going to be naturally attracted to us and they’re going to be likeminded. We don’t tend to attract the type of client that wants the attorney that’s super aggressive and is going to hammer the other party. They are looking for an attorney that understands their business model and philosophies so in a way, the client who’s attracted to our model already does our work for us.
Gina: I’ve heard from some that the B Corp certification process is better suited to large corporations. What’s your experience been with relevance meeting the criteria?
Evelina: For me, the B Corp certification process is rigorous. We were doing it every two years and just recently, B Lab decided extend renewal requirement to every three years, which is wonderful news. But even though it’s rigorous, I like it because it challenges me to re-examine what I am doing. It never allows me to get into a comfort zone and I think as an entrepreneur, that’s admirable. I don’t want to get too comfortable and complacent so in the end, I’m grateful for the challenges that they pose within the process.
Gina: Becki what has your experience been with the certification?
Becki: Likewise, it’s pretty rigorous for us. Every few years, the process seems to change quite a bit. The upside to going through that is you learn ways to improve. Along the process of doing the assessment, there are best practice suggestions within the assessment and you figure out what things you can adopt each year, how you can improve each year. We’ve gone up and down and then up again in our score and we are looking at ways we can constantly improve.
I actually found it to be easier for the smaller companies to go through the process because they don’t have to get buy in from a large group including their entire staff and team. With a larger corporation, I found that in the certification process, it has to be driven at the top by the CEO, the executive has to be really committed to it, but then there also have to be people in place that every level of the company and every department who are passionate about it, otherwise the message just gets lost in the weeds and it can be very difficult to obtain certification because of that. In a way, being a small company as a B Corp can actually be easier.
Gina: Are there any role models or other organisations that you look to as champions in the space?
Evelina: For me it is Patagonia; they were the first company in California to become a B Corp.
Becki: Patagonia has always been an inspiration, just the way that they’ve infused that philosophy even before there was B Corp, they’ve always been committed to creating products that are sustainable and they really do go against the grain in their industry.
For me, in the legal field, there are a few attorneys out there that I’ve found to be really wonderful mentors for me. And of course, the people in my industry maybe aren’t as famous, they don’t necessarily have big names, but for me, the people that are doing the good work without really getting the recognition inspire me.
Gina: Are there any big law firms either a national law firms or international law firms that you know of that have achieved B Corp certification?
Becki: There are few firms in the Bay Area that are fairly large, but none of the huge firms that are international.
Gina: Does B Lab offer a platform where you can share experiences with other certified companies?
Evelina: Being a B Corp is like being in a club, like a fraternity or sorority. And on the B Lab website, they have a hive where you can reach out and direct message anyone that’s a B Corp and that’s really cool.
Becki: And there are local groups, like there’s a Los Angeles based B Corp community that we get together quarterly to workshop ways to improve as B Corps in our companies. If you’re just starting out and trying to get the certification, it can be maybe more daunting but the folks at B Lab are really supportive and if you’re looking trying to setup a certification, reaching out to them as a first step is a great way to do it to find out more about the structure and how it might benefit you.
Gina: Evelina, I am curious: are your clients primarily for-profits or non-profits or balanced?
Evelina: It’s funny because it’s been a journey. I started working with non-profits for a very specific reason because I thought these are the people that are the real B Corps in the trenches, they don’t need B Corp status, and they are doing social justice. And then through the last four years, I’ve realised that the non-profit model is not going to be sustainable because we’re out here raising all of this money and then a year later, we have to do it all again. I’m starting to see that my impact as a B Corp, as a benefit corporation is now going to be even greater if I help fellow for-profit for-purpose companies and help them grow and do sustainable events. That’s been huge personal growth for me.
Gina: Becki, who are your clients?
Becki: I would say about half of my practice is non-profit and then the other half is social enterprise or businesses that have an ethos about them. I find that exactly the same thing in the non-profit sector. There can be a poverty mindset and that can be very difficult to actually achieve positive change when constantly striving to raise money. But I have found actually so many of our clients are moving towards a social enterprise model where they have a product or a service that’s driving revenue into the organisation and it’s just as much more seamless in terms of being able to make the impacts they want to make.
Gina: That’s encouraging! In my own practice, I strive to drive more philanthropic capital to purpose-driven for-profit businesses. I also support non-profits working to break the dependency on donations and become financially independent. There’s greater awareness around changing the funding model that’s required. I’m hopeful that things are moving in that direction.
Would each of you share any barriers to entry that you have encountered, challenges in fulfilling your own mission?
Evelina: I think that the biggest barrier for zero waste events is the waste management process and making sure that everything goes to the right place because one person can contaminate an entire van. I’ve had to strengthen my relationships with commercial composters and waste management.
Gina: How about you, Becki?
Becki: The challenge that I often face is in negotiations with other attorneys. I can’t choose who the other client’s attorney is and some lawyers do business in a way that’s just combative and so I have to be prepared for that and I have to fully represent my client in those situations. I can’t back down; I have to rise to that challenge. And so my challenge in that is not resorting to the same aggressive tactics. Stay true to my beliefs, staying true to what my client feels that they’ve hired me to do without compromising their position in the negotiation.
Gina: That’s a delicate balance.
Becki: It is. And I think being aggressive is a learned attitude in way of practice. I don’t think people go in to law school thinking that they’re going to behave that way. It’s become a part of the culture and I don’t think it’s always been that way and it is not universal. As a part of my mission as a small firm is to bring a little light in that darkness and hopefully, I can change the minds of the other attorneys that I work with. I don’t hope to change the entire industry but hopefully interactions with the other attorney, I can show them a slightly different way of approaching things.
Gina: I’m confident that you shift energy through your approach. I am a big proponent of alternative dispute resolution, giving people another choice to expensive and acrimonious court litigation.
Becki: Litigation creates an environment for the client to be in a constant combative state. When you’re in litigation, you can’t just ignore that you’re in litigation, it impacts your whole life. Whether you have all the resources in the world to throw at something or not, it impacts your day-to-day life. When I have a dispute, I work to settle with dispute as quickly as possible so my client can move on with their life. I think that’s the best service you can do to for your client and that is a completely different philosophy that a lot of other attorneys have.
Gina: Taking a step back for a moment, Do you have a vision as to where you’d like to be in five years?
Evelina: Yes, I have exciting news! I’m actually going to be opening a new division of our company in the products space, selling eco-friendly event products. So we’re just now pouring into that and it’s, I think that is going to have a really big impact…
Gina: That’s exciting! Congratulations!
Evelina: Thank you.
Gina: What about for your practice, Becki? What is your vision for five years?
Becki: My partners and I are actually actively in the process of figuring that out. I know it’s going to involve continuing to elevate the work that we do and getting better at it, and growing as a firm bringing additional attorneys into the fold.
Gina: What about for your respective industries? What do you hope to see shift?
Becki: I would love to see a change in the way that attorneys approach each other and approach what’s best for the client. And I would love to see the decorum come back, that kindness and a sense that the parties that we represent are in a relationship and we want the outcome of that relationship to be the best that it can be rather than destroying people’s lives. I want to see lawyers focus on helping their clients have better relationships. It’s a big pie in the sky idea but I know that there are others like that.
Evelina: For me, I have always wanted efficiency in the event sector and production. If we keep rolling out these incredible new companies, new vendors that are providing services and goods that are clean and easily recyclable or compostable, the efficiency will be beautiful.
Gina: Moving away from your respective roles in your own professions, I’d love to hear your views on what you think the interplay is between doing ‘well’ financially versus doing ‘good’ for society.
Becki: I think that it takes some courage to let go of focusing exclusively on making money. Of course, we all need to make money to live, to survive, to have a nice place to live, and there’s nothing wrong with making money. It takes an incredible shift in mind set to not focus on how much you make as the marker for success. And when you do come to that other side, I think you find that it comes to you more naturally. It may not come as quickly but it does come because I think positivity attracts positivity and that tends to also attract wealth.
Gina: What do you think, Evelina?
Evelina: I think that I’m a real entrepreneur and I really think that anyone that’s dedicated to being the best in their field and providing the best service and staying true to their mission, I think that person is always going to make money. I try to be the very best and deliver what I say I’m going to deliver. I think ambition and action will always be followed by abundance and that’s been my experience.
Gina: I agree. I believe and the evidence is showing that companies that consider non-shareholder stakeholder interests and risks in their decisions actually become stronger companies in the long run. The institutional investors, the long-term investors are investing in companies that have ranked strong on their environmental social governance policies not because they’re altruistic but because they see that as a better investment and these factors as risk mitigators.
Becki: I definitely agree. I think that, in this system as it’s been setup, it follows some fallacies. It is just simply not true that you have to put these two things in separate baskets, social good and making money and the traditional model of making all your money and then starting a charity and then starting to donate.
There is something else we haven’t talked about yet. I think that the mindset of clients and the customers are changing; they want to trust the companies they deal with and are more values driven. That’s another thing I learned about the B Corp and benefit corporation, is the value of transparency; it’s all out there! B Corps have to list their impact report now on their website and I think it’s really a big thing.
How would you define social enterprise?
Becki: I come at it from a generalist perspective because my client base is so wide ranging, I don’t tend to have a very narrow view of it but I think there has to be two components. It has to be some kind of profit driven business model. It doesn’t need to be a for-profit, it could be a non-profit that has a source of revenue that comes from either providing product or service and then there has to be a social good drive. Not just a PR campaign or simply donating money, like a percentage of profits, but providing a social good with the product or service has to be baked in to the whole mission of the company.
Gina: Evelina, any further thoughts?
Evelina: I can really echo that exact sentiment. I am a social enterprise and provide both of those things.
Gina: One last question. What do you think needs to take place in order to shift the needle closer to sustainability?
Evelina: That’s a good question.
Becki: I think it all comes down to education. I’ve been thinking a lot about, not to get political, but the state of our political system in our country today and how tribal it is. And I think a lot of that tribalism boils down to where people get their information, what they’re educated about, and who is driving that information. That sounds very vague but I really do think that so many of our world’s problems can be solved from day one in our education system. If children are raised to believe in protecting the environment, taking care of each other, believe in science-based, evidence-based facts, I think that you’re going to get a society that demands that kind of change, that sustainability.
Evelina: I think innovation will shift the needle.
Gina: Would you elaborate on that?
Evelina: I think with innovation, the education component will be realised automatically. My daughter will grow up with that innovation and so the idea of plastic ending up in the ocean becomes unfathomable to her generation. I think that innovation is going to correct and repair a lot of things that we once did. I think that’s what’s going to really push the needle in the next few years.
Gina: Any last thoughts?
Becki: This has been really great wide ranging interview. I really appreciate the conversation!
Evelina: It was a great conversation!
Gina: The pleasure was mine! If any of the readers want to follow up with you, how can they find you?
Becki: My website is www.sustainable-lawyer.com and you can find me there. Reaching out to us personally is the best way to have a conversation.
Evelina: For me it’s www.EvelinaEcoEvents.com or through our social media.
Gina: I really enjoyed this and I want to thank you both for your time and wish you both the best in your pursuits.
Evelina: Thank you for your interest Gina, and for how much fun your energy is when you interview!