For many companies, the true cost of doing business may be much more than meets the eye. Today a new kind of business is looking at how measuring conventionally unaccounted-for costs could go a long way towards making businesses better for everyone.
Take the example of a conventional farmer. A farmer must pay for the cost of seeds, labor, land, farming equipment, and of course, water. If you are a conventional farmer you’ll also need to pay for fertilizers to help your plants grow and pesticides to kill any unwanted pests. But are those really all of the costs of being a farmer? What about clean air? Crops certainly need clean air to grow. Air is an example of a resource that has a very real value for the farmer—yet it is used for free.
Larger, common resources such as clean air are often referred to as gifts of nature and represent resources that everyone can use seemingly free of charge. The trouble however, with not measuring and assigning a value to these kinds of “gifts” is that when resources have no value they have a tendency to be abused.
“Whenever a scarce resource comes free of charge (as is typically the case with our limited stocks of clean air and water), it is virtually certain to be used to excess,” says environmental economist Wallace Oates. “Many of our environmental resources are unprotected by the appropriate prices that would constrain their use. From this perspective, it is hardly surprising to find that the environment is overused and abused.”
Thinking of our shared resources as free not only promotes their abuse it also promotes the idea that polluting them comes without a cost, which is of course untrue. In the same way that clean air has a real value for the farmer, polluted air comes at a real cost to the living things that rely on clean air to live.
Returning to our example of the conventional farmer, lets say the farmer chooses to use pesticides that run off of a his or her land into the native environment, where they negatively impact the local wildlife, the neighboring community, and eventually (if you’re a farmer in Hawaii) the surrounding eco systems of the Pacific Ocean. The costs of these impacts are not accounted for on the conventional farmers balance sheet; instead, they are costs that the neighbors must pay, despite having no part in polluting the resource. Economists call these costs negative externalities and if this approach to resource management and a businesses relationship to its stakeholders seems unfair to you, you’re not alone.
Certified B Corporations
Currently there are over 800 companies in over 60 industries and in 28 countries that have all come together under one unified goal—to redefine what success in business really means. Their aim is to consider the true costs of doing business by measuring and scoring the typically-overlooked external impacts that businesses have on all of their stakeholders, including the environment. These companies are called Certified B Corporations and on October 1st 2013 Hawaiian Ola proudly joined their ranks.
Certified B Corporations meet higher standards of social and environmental performance, transparency, and accountability. “As a company whose mission is to expand the overall demand for organic Hawaiian goods, certifying as a B Corporation was a natural step for us,” says Brett Jacobson, Founder of Hawaiian Ola. “The process for becoming a Certified B Corporation was comprehensive and thorough, and has helped us better measure the impact our actions have on our employees, suppliers, community, consumers, and environment.”
The performance standards for Certified B Corporations are comprehensive and transparent. They measure a company’s impact on all its stakeholders. Unlike traditional corporations, Certified B Corporations are legally required to consider the impact of their decisions not only on their shareholders, but also on their stakeholders.
Paying for what matters
At Ola, nurturing fair and responsible relationships with our stakeholders is central to how we do business. And our commitment to stakeholder accountability can be seen in the quality ingredients we use to make our products. Choosing to use certified organic and certified fair trade ingredients are two important ways that Ola has aligned our purchasing power with our values. As any thoughtful shopper will tell you, responsibly made goods don’t always come at the same price as their conventional counterparts, which is partly why so many companies choose not to make them. But for Ola, and the amazing family of consumers who share our values, paying a fair price for ingredients grown with reverence for the planet and its human occupants, makes perfect sense.
“It’s all about seeing real costs where other companies see externalities,” says Chris Whidden, Ola’s Brand Manager. “Not considering how a business impacts the environment or the people in its community is like playing a game on easy mode…what we’ve found at Ola is that the more stakeholder impacts you account for, the harder the game gets. Companies that choose to become Certified B Corporations are playing on difficulty level: Tough—and the exciting thing is, I think we’re winning.”
According to a report by Food-Navigator, organic is the fastest growing sector of the American food industry and continues to outpace growth in conventional food sales. Farmers who grow organic food might pay a little more for organic fertilizers and pest management solutions up front. But these cleaner farming practices save their neighbors from having to pay for the negative impacts that can come from using synthetic and often toxic options commonly used by conventional farmers.
Similarly, FairTrade Certified products are also gaining ground. According to a 2013 report by SPINS, FairTrade is one of four key attributes responsible for driving growth in beverages right now. Buying FairTrade ensures that the farmers are justly compensated and just wages help farmers build sustainable businesses that positively impact their community. The end goal is to create farming communities with access to education, health care, and better nutrition.
B the Change
Supporting Certified B Corporations is an easy way to promote businesses that consider the broader impact that their decisions have for us all. At Hawaiian Ola we believe the future for companies that can find harmony with their communities and the environment is bright. Our mission is to expand the demand for organic, GMO-free Hawaiian goods by producing and exporting healthy products made from sustainably grown, island-native plants, like Noni.
By 2020, Hawaiian Ola plans to educate over one million people on the importance of our mission and to create a demand for one thousand acres of organic farmland in Hawaii. The end goal is to reduce the amount of agriculture-related pesticides running off the island and polluting the native ecosystem and the surrounding Pacific Ocean. Keep learning; for more information about how Hawaiian Ola is creating change, visit our profile page at bcorporation.net.
Press Release Available at CSR NewsWire.