The CEO: Marrying profitability with sustainability

In an era marked by poly-crisis – accelerating climate change, global epidemics, and growing social and economic inequality – the role of the CEO has never been more critical. Today’s chief executives are faced with the intricate challenge of balancing two seemingly divergent goals: profitability and sustainability. According to Edelman’s 2024 Trust Barometer, CEOs are expected to safeguard jobs and address emerging ethical concerns. In fact, 62% of respondents believe that CEOs should manage societal changes, not just those within their businesses, highlighting a broader opportunity for leadership.

I’ll be joining Economist editor Vijay Vaitheeswaran for an upcoming panel discussion focused on the vital role of leadership in prioritizing sustainability. (See the end of this article for a link to join us.) In preparation, I’ve been reflecting on the lessons we can share from B Lab about why it’s worth prioritizing purpose and the benefits of making this shift, even within our current market-driven economic system.

The power of purpose-driven leadership 

Modern business leaders recognize that meaningful change is not only an ethical imperative but also essential for the long-term viability of their organizations. However, navigating this transformation can be daunting. Through our tools and programs, B Lab provides a pathway forward, offering access to expert insights and best practices and empowering CEOs to learn, evolve, and drive positive change within their organizations. 

The B Corp movement is an embodiment of the profound impact of this transformation in the way we do business. Through our B Corp community, along with our policy and advocacy efforts, B Lab is reshaping the structure of capitalism, moving away from a narrow focus on shareholder interests to a model that prioritizes accountability to all stakeholders – customers, workers, and the environment. 

By advocating for stakeholder governance, the B Corp movement is redefining traditional measures of success, prioritizing purpose alongside profit. But doing business sustainably is just the beginning. True systemic change is necessary to redesign the role of business in society. B Lab’s standards are designed to facilitate this transformation, addressing not only company operations and legal frameworks but also the prevailing narratives of business success. 

Benefits of integrating environmental and social factors 

Putting aside the politicization of the acronym “ESG” (which I imagine we’ll discuss on stage!), the reality is that integrating environmental, social, and governance factors creates benefits for many of the stakeholders in and around your business: 

• Consumers: Environmental and social issues increasingly influence consumer choices. Certifications like B Corp, 1% for the Planet, or Fairtrade empower consumers to support businesses aligned with their values (creating an opportunity for leading companies). 

• Investors: Behind the sensational headlines about “woke capitalism”, investors recognize the importance of ESG factors in investment decisions. B Lab’s recent partnership with Nasdaq, incorporating B Impact Assessment data into reporting tools, reflects this evolving trend. 

• Business resilience: Studies show that B Corps are more resilient than other businesses. During the COVID-19 pandemic, 95% of B Corps stayed in business compared to 88% of non-B Corps. This resilience highlights the strength of purpose-driven business models. 

• Employee engagement: Companies with a strong sense of purpose and stakeholder consideration have more engaged and effective workforces. Demonstrating a commitment to values beyond profit aids in employee recruitment and retention. 

• Economic impact: "The Purpose Dividend", a UK study, quantifies the positive impact of purpose-led businesses. If all UK businesses operated like B Corps, the economy could see a £149 billion annual GDP boost and an £86 billion increase in capital investment.

Consumers, workers, investors, and policymakers are demanding more from businesses, recognizing their potential to drive meaningful change. Chief executives play a pivotal role in fostering a culture where companies and the planet thrive in harmony – not at the expense of one another. The global community of B Corps, which has doubled in size over the past two years, reflects the growing momentum of this movement. CEOs are now expected to navigate societal change alongside business challenges, ensuring long-term success while contributing to a more equitable and sustainable future.