Interview with Pedro Tarak , cofounder of System B and speaker at Sustainable Brands of Barcelona

Business and disruption. It seems daring if we consider the usual tone of the meetings of the Board of Directors and the Management Committees of big companies…

A B-Corporation is like any business enterprise that works with their governance tools. Only it has peculiar characteristics which naturally affect their culture regarding the meaning and the way to do business and how to manage their relationships with all stakeholders including its own shareholders.

How can a business start thinking “out of the box”? What elements can help a business to start to think differently?

That the own purpose of the company is to solve the social, environmental and cultural problems by creating non-state public goods for the world and placing the same purpose in the social object of its statute. This structures and sieves the entire business.

That the management tools used integrate the economic and financial dimensions, labor and the social and environmental issues in a framework of transparency and public accountability.

That it expands its fiduciary liability (caring of the shareholders) to other stakeholders (eg. the staff, the community, the value chain, the Earth) and expresses its statute legally or through agreements / pacts of shareholders.

Could we calm directors obsessed with results and profitability: is it possible to be sustainable and profitable? Is it necessary? Is it utopian?

This path does not require to convince the “uneasy” ones. It is only for those who wish to genuinely let their company live another way… Competing in the market since the creation of public and shared value and being true part of solutions to the world. It’s about being the best for the world. And not only the best in the world. The best way to generate an “contagion” of this approach is giving a concrete example with the commercial enterprise itself showing that profitability and sustainability is something more than possible and financially convenient. Even stronger economically and desired by the talents that it attracts, consumers and investors who prefer it and a society willing to value their license to operate.

Sometimes with all the talking about sustainability and ethics, we forget that this is a movement of businesses, companies planning to grow, do business, make money. Can you make money by being disruptive? What differentiates an entrepreneur who follows the conventional parameters? And what do they have in common, at least “disruptive”?

Like in any other business enterprise, the numbers should be closed annually. But also in the long run. And not just about immediate financial returns but about creating integrated economic, social and environmental value. For some this is a “business” movement. For others it is a citizen’s movement in which they take the fate of the economy in their own hands and in which it is expressed entrepreneurially in the market. In the beginning we see a differentiation between “conventional” and the emergent. However, the interesting thing about this phenomenon is that it speaks about its own example rather than questioning who does not take this path now. It does not aspire to question those who do not walk the same paths. Rather, to share their visions, their business models and it competes for the world community and complicity creating common cause.

Since System B is promoting a new legal concept to define socially committed companies, are there countries that have already created that profile? How does it work? Should there be a comprehensive legislation, a standard that is incorporated into international treaties?

System B promotes B-Companies, a new market identity and legal type combined. But aside, it promotes a legislation that defines the new societally options expanding the legal types pack available to facilitate more transparent legality to this ways of doing business.Our global strategic ally, B Lab, based in the USA, has promoted the new legal kind of companies in 28 states of his country, establishing what is called “Benefit Corporations”. B Corps add to the legal requirements the elements of the comprehensive evaluation with certifications and re-certifications, random audits, advertising of the scores, the integration into a community of peer companies and the use of a collective brand which symbolizes its seal (a B inside a circle).

The legal requirements include:

The incorporation of a public purpose and value and goods shared with the social object of the statute. It should reflect a positive measurable social / environmental impact.

A submission to a comprehensive assessment of the “360 degrees sustainability” of the Company, not only of the processes or products, tested and certified by an independent party.

Extending the fiduciary responsibility of the company to all stakeholders and not just to shareholders protecting the statutory role and responsibility of management and the board.

Regarding the legislative strategy to promote it globally it´s done through national states (executive / parliaments). And I do not think that the way the international treaty is the fastest and effective way for the adoption and expansion of this new legal type of an entrepreneur.

A company B could not fire people in the same way as a conventional company. Does this affect growth negatively, or is it the opposite, could it generate currents of solidarity, more commitment to both its customers and its suppliers and employees, that reverse the situation?

Like any other company, a B-Company may dismiss employees. The big difference is that by having incorporated certain labor practices of care, it is very likely to find alternative ways before firing employees because of the crises. There are no unique recipes for B-Companies (in any draft).

You defined Systema B as something that “is not an evolution of capitalism or socialism, but an evolution of the economy of all, integrating the self, with ourselves and with the earth.” I guess that this ideologically faces in the same way supporters of socialism and capitalism. With which other supporters of what system did you further discussed?

Hahahaha! That is my own vision of redefining the I (excessively individualistic) and its extension into a self belonging to a social group – the us – (not only affective) and the Earth. Therefore the fate of us and the earth will affect myself. And according to what will be the resonance of us and the earth, there will be other ways to work individually and organizational So it is natural that the resonant and empathetic business with the us and the earth will also receive an assessment of their audiences. In Systema B we aspire the evolution, not the revolution of economy. So what have we learned from the age of the industrial revolution is how we can now include social and environmental dimensions as an integral part of the economy. And not as a separate fragment. And to be able to measure the welfare that is created for individuals, societies and the Earth at the same time as the DNA of the economy. In this sense, the truth is that we only find sympathy from leaders of left, center and right. Also in citizen movements that aspire to affect the meaning of the economy. It is very encouraging to see agreements between parliamentarians from left and right to propose projects of institutionalization of legal types like these. These are the gifts that we expect as a society. After all, what we propose is the synthesis of proposals combined by the left and the right.

What argument should be used for a socialist to convince him that Systema B is a formula to ensure the welfare of the people and the environment, while ensuring the survival of the market economy?

Our approach is not to persuade neither the left nor the right. Or anyone! It is only about sharing what we do to solve social problems such as social inclusion and inequality, and environmental ones as the excess of greenhouse gases from the business models of our companies themselves. Everything changes when one shows what is achieved with the strength of consumers who buy, providers who want to be part of the same purposes, talents who are willing to work in these type of businesses, investors matching with the public purposes of the companies and a lot of media talking about these examples. Of course! Besides, when the impact of value chains is also shared, and you can see scale solutions that we all aspire to achieve from politics, we see that we are a complement to the efforts and actions taken by the public sector and political parties of any orientation.

Leave us a phrase, a thought, an anecdote which helps to convince skeptics that the change is possible and can give us good results.

The industrial revolution kept his place in the history of collective learn. Now it’s time to evolve towards the age of sustainability, where we can celebrate being together, get excited about dignity and respect for each other and for the communities living in the planetary ecosystem frontiers. Let our creativity and innovation be an example of taking a step forward!

Natura, a leading company in Brazil in hygiene products and cosmetics, recently certified by Systema B. Tell us how was the process of working with Natura. Sometimes it is thought that these models are for small businesses and with zero scalability. What were the main challenges?

Natura was already naturally a Company B! It has the philosophy and many of the practices being promoted. This happens with many companies that feel they already are there, regardless of their category, size or scale. For us it was just enjoying to accompany their process. Perhaps we should ask them directly to share their experience.

Why do you think events such as Sustainable Brands are important?

Today the new saying of brands is doing. The world expects solutions to their problems in all sectors. We learned that it is not enough to split functions and responsibilities between the state, private sector and civil society. Like this we do not arrive on time! Brands that in the same time generate economic value (e.g.. employment, added value, etc.), financial value (e.g.. utilities to shareholders and others), social value (e.g.. creation of micro enterprises, educational systems, etc.) and environmental value (e.g.. regeneration of degraded or destroyed ecosystems) will be more commercially valued and preferred brands. We need to bring this conversation to the public space of influence to promote a deeper thinking of this issues an also creativity and smart thinking inside companies. We are entering an era of low carbon, of regeneration of ecosystems, where wastes become inputs of any process, in which to live civilly there is the need to distribute and decentralize economies! They are great opportunities for entrepreneurs! And their brands must convey the message: we are part of the solution to all! Sustainable Brands allows the conversation to link the business sense of a company with the creation of integral value and how to communicate that with their brands.

What would you like to happen in Sustainable Brands?

That a significant group of Spanish business leaders from different generations become a reference for other market and society players, placing the solution of common problems as part of the core business of their own companies. As dear Gandhi said: Be the example you want to see!!