2012-03-21

Co.Exist

6 Companies That Are Growing Rapidly While Doing Good

You don’t have to make a choice between making money or making a difference. Just follow the model of these rock stars of the new economy.

For many companies, it’s the holy grail: grow revenue, increase jobs, and be socially responsible at the same time. Sometimes, social responsibility is sacrificed in the name of keeping companies afloat. But these six companies, dubbed Rockstars of the New Economy by B Lab, have achieved three to 100 times revenue or job growth while maintaining a high environmental and social impact. That’s success.

Sungevity

Sungevity is part of a growing group of companies--including SunRun and SolarCity--that lease solar systems to customers, instead of forcing them to purchase the often-quite-expensive panels. In the past year, the company has tripled its staff to 300 employees. It has also installed solar panels on over 3,500 homes (generating 8,500 kW of power) since its founding in 2007.

Revolution Foods

This company, which partnered with the Nest Collective accelerator for children’s wellness food brands after it was founded, reached $50 million in revenue in 2011--increasing its revenue by 100 times over the past five years. Revolution Foods, which serves healthy school lunches to kids, has dished out over 30 million affordable meals to public school students since 2006.. A sample meal: honey-glazed chicken with roasted potatoes and garlic braised collard greens. Delicious. Revolution Foods was one of Fast Company's 10 Most Innovative Companies in Food for 2012.

Lumni USA

Lumni, a company operating in Chile, Colombia, Mexico and the U.S., "creates funds that invest in the human capital of low-income students," according to founder and CEO Felipe Vergara. The company’s social investment funds invest in college students, and in return, the students commit to paying back a fixed portion of their income for six months after they graduate (they don’t have to pay if they’re unemployed). Over the last five years, Lumni grew from $1.5 million in assets under management to $25 million. In 2011, it reached 2,500 students. Lumni USA recently financed its first class of American students.

Better World Books

Better World Books collects and sells books that libraries and colleges are otherwise going to toss in the trash and sets aside part of each book sale for its nonprofit literacy partners, including Books for Africa, Room to Read, and Invisible Children (that last one may be questionable in light of recent discoveries). In the past five years, the company increased its revenue by five times, growing to $50 million in 2011. Better World Books has donated over 5 million books (for every book sold, a book is donated).

Sustainable Harvest

A coffee importer that emphasizes transparency across the entire supply chain, Sustainable Harvest reached $76 million in revenue in 2011 (a rate of five times growth in the last five years). It has also brought over $200 million to rural coffee farming communities over the past 15 years. And as we noted in a recent post, Sustainable Harvest is introducing the iPad to coffee farmers in an attempt to increase efficiency and traceability.

Warby Parker

Like Better World Books and Tom’s Shoes, Warby Parker uses the "one for one" model--for every pair of glasses sold, the company gives a pair to someone in need via its nonprofit partners. Founded in 2010, Warby Parker now has 50 employees and has given away over 100,000 pairs of glasses.

These six companies are obviously not the only ones doing well by doing good. They are all B Corporations, which are required to meet legal accountability, environmental, and social performance standards upheld by the nonprofit B Lab. Other notably successful B Corporations include Patagonia, Method, and RecycleBank (see this post on the 20 Best Businesses for the World). There are 517 B Corps in total, but plenty of successful and socially responsible companies have yet to join.

Regardless of whether they are B Corps or not, Lumini’s Vergara believes that it’s "essential for every business to have a purpose that can connect people, staff, customers and partners with that mission." And if these businesses can make lots of money while doing that, even better.

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8 Comments

  • Good_Generation

    I think this is a most inspiring list of companies and hope that we will see this list grow in size by leaps and bounds in the coming years.

    One aspect I would like to draw attention though is that of how companies are evaluated as "successful" and who does the evaluation. While this article defines "success" by revenue growth and social/environmental impact, not everyone who matters (those with the money) agrees always on this.

    Underneath the good news of such companies a struggle is constantly taking place between funders - on the one side "investors" who expect some monetary return, and on the other side "donors" who of course just want to give away their money for the most impactful cause. In the world of impact investing, we call this "financial" vs. "social" returns on investment.

    If "success" is measured by how these companies are doing on social impact or "social return", no doubt we can call them successful.

    If, on the other hand, we measure this by financial returns, we need to make an important distinction between revenue and profit. As the article states, some of these firms report great revenue, but the picture may be different if we look at the bottom line of profits (that is, revenue net of all the costs).

    Why does this matter? And to whom does this matter? Because different funders measure success differently.

    If we want these firms to grow and scale further we want to invite more "investor" types. Philanthropic money only provides initial boosts but is finite and not always sustainable by definition.

    If we want to invite more investor types we need to show a stronger financial return profile. As long as a company's valuation is mostly driven by profits or "discounted cash flow", it will not look as hot as if it were valued on revenue. For all non-finance readers: unfortunately, the former is ultimately how companies' financial return is calculated, even the "good" companies. And they are making revenue, but little or sometimes no profit.

    Lastly, we have to be a bit careful in mixing up all these firms as if they were essentially doing the same thing. They are not.

    "Sungevity" is fully for-profit renewable energy (making money is most important to their investors).

    Better World Books is a social enterprise (their investors are split between money-seeking and impact-seeking folks).

    Thus, while all these firms do significant "social or environmental good", their underlying business model and conditions for success vastly differs. "Doing well" may mean revenue for all of them, but that's not necessarily what will get them more money to continue to grow, depending on who their funders are.

    In the end, as a B Corporation or "responsible" firm, you may not have to make an explicit choice between doing good and doing well... but you better know 1) how to define "well" and 2) which one of these two things your investors care about more if you want to stay alive and grow.

    As much as it remains difficult to have our cake and eat it, here's to the B-Corp movement and it's important work going forward!

    Thien

    GoodGeneration.org

  • Gates

    Whether or not you agree with the tactics of Invisible Children's efforts to raise awareness and stop decades of violence in Central Africa caused by Joseph Kony and the LRA, it's the worst kind of dishonest journalism to call to question the organization (IC or Better World Books) merely based on "guilt" by association to other philanthropic organizations whose world view you don't agree with.    To set the record straight, IC was one of nearly 10,000 charities supported by the National Christian Charitable Foundation annually in 2008 and 2009.  The author of the AlterNet article highlighted 6 organizations that were deemed offensive to her perspective on homosexuality - that's 6 out of 10,000! Stated differently, $9-$10M of annual giving out of a total in excess of $300M (see the annual ministry report at www.nationalchristian.com or the 990).  The National Christian Charitable Foundation focuses its giving on the tenets of the Christian faith namely evangelism and discipleship, but it also made grants in excess of $130M in 2010 to poverty alleviation, education, disadvantaged youth and humanitarian services.  Organizations funded include Habitat For Humanity, Charity Water, International Justice Mission - all thought leaders in their field, all working for the common good of society and inspired by their Christian faith.  Linking to the AlterNet article was an irrelevant distraction in an otherwise helpful piece.

  • Doug Brockway

    Kudo's to these companies for demonstrating that doing good in the community can indeed be profitable. The next step, which is often overlooked in CSR, is to do good by your own people. While many a company can make a positive impact in the external realm, it does not guarantee a healthy internal corporate culture. Quite the opposite can exist. While all of the companies listed above may be great places to work, many others seen to be 'doing good' outside of the office can be quite another story on the inside. Here's an article I wrote a while back regarding community optics versus internal reality http://www.brockwayservices.co... If you want to fully realize the full potential and benefits of CSR then don't forget about your most important asset - your people. 

  • Bucky Box

     Interesting Doug, I wouldn't put these organisations in the same category of CSR.  I can see a new breed of business emerging which doesn't earn money, and then put a percentage back into the community via various branded initiatives, so much as intertwine social / environmental good into it's core.  I see b-Corp and a host of other support mechanisms aiming to catalyse business which actually makes its money by regenerating social, environmental & cultural capital.

    I'd love to hear your thoughts about how CSR interacts with this concept.

  • Jay

    Hi, B Corp is going global.  If you reach out to Jordan Chazin from B Lab at jordan@bcorporation.net he'd be happy to explore it with you.  Best, Jay Coen Gilbert