One of the more ambitious predictions in our list of the World Changing Ideas of 2014 is that we'll see a public company become a benefit corporation in the next year. Plum Organics, a healthy baby food company, is paving the way. In 2013, the company became a benefit corporation—with the help of Campbell's Soup, a public company that acquired Plum the same year.
Benefit corporations, which are becoming legal in a growing number of states, make it possible for companies to consider the impact of their actions on the environment, workers, and the community in addition to their impact on shareholders. They can pursue values-driven missions without worrying about getting sued. Hundreds of private companies throughout the U.S. are benefit corporations, and their ranks are growing quickly.
Now that the state of Delaware, the legal home of half of all publicly traded companies, has made benefit corporation status legal, it's only a matter of time before a public company becomes a benefit corporation. Plum, the first benefit corporation under a public company umbrella, was one of the first organizations to become a benefit corporation in Delaware.
Plum has been a mission-driven organization since its launch in 2007. Created by a small group of parents that wanted to change the way kids eat, Plum is guided by three core beliefs: healthy food is the future of food (Plum incorporates ingredients like kale, quinoa, and butternut squash into its products), modern parents require modern solutions—in this case, baby food options outside of the two brands that have dominated the industry for decades— and business can be a source for change in the world.
These beliefs have paid off. By the end of 2012, Plum racked up $93 million in sales. "We believe that profitability can be because of our purpose. We believe that's really been the hallmark of our success," says Neil Grimmer, president and co-founder of Plum.
Grimmer believes that even when the company does things that seem on the surface to flaunt the idea of putting profitability first, they end up paying off. In 2012, Plum decided it needed to do something to get its baby food to the one in five kids in the U.S. who go hungry every day. So the company took $250,000 out of its marketing budget and created an internal initiative to develop a product designed for the nutritional needs of kids who chronically miss meals. The resulting product, Plum's Super Smoothie pouch, is given away through supply chain partners.
"You can imagine the idea of investing dollars to create a product for donation was a pretty radical idea," says Grimmer. "There was some question from previous investors on the ROI of that kind of investment." As a result of the impressive media attention given to the Super Smoothie, the investment actually ended up being worthwhile from a marketing perspective.
In June 2013, Plum was sold to Campbell's Soup. According to Grimmer, Campbell's embraced Plum's desire to become a benefit corporation immediately. "It's part of why they fell in love with Plum. They believe in the mission of our brand, our relationship with consumers. When it was presented originally, it was definitely a little bit of a foreign language, but there was fast alignment," says Grimmer.
While Plum, a long-time B Corporation (a corporate social responsibility certification separate from benefit corporation laws), has always been guided by values, benefit corporation status makes it easier for the company to always do what it thinks is right.
"When these ideas become inscribed in your corporate bylaws, it becomes the compass of the company. Now more than ever that's part of our charter. Every new employee that comes in to this company understands that we're a public benefit corporation," says Grimmer.
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