By Max Goldberg
Certified B Corporations are businesses that meet the highest standards of verified social and environmental performance, public transparency and legal accountability to balance profit and purpose.
Given that many prominent organic brands are B Corps, what happens with this certification has real relevance to the organic industry.
At issue is what recently took place with Danone North America (Danone), when it cut the contracts of 89 small organic dairy farms in New York and New England, serving a devastating blow to these farmers and their communities.
While businesses are completely free to make decisions that are in their best interest, this move was complicated by the fact that Danone is also the largest B Corp in the world.
Because of the intricacies and nuances of the organic dairy industry in the Northeast, it was widely known that if Danone cut the contracts of these 89 organic dairy farmers, they would have few options for survival and very possibly face financial ruin.
When Danone made this decision to cut the contracts, it cited “growing transportation and operational challenges” as the reason. For the first six months of 2021, the net income for Danone’s parent company was 1.068 billion euros ($1.238 billion dollars).
OUTRAGE FROM POLITICIANS
Senate Majority Leader Charles Schumer (D-NY) is fighting for answers from Danone and is calling for aid from the company.
In Maine, Governor Janet Mills said, “I’m upset. Danone is a B Corporation. They’re supposed to be involved with social justice.”
In a letter sent to Danone (the parent company) from U.S. Representatives Peter Welch (D-VT), Chellie Pingree (D-ME), Jared Golden (D-ME) and Annie Kuster (D-NH), the lawmakers wrote, “Your actions against these Northeast farmers are in direct conflict with the B Corp commitment of ‘balancing profit with purpose’ and ‘using business as a force for good.’”
B CORP MAKES A DECISION, COMPLAINTS FILED
In late October, Alexa Harrison, senior public relations manager at B Lab U.S. & Canada (the entity that oversees the B Corp certification), sent an email out saying that B Lab had reviewed this situation internally and that Danone North America’s B Corp status would not be affected.
This decision has not been sitting well with organic advocacy groups.
On November 8th, eleven organic consumer and farming organizations submitted a complaint to B Lab asking it to re-evaluate this decision, complete a full investigation and “send the message that B Corporation’s status is credible.”
Just a few days ago, 7,739 organic consumers and farmers submitted a complaint to B Lab against Danone North America, which outlines violations the company has made against the B Corp Declaration of Interdependence.
At a time when consumers want to spend their dollars on companies having a positive impact on society, third-party certifications have become more important than ever. Yet, that also means, for these third-party certifications, making some hard decisions about the companies that they certify—precisely the ones that are paying to keep these third-party certifications afloat.
According to Kate Mendenhall, executive director of the Organic Farmers Association, one of the eleven organizations that signed the November 8th complaint, “If there is no enforcement of the rules, consumers will start to lose trust in the values that B Corp represents.”
Max Goldberg is the founder of Organic Insider, one of the most influential newsletters in the organic industry. Max has been called “an organic sensation” by The New York Times, and he has been covering the organic industry for more than a decade.
