There are no universal set of ethical principles that exist. You only need to see the range of definitions for ethical fashion to realise that ethics is indeed a highly sensitive matter usually tied in with individual morality and personal virtues.
However when it comes to ethical business, a standardised certification helps to separate the businesses that say they are doing good from the ones who really are doing good.
In a capitalistic world where there is understandable skepticism about whether money and morality can really mix; providing proof of “goodness” is essential if a business claims to be socially responsible. As consumers, we are already familiar with certification programs such as “Fair Trade” “Australian Certified Organic” (or “USDA Organic”) “FSC” and “GOTS” so it seems that we really do care about ethical labels.
With regards to ethical business certifications, B-Corp has provided the only real option – until now.
The recently launched GoodWell ethical certification program is set to give B-Corp a run for its money.
When Kallen, a volunteer of GoodWell got in touch explaining that they “are committed to changing capitalism from being good for a few to good for all (and the planet!)” I was intrigued. I am skeptical of capitalism as being the economic answer to our world problems as it is often driven by profit, greed and the acquisition of capital increasing the gap between the “haves” and “have nots”.
Nevertheless I decided to give GoodWell a chance.
So here’s a Q&A I did with GoodWell founder Pete Gombert who was happy to answer all my questions:
How do you differ from B-Corp?
GoodWell has a mission to have 100% of companies worldwide operate with basic humanity. Our goal is to eliminate the worst behavior in corporate society around the globe and in doing so create unprecedented change. As a result our metrics are simple to measure, universally applicable and binary. These metrics are intended to be the floor of basic humanity for corporations, not the ceiling, so they are designed to be achievable. In order to achieve GoodWell certification you must pass all 13 metrics – fail one and the company does not achieve certification. The metrics and their collection method are then verified annually by a third party auditor. In the B Corp structure you answer 200 questions in 5 categories and must achieve a score of at least 80 in order to be certified. This means a company could be great at Governance and Environment, but literally use slave labor and still be certified. We are not saying this is happening with B Corps, but we believe the scoring system is flawed in this regard.
B Corp is a self attestation model with the possibility of an audit. We believe third party attestation is essential when certifying corporate behavior; look no further than the Volkswagen scandal to see how far companies will go to appear to be in compliance without really meeting the standard.
When you talk about free market, what do you mean? I love that your organisation believes in changing capitalism to one that is fairer/and or more equitable but would love to explore this because at this point, the free market system has not delivered what the world needs. And in fact, we do not entirely live in a free market system as governments bail corporations out as they are “too big too fail” and there are handouts and subsidies given to many corporations as it is. Capitalism in its very nature is geared towards “he who owns the capital owns the wealth” so I would like to learn more about your views on this.
What we mean by free markets is the fact that we are not asking for government intervention to change the way the market works. We believe the free market has enormous potential to solve incredibly complex problems, however, the market as it is currently structured is not entirely free. In order for a free market to operate properly there must be a system of checks and balances in place to ensure conscious decisions can be made during the value exchange.
During the time when Adam Smith wrote about the invisible hand and the power of the free market, transactions were largely completed with a level of intimacy and transparency which is unimaginable today. Consumers have lost their connection to the businesses we do business with and now enter into commerce based solely on an individualistic basis judging companies largely by their brand, product quality, price and customer service.
Consumers can no longer know their trading partners and hold them accountable. GoodWell aims to level this field and provide a level of transparency and certainty that once existed when you traded with your neighbor. You are correct that capital owners are powerful forces in a free market, but the largest capital holder the world over is the collective consumer. If consumers collectively demand more from the companies they buy from, the companies will be forced (by the free market) to behave well or die. This is why a free market solution is essential – the balance of power needs to be restored in order for the free market to operate properly.
The other thing I noticed are the metrics… a CEO cannot make more than 100x that of the of the average worker. That to me is significantly high and I consider this to be excessive. I’d like to know the reasoning/thought process behind this decision.
If you remember that the mission of GoodWell is to have ALL companies worldwide act with basic humanity this metric might make more sense. We are trying to be the floor, not the ceiling. That means companies who choose to pay their CEO’s 100x the average worker are meeting the minimum requirement and can – and should – go lower over time. 100x is a wide gap, we understand that, but given that in the USA the average is now 350x we believe this is an achievable goal which will get companies moving in the right direction. If we set the standards to the level of the best companies in the world (say 20x), we will gain little or no adoption and therefore will not achieve what we’ve set out to do.