Cement Your Reputation With a GoodWell Ethical Certification

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Cement Your Reputation With a GoodWell Ethical Certification

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.

Cement Your Reputation With a GoodWell Ethical Certification

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.

GoodWell has a strict requirement for certified companies to ensure their entire supply chain is GoodWell certified over the course of a 10-year period. This ensures companies cannot simply outsource their bad behavior far down the supply chain. There is a cascading effect to this requirement which ensures the entire supply chain will eventually be certified. Right now supply chains can be dozens of levels deep, with the lowest levels being where the worst atrocities can occur. Large companies tend to claim ignorance of these situations because of the complexity of the very supply chain they rely on. They are happy to reap the benefits and deny responsibility. Cleaning up companies without cleaning up their entire supply chain is like planting grass on top of a toxic dump site. It might look good from afar, but right below the surface horrible things are happening. B Corp has no such requirement and as such may cause companies to clean their own house and outsource the bad behavior elsewhere.
There are other structural differences, but those are the large ones.

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.

Cement Your Reputation With a GoodWell Ethical CertificationDuring 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.

Cement Your Reputation With a GoodWell Ethical Certification

About female compensation… As a staunch feminist, I’d like to know about the average income disparity and why you have given a 10% tolerance. Is there a reason why 10% has been chosen and not say, 5%?

This is essentially the same answer as CEO pay, with one exception. Within a given role there may be quite a wide range of experience. For example, let’s say a woman is hired as a controller in a mid-sized organization with pay of $50,000 per year.  She works hard for 2 years, earns a cost of living adjustment and is making $54,000 at the end of year two, but is not eligible for promotion until year 3. Now a man is hired as a controller in the same organization at the same starting salary of $50,000. The company would be out of compliance if the tolerance is 5%, but in compliance at 10%.  It is a tricky metric with a good deal of nuance, but we believe 10% allows for the unique, fluid situations without being too restrictive.

Why I became a founding member of the GoodWell Certification Program

Although I sometimes struggle with the idea of ethical ratings and certifications because standardisation can breed consumer complacency and increase greenwashing, I was impressed with Peter’s detailed responses (particularly his ability to communicate the key differences between his organisation and B-Corp), and his passion for improving our current system.
As I support policies and ideas that help consumers make more conscious choices, I decided I would become a GoodWell Founding Member. It’s only US$35 to join, so if you’re interested in becoming a member too, click here.

To learn more about GoodWell check out their website and you can also follow them on Facebook and Twitter.

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