Since the very beginnings of commerce, businesses strived to earn superior financial returns by maximizing revenues and minimizing costs. Revenue generation by satisfying market demand is straightforward for most businesses. However, the cost side of the profit equation is subject to a variety of ever-changing expense factors such as labor, raw materials, facilities, utilities, legal and environmental compliance, and overhead. In the most basic terms, businesses with the highest net incomes and resultant cash flows (total revenue minus total expense) are rewarded by investors with the highest market valuations for their reliability in generating consistent positive operating results. Up until very recently, most businesses viewed their missions to maximize shareholder value rather than stakeholder value.

The “true cost” of doing business considers all stakeholders, not just the company shareholders. Question: what true costs are missing from the profit equation in a maximize shareholder value company strategy?

Answer: the cost of negative impact on society and the environment.

If a company solely pursues maximizing shareholder value, such companies do not fully bear the costs of negative externalities resulting from the production of goods and services such as air pollution, water pollution, noise pollution, excessive carbon dioxide output, unfair or illegal labor practices, and traffic congestion. These costs are often borne disproportionately by society as a whole and not reflected in the underlying cost structure of individual businesses. Government regulatory practices vary widely around the globe in an effort to shift some of these costs back to the offending companies; however, society as a whole has shouldered the majority of the financial, environmental and social burden.

What is the solution for investors? Invest in companies which take all stakeholders into account. Such companies can take many forms but one way to positively screen for companies who care and want to do good is to choose to invest in Certified B Corporations.

Certified B Corporations are a new kind of business that balances purpose and profit. They are legally required to consider the impact of their decisions on their workers, customers, suppliers, community, and the environment. This is a community of leaders, driving a global movement of people using business as a force for good.

Each of us has the opportunity to choose which companies we invest in for a better future for ourselves, family, friends, and people we don’t know or will never meet. B Corporations are required to meet the highest standards with respect to verifiable social and environmental impact, transparency, and accountability. As investors and consumers, we can make positive choices on a daily basis to engage with businesses who share the vision of doing business with a balance of profit and purpose. B Corporations provide a means for everyone to make positive investment and consumption choices that take all stakeholders into consideration.