Social entrepreneurs in Latin America came together last year to discuss what it would take to foster social enterprises in the region. After all, social enterprises are playing a significant role in economic development and social and environmental welfare. The goal was to focus on what would allow social enterprises to flourish and increase their impact. As a result, Sistema B – the Latin American version of the B Corporation (or “B Corp”) certification model – was established.
Like the B Corp, Sistema B evaluates and certifies companies (called “Empresas B” in Spanish) who combine profit with positive social and environmental impact in their business model. In most cases, the social mission is their reason for existence and profit is simply what they use to keep the business running.
Last month, B Lab, the creators of the B Corp, and Sistema B have announced a partnership with aims to certify 100 B Corps in Latin America by the end of next year.
“Certification is useful but we’re also focusing on the creation of an ecosystem,” tells Maria Emilia Correa, co-founder of Sistema B, of more ambitious goals to The Financial Times. “The goal is not just to have a lot of certified B Corporations – our real goal is to help these companies become significant enterprises that can achieve scale and impact.”
What she’s referring to is building legislative infrastructure to support social enterprises. In the US, B Corps pioneered and paved the way for the benefit corporation legislation that is currently introduced in 11 states. It provides registered companies with legal protection to pursue social and environmental missions alongside profit. The Financial Times reports that the same legislation is expected to be in place in Latin America. In Chile, for instance, Sistema B is in discussions with the government to introduce the legislation. The first draft will be presented in December. Colombia is also showing interest.
“The legal framework is important because it defines you as a different corporation,” says Correa. “It gives you credibility and helps investors to identify you.”
“What’s clear is that there’s a global movement of businesses using capitalism to create change,” says Bart Houlahan, co-founder of B Lab. “So the need for this infrastructure exists globally.”
