By Sarah Stranahan and Marjorie Kelly
Fifty by Fifty has identified 50-plus leading-edge firms with a powerful new ownership design: the mission-led employee-owned firm. In a new report, Mission-led employee-owned firms: The Best of the Best, these firms are shown to significantly outperform conventionally owned firms in overall environmental and social impact. These firms include well-known brands such as Eileen Fisher, King Arthur Flour, and Dansko, as well as social enterprises such as Cooperative Home Care Associates and environmental leaders such as 10 members of the purchasing cooperative Amicus Solar.
Society does not often look to ownership design as a solution to ecological crises or inequality, but Fifty by Fifty’s research suggests that enterprise design is a powerful lever for change. These mission-driven employee-owned firms offer a real alternative to investor-owned, publicly traded companies designed for an earlier era of 19th century industrialization. Laser-focused on short-term gains for shareholders – who are overwhelmingly the wealthiest 10 percent – these investor-controlled companies hinder our ability to adapt to a new era of ecological fragility and growing inequality.
In its research, Fifty by Fifty found employee-owned B Corps achieved overall B Scores (an assessment of environmental and social impact done through the nonprofit B Lab) that were on average 20 points higher than similar firms that are not employee owned. Their scores were double those of conventional businesses. Moreover, mission-led employee-owned firms consistently appear in vastly disproportionate numbers among B Lab’s Best for the World honorees: among the 45 U.S. employee-owned B Corporations, 82 percent were named Best for the World in 2017 or 2018.
The employee-owned B/benefit corporation is an enterprise design that demonstrates how business can become a powerful force for good, rewarding those who help create wealth and protecting mission during ownership transitions.