Legal Structures and Voluntary Certifications, Featuring Teatulia
“Socially Responsible Business,” “Social Enterprise,” “Public Benefit Corporation,” “B Corp.” What do all these terms mean and do the differences matter? How do different legal structures and third-party certifications affect your business? Our guest is the co-founder and former CEO of Teatulia Organic Teas, Linda Appel Lipsius. Linda shares the inside story of Teatulia: born from a chance encounter in a coffee shop, grounded in a women’s co-op in Bangladesh, nurtured with cow dung, rewarded with customer and employee loyalty, and lauded by organizations as diverse as the North American Tea Championship and Fast Company Magazine. Linda is a visionary business leader who built a universally-respected brand known for doing things better and using business as a force for good.
A few highlights from our conversation:
Legal Structures: There is difference between a Benefit Corporation (a legal structure that is taxed like a C Corporation but allows you to consider other stakeholders in addition to shareholders when making decisions) and a B Corp (a voluntary designation administered by an independent nonprofit). Being a Benefit Corporation can help protect your purpose and align all management and investors along the same values.
Storytelling about your social impact connects consumers to your brand, which wins business and keeps business.
Building wealth: Teatulia needs cow dung to fertilize its organic tea garden. Employees don’t have cash to buy cows but they do have the ability to care for them. Teatulia loans out cows to the members of their co-op, and the loan is repaid in cow dung. Once the loan is paid off, the family has an asset that can bring in many other benefits - milk, calves, etc. This approach builds wealth among the community, and is a net neutral cost to the business.
Channel strategy: Teatulia has transitioned away from grocery as its primary channel because of poor economics in favor of food service and institutional buyers. Buyers in these channels are very relationship-based (be patient!) but you get the opportunity to truly tell your story to someone who is dedicated to the issues. You can highlight different parts of your story to different channels.
Employee retention: People want to go to work everyday holding their head high and knowing they are making a difference. Teatulia’s social impact attracts and keeps great employees.
B Corp Certification: Though consumers may be more familiar with the “Organic” certification (which Teatulia also holds), Linda thinks B Corp certification is the most meaningful. It is a comprehensive look across the business, including environmental, social and governance practices
Employee Volunteer programs: Last week we talked about Corporate Social Responsibility and employee volunteer programs in particular (listen to that episode here). In Linda’s current role as Executive Director of Denver Urban Gardens, her staff of 22 manages over 1,500 volunteers each year. They welcome groups to “Dig in the Dirt with DUG” and provide a range of opportunities to suit different needs, but they also charge $2,500 to cover the costs to DUG to organize and host the group. Brilliant!
Next Right Thing: Linda recommends that you pick up on the interests of your employees - if someone wants to put in place a recycling program - support them! You can also look through the B Corps Assessment tool and get ideas of small, specific actions you can take.
Listen to the full episode on VoiceAmerica.com, Spotify, or wherever you get your podcasts.
