You may not know it, but when you’re buying clothes from Eileen Fisher, you’re buying from an employee-owned company. Fisher founded the company in the early 1980s, but instead of going public, she sold 30% of the company to her own employees in 2006 (they now own 40%). That’s helped her keep the brand’s principles aligned: Eileen Fisher was one of the first clothing companies to offset 100% of its carbon footprint, and it’s become a pioneer in advancing localized, sustainable production, setting itself on a path to use 100% organic cotton and linen by 2020.
In 2015, Eileen Fisher became a Certified B Corporation, completing one of the most stringent assessments of business as a force for ethical and environmental good. Because the company’s employees are partial owners and share the same commitment to ethics and sustainability, Fisher, who’s nearing retirement, feels confident that the brand will continue on in the same way after she leaves.
A new report from the Democracy Collaborative, a nonprofit that advocates for employee ownership structures, explains how the clothing company exemplifies a mission-led, employee-owned company: One in which employees, through their ownership stake, help drive the brand’s ethical commitment to environmental sustainability, social equity, or ideally, both.
According to the Democracy Collaborative’s Fifty by Fifty program, which has a goal of 50 million employee owners in the U.S. by 2050, there are around 45 such companies in the U.S. While big-growth brands, and the conglomerates that buy them up, tend to garner the most attention, the Democracy Collaborative’s new report makes the case that it’s the smaller, steadier companies that should attract the spotlight.
The intersection of a strong sustainability and ethical mission and employee ownership, says Sarah Stranahan, an associate at the Democracy Collaborative, represents the sweet spot for good business–and something more companies should be aiming to achieve. The Democracy Collaborative calls businesses at this intersection “next-generation enterprises” because they proactively address persistent problems, including income and wealth inequality, environmental degradation, worker exploitation, and lack of community accountability.
There are many companies built around one of the elements of a next-gen enterprise. Around 2,945 Certified B Corporations worldwide pass a rigorous assessment that requires them to demonstrate positive impacts across multiple categories, including environmental stewardship, workplace culture, and community benefits. There are also around 5,400 benefit corporations in the U.S., which follow a less stringent criteria. More than 6,000 companies in the U.S. have some kind of employee ownership model, whether that be an Employee Stock Ownership Plan, in which employees own a percent of a company’s stock, or a worker-owned cooperative, in which employees collectively own and govern the company (the former is much more common).