[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]


    EMBRACING CORPORATE SOCIAL RESPONSIBILITY: SMALL BUSINESS BEST 
                               PRACTICES

=======================================================================

                                HEARING

                               BEFORE THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION
                               __________

                              HEARING HELD
                            DECEMBER 4, 2019
                               __________

                  [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
                               

            Small Business Committee Document Number 116-064
             Available via the GPO Website: www.govinfo.gov
             
             
                              ___________

                    U.S. GOVERNMENT PUBLISHING OFFICE
                    
38-822                     WASHINGTON : 2020 



             
                   HOUSE COMMITTEE ON SMALL BUSINESS

                 NYDIA VELAZQUEZ, New York, Chairwoman
                         ABBY FINKENAUER, Iowa
                          JARED GOLDEN, Maine
                          ANDY KIM, New Jersey
                          JASON CROW, Colorado
                         SHARICE DAVIDS, Kansas
                          JUDY CHU, California
                           MARC VEASEY, Texas
                       DWIGHT EVANS, Pennsylvania
                        BRAD SCHNEIDER, Illinois
                      ADRIANO ESPAILLAT, New York
                       ANTONIO DELGADO, New York
                     CHRISSY HOULAHAN, Pennsylvania
                         ANGIE CRAIG, Minnesota
                   STEVE CHABOT, Ohio, Ranking Member
   AUMUA AMATA COLEMAN RADEWAGEN, American Samoa, Vice Ranking Member
                          TROY BALDERSON, Ohio
                          KEVIN HERN, Oklahoma
                        JIM HAGEDORN, Minnesota
                        PETE STAUBER, Minnesota
                        TIM BURCHETT, Tennessee
                          ROSS SPANO, Florida
                        JOHN JOYCE, Pennsylvania
                       DAN BISHOP, North Carolina

                Adam Minehardt, Majority Staff Director
     Melissa Jung, Majority Deputy Staff Director and Chief Counsel
                   Kevin Fitzpatrick, Staff Director


                            C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Chrissy Houlahan............................................     1
Hon. Pete Stauber................................................     2

                               WITNESSES

Dr. Robert Strand, Executive Director, Center for Responsible 
  Business, University of California-Berkeley Haas School of 
  Business, Berkeley, CA.........................................     5
Mr. Vincent Stanley, Director of Philosophy, Patagonia, Ventura, 
  CA.............................................................     6
Ms. Kristy Wallace, CEO, Ellevate Network, New York, NY..........     8
Mr. Jaime Arroyo, Associate, Work Wisdom, LLC, Lancaster, PA, 
  testifying on behalf of Kedren Crosby, President of Work Wisdom    10
Mr. Sean McElwee, President and Chief Creative Officer, Seanese, 
  Viejo, CA, accompanied by Ms. Sandra McElwee, Chief Dream 
  Facilitator, Seanese...........................................    11

                                APPENDIX

Prepared Statements:
    Dr. Robert Strand, Executive Director, Center for Responsible 
      Business, University of California-Berkeley Haas School of 
      Business, Berkeley, CA.....................................    25
    Mr. Vincent Stanley, Director of Philosophy, Patagonia, 
      Ventura, CA................................................    33
    Ms. Kristy Wallace, CEO, Ellevate Network, New York, NY......    37
    Mr. Jaime Arroyo, Associate, Work Wisdom, LLC, Lancaster, PA, 
      testifying on behalf of Kedren Crosby, President of Work 
      Wisdom.....................................................    40
    Mr. Sean McElwee, President and Chief Creative Officer, 
      Seanese, Viejo, CA, accompanied by Ms. Sandra McElwee, 
      Chief Dream Facilitator, Seanese...........................    42
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    Article by Robert Cresanti - What Small Businesses Know About 
      Corporate Responsibility...................................    45

 
    EMBRACING CORPORATE SOCIAL RESPONSIBILITY: SMALL BUSINESS BEST 
                               PRACTICES

                              ----------                              


                      WEDNESDAY, DECEMBER 4, 2019

                  House of Representatives,
               Committee on Small Business,
                                                    Washington, DC.
    The committee met, pursuant to call, at 11:30 a.m., in Room 
2360, Rayburn House Office Building. Hon. Chrissy Houlahan 
[member of the Committee] presiding.
    Present: Representatives Finkenauer, Kim, Davids, Chu, 
Evans, Schneider, Delgado, Houlahan, Craig, Radewagen, 
Balderson, Hern, Hagedorn, Stauber, Burchett, and Bishop.
    Ms. HOULAHAN. [Presiding] Good morning. Can you all hear 
me? The Committee will come to order.
    And we want to thank everyone for joining us this morning, 
and I want to especially thank all of our witnesses for being 
here today.
    Throughout the history of industrialized economies, the 
primary goal of a business was to make money and the chief 
objective of corporations was to increase shareholder value 
above all else. This approach has had clear benefits. Over the 
last 4 decades, American-owned firms have become the largest, 
most visible companies in the world, and the United States has 
established itself as the world's largest and most innovative 
free market.
    At the same time however, this approach to corporate 
governance has drawbacks. In this system, companies are 
incentivized to cut costs to maximize profits. This can lead to 
companies overlooking the impact that their decisions have on 
the environment, the communities in which they operate, and the 
personal well-being of their employees.
    The global economy has reduced prices on many consumer 
goods, but business practices that reward cost-cutting measures 
have depressed wages, which puts home ownership, education, and 
class mobility, the staples of ``The American Dream'', out of 
reach for many Americans and contributes to an ever-widening 
economic income inequality gap.
    As the 21st century pushes on, and public opinion on issues 
such as climate change and equity in the workplace continue to 
evolve, the idea of shareholder primacy is not only beginning 
to look at as being shortsighted, but it is also increasingly 
like bad business.
    Consumer preferences are shifting, and they expect 
companies to practice social and environmental responsibility. 
And, in fact, recent market surveys suggest that consumers are 
much more likely to purchase goods and services from companies 
that embrace environmentally and socially responsible business 
practices, and they are willing to pay a little bit more to do 
so.
    Already, there is a growing community of entrepreneurs and 
small business owners embracing a more socially and 
environmentally responsible version of capitalism, driven by 
the idea of corporate social responsibility.
    Corporate social responsibility, or CSR, is an umbrella 
term, used to refer to voluntary actions taken by private 
businesses that enhance a company's commitment to managing the 
social, environmental, and economic effects of its operations 
responsibly, and in line with the public's expectations.
    There is not a defined set of CSR initiatives, but actions 
are generally related to creating value, both for customers and 
employees, promoting diversity and inclusion, supporting the 
communities in which they are located and protecting the 
environment.
    Companies that adopt these practices see their employees 
and the environment, the communities in which they operate, and 
the products and services that they provide as equally 
important for long-term growth and financial success. They see 
offering benefits such as health insurance, paid family leave, 
and a representative voice and ownership for employees, 
increases worker productivity, lower turnover, and provides a 
competitive edge in talent recruitment.
    Evidence suggest that firms embracing CSR are better able 
to survive during market downturns. In the wake of the 2009 
recession, companies engaged in CSR activities reported average 
sales growth of 13 percent and profit growth of 12 percent 
compared to 6 percent and 4 percent for companies that focus on 
cost-cutting. And we know that over the years, many small firms 
have already been engaging in some of these socially and 
environmentally responsible activities. Small firms have been 
building sustainable businesses, investing in their workers, 
dealing fairly with suppliers and creating valuable goods and 
services while also providing jobs on Main Street.
    Today, we have the privilege of hearing testimony from our 
expert panel, who will share with us best practices for our 
small businesses as we change our perspectives of sustainable 
business and capitalism. I look forward to your guidance and to 
working with my colleagues on both sides of the aisle to ensure 
that businesses of all sizes are created not just for jobs and 
profits, but also to positively contribute to their surrounding 
communities, to the environment, and to our society as a whole.
    And I would like now to yield to the Ranking Member, Mr. 
Stauber, for his opening statement.
    Mr. STAUBER. Thank you very much, Chair Houlahan. It is a 
privilege to be here with you today. Thanks for holding this 
hearing. And thank you to the witnesses.
    You know, today, the Committee has come together to 
recognize the achievements of small businesses that have 
involved themselves with a corporate social responsibility 
frequently shorted to CSR. Our panel will help us understand 
what small businesses can do and are doing and what this 
Committee can do to support these initiatives. Examples of CSR 
can be found throughout America's business history. Early 
examples include factory owners providing housing for their 
employees. Now, CSR has expanded to include environmental 
efforts, philanthropy, and volunteerism.
    Some small business owners may think that CSR is an 
activity that only large corporations engage in. However, small 
businesses frequently participate in activities that encompass 
CSR values without recognizing or tracking them as CSR 
initiatives.
    Small businesses can choose an area of CSR that contributes 
positively to their community and/or customer base and can 
benefit from tax breaks, increased consumer and profits, and 
greater employee loyalty.
    I look forward to hearing from our panel about the benefits 
they have experienced.
    Thank you, Madam Chair, and I yield back.
    Ms. HOULAHAN. Thank you, Mr. Stauber. The gentleman yields 
back.
    And if Committee members have an opening statement 
prepared, I would ask that they be submitted for the record.
    I would like to just take a couple minutes to explain the 
timing and the rules. Each witness gets 5 minutes to testify 
and each member get 5 minutes for questioning. There is a 
lighting system to assist you. The green light will be on when 
you begin, and the yellow light will come on when you have 1 
minute remaining. The red light will come on when you are out 
of time, and we ask that you try to stay in the timeframe to 
the best of your ability.
    I would now like to introduce our witnesses.
    Our first witness is Dr. Robert Strand, the executive 
director of the Center for Responsible Business and lecturer at 
the Berkeley Haas School of Business. His research and teaching 
compares U.S. and Nordic approaches to sustainable and socially 
responsible businesses. He holds a Ph.D. in corporate social 
responsibility from the Copenhagen Business School and an MBA 
in international business from the University of Minnesota. He 
was a United States Fulbright Scholar to Norway and spent a 
decade in industry at IBM and at Boston Scientific. Thank you, 
Dr. Strand, for being here today.
    Our second witness is Mr. Vincent Stanley. Mr. Stanley is 
the co-author of The Responsible Company and has served in a 
variety of roles with Patagonia since its founding in 1973. He 
held executive positions as the head of sales and marketing and 
is now the chief storyteller for Patagonia and the director of 
Patagonia Philosophy. He is also a visiting fellow at the Yale 
School of Management. Thank you, Vincent, for being here today.
    I would like now to introduce our third witness, Ms. Kristy 
Wallace. Kristy is the CEO of Ellevate Network and is 
responsible for executing their mission of changing the culture 
of business from the inside out by providing professional women 
with a supportive community to lean on and learn from. She is 
the host of the Ellevate Podcast and is a speaker and thought 
leader on leadership, diversity, social entrepreneurship, and 
networking. Most recently, Kristy was recognized as a Woman of 
Influence by the New York Business Journal. Welcome, Ms. 
Wallace.
    Our fourth witness today is Mr. Jaime Arroyo, an associate 
at Work Wisdom located in Lancaster, Pennsylvania, very close 
to my district. For over a decade he has worked in various 
positions within banking with a mission to help clients reach 
their personal and business financial goals. During this same 
time, Mr. Arroyo has also built his own real estate business, 
investing and managing in properties in Lancaster, 
Pennsylvania. He completed his MBA at Drexel and was recently 
elected curator for the Global Shapers Lancaster Hub, an 
initiative of the World Economic Forum. He facilitates Review 
Club for Work Wisdom where he leads discussions about relevant 
business trends and leadership development. Welcome.
    I would now like to yield to our Ranking Member, Mr. 
Stauber, to introduce our final witness.
    Mr. STAUBER. Thank you, Madam Chair.
    I am very excited to introduce our final witness, Sean 
McElwee. Sean is the owner and creative force behind Seanese, a 
T-shirt company he started with the intent of raising awareness 
and inclusion for people with Down syndrome all over the world. 
He comes to us from Southern California, and you may recognize 
him from the Emmy award-winning, unscripted reality series, 
Born This Way. His company got its name from something Sean's 
parents used to say to people when he was young. When others 
struggled to understand Sean's speech, his parents would say he 
spoke Seanese. Now he puts his unique sayings on shirts so that 
everyone can speak Seanese. Sean has been on a mission to let 
the world know, and new parents, know that having Down syndrome 
is nothing to be afraid of.
    To showcase this, Sean has been driven since the beginning 
of his company's creation to give back. He began by donating 10 
percent of his profits each month to nonprofits all over before 
zeroing on his project to provide free and low-cost baby 
onesies to Down syndrome organizations for new parents. One 
dollar from every item purchased goes towards his ``Welcome 
Baby Onesies Mission.''
    Accompanying Sean today is his mother and chief dream 
facilitator, Sandra McElwee. Sandra has been an advocate for 
those with Down syndrome for many years. She has authored three 
books on the experience of having a son with Down syndrome.
    Sean and Sandra, it is a distinct pleasure to have you here 
today. You are a role model.
    Mr. HERN. Mr. Ranking Member, will you yield for just a 
second?
    Mr. STAUBER. I will. Go ahead.
    Mr. HERN. I will commend you on your statement and how 
important this issue is to you and your family, and you being 
such a leader on these issues yourself and showing so many of 
us how we should respond in Congress and to our witness I will 
just say, all our witnesses, we are just so happy that you are 
here and look forward to your testimony.
    Mr. STAUBER. Thank you.
    Mr. HERN. Whenever you are ready to resume.
    Mr. STAUBER. I appreciate that.
    Sean, you are a role model, especially to kids like my 
Isaac, who also has Down syndrome. I cannot wait to hear more 
from your story.
    Thank you, Madam Chair, and I yield back.
    Ms. HOULAHAN. Thank you. It is a privilege to serve with 
you.
    And now, Dr. Strand, you are recognized for 5 minutes.

STATEMENTS OF DR. ROBERT STRAND, EXECUTIVE DIRECTOR, CENTER FOR 
 RESPONSIBLE BUSINESS, UNIVERSITY OF CALIFORNIA-BERKELEY, HAAS 
 SCHOOL OF BUSINESS; VINCENT STANLEY, DIRECTOR OF PHILOSOPHY, 
PATAGONIA; KRISTY WALLACE, CEO, ELLEVATE NETWORK; JAIME ARROYO, 
ASSOCIATE, WORK WISDOM, LLC; SEAN MCELWEE, PRESIDENT AND CHIEF 
                   CREATIVE OFFICER, SEANESE

                   STATEMENT OF ROBERT STRAND

    Mr. STRAND. Thank you.
    I am Robert Strand, executive director of the Center for 
Responsible Business and faculty member at the University of 
California, Berkeley. I also hold the title of associate 
professor of Leadership and Sustainability with the Copenhagen 
Business School in Denmark.
    The 20th century was defined in large part by the 
ideological battle between American capitalism and Soviet 
communism. The 21st century will be defined by whether American 
capitalism sufficiently meets our collective needs and tackles 
our greatest challenges including climate change, growing 
inequalities, decent work for all, and threats to our 
democratic institutions. The 17 UN Sustainable Development 
Goals (SDGs) succinctly articulate these needs and challenges. 
The success of American capitalism in the 21st century will be 
measured against the Sustainable Development Goals.
    With this in mind, I deeply welcome the recent restatement 
on the purpose of the corporation by the Business Roundtable to 
embrace a stakeholder view of the firm. This represents a 
pragmatic step to improve American capitalism as a stakeholder 
view increases our likelihood to successfully achieve the 
Sustainable Development Goals.
    A stakeholder view states that the purpose of a firm is to 
provide value to its stakeholders. It represents a stark shift 
from the previous stated purpose known as ``shareholder 
primacy'' long promoted by the American economist Milton 
Friedman that prescribes a lone corporate purpose to maximize 
profits.
    Dr. Friedman was a central figure in the ideological battle 
between American capitalism and Soviet communism. For Freidman, 
anything other than a free market response was the enemy and 
profit-maximizing firms were central to Friedman's view of free 
markets. Friedman contended anyone suggesting firms have a 
responsibility beyond profit maximization, such as avoiding 
pollution or addressing discrimination, were ``preaching pure 
and unadulterated socialism.'' That use of the word 
``socialism'' is a Cold War ideological relic. It served its 
purpose then but I cringe at its use today. The Business 
Roundtable's restatement helps move us past these tired old 
ideological debates.
    I now turn attention to the smart policy and corporate 
governance structures necessary to best ensure the Business 
Roundtable's words are turned into durable action supportive of 
the stakeholder view.
    B Corps present great promise. In 2012, when Patagonia 
became the first California company to sign up for B Corp 
certification, its founder, Yvon Chouinard, stated that B Corps 
created the necessary legal framework through which Patagonia 
could remain committed to a stakeholder view even through 
changes in ownership. B Corps has yet to be widely tested in 
the domain of public corporations where I also look to examples 
from elsewhere in the world for institutionalizing a 
stakeholder approach en masse.
    Chiefly, I look to the Nordic countries comprised of 
Denmark, Finland, Iceland, Norway, and Sweden, given the 
Nordics are originators of the stakeholder view of the firm and 
have developed a variety of corporate governance structures 
that support the stakeholder view. This includes the Danish 
industrial foundation model. Leading Danish firms, like 
Carlsberg and Novo Nordisk, are public corporations whose 
majority of voting rights are held in perpetuity by an 
associated industrial foundation. This enables the company's 
management to embrace a long-term perspective supportive of the 
stakeholder view. The 1969 Foundation Law prevents such a 
structure in the U.S. We may want to revisit this.
    A stakeholder view also comes with challenges. Patagonia is 
widely heralded as a responsible company in part because it 
provides a key stakeholder, its employees, with benefits like 
fully paid parental leave, access to quality childcare, paid 
medical leave, and sufficient healthcare coverage. I applaud 
Patagonia as such offerings are widely recognized as beneficial 
to society, but I have significant concerns for a capitalistic 
system that pushes such responsibilities into the domain of 
business. This is inefficient and can unintentionally 
exasperate inequalities. Furthermore, it redirects the precious 
resources of small and medium-sized companies who may not be 
able to satisfy these demands. My experiences in the Nordics 
have convinced me there is a much more efficient and equitable 
way to handle these things. I believe small business could be 
the champion of pragmatic explorations to consider what might 
work better in an American context.
    In closing, I would like to point out that small business 
is the most trusted institution in the United States. I am 
deeply concerned about mounting populist attacks on the concept 
of capitalism, but I am equally concerned about inaction on the 
part of our business and political leaders to go about the 
pragmatic work of improving our version of American capitalism 
so it best meets our needs and tackles our greatest challenges. 
As representatives of the most trusted institution in the U.S., 
this congressional Committee has the opportunity, and dare I 
say responsibility, to assume a leadership role to usher in a 
new era of American capitalism in which the stakeholder view is 
mainstreamed and the challenges represented by the Sustainable 
Development Goals are met. Thank you.
    Ms. HOULAHAN. Thank you, Dr. Strand.
    Mr. Stanley, you are now recognized for 5 minutes.

                  STATEMENT OF VINCENT STANLEY

    Mr. STANLEY. Thank you for inviting me to speak with you 
today.
    Recently, this Committee heard testimony from four of my 
colleagues in the outdoor recreation industry who all spoke of 
their love for their experience in the natural world. Something 
changes for all of us when we get a mile from the road and 
begin to experience in the presence of nature both our self-
reliance and our vulnerability. Reverence for this experience 
has attracted many to the outdoor industry, not to make a 
killing but a living, to put at the center of their life and 
work something they care about deeply.
    We in the outdoor industry are not the only ones with this 
desire. The majority of America's small businesses begin with 
the impulse to put at the center of work some interest, 
bsession, or skill, and to engage with others of like mind, 
heart and need. Small businesses are by definition rooted in 
community, either a shared place or activity.
    Patagonia, no longer a small business, is still rooted in 
communities of sport--climbers, anglers, hikers--and of place. 
For decades we have helped fund hundreds of small grassroots 
organizations working to save a beloved local patch of land or 
stretch of water.
    Every beloved place needs help in a time of what Pope 
Francis has called a ``single complex crisis, which is both 
social and environmental,'' one marked by perilous inequality 
and multiple existential threats to nature from a carbon-
saturated atmosphere, acidifying and plastic-choked oceans, 
dwindling freshwater, lost topsoil, and a thinning of the web 
of life that threatens our resilience and capacity to thrive.
    We know how important it is to act locally, how much we all 
need vibrant communities where most of the money stays in town, 
where citizens can fully care for what they love, to improve 
the vitality of the neighborhood but also of the bioregion that 
makes life in a neighborhood possible, the local streams, 
farms, forest and wild land.
    This single, complex crisis has hit, so far, people and 
places far from popular view--the poor in the desolate inner 
city or hollowed out rural town, the shrinking of both polar 
ice and the submerging tropical islands.
    But now the crisis is coming home everywhere. Palm Beach is 
not immune to sea level rise. Santa Barbara, my hometown, knows 
and fears wildfire in winter.
    The acceleration of this twin crisis, as well as new job-
displacing technology, is changing the way all businesses view 
their future. We know there will be new rules and conditions 
and we have no idea of what they will be.
    But the moral imperative is clear. The crisis demands that 
businesses understand our impacts, minimize the harm we do, and 
generate products and services that improve the quality of 
human life and communities and restore to health living 
systems--water, soil and atmosphere. The young demand this as 
well. The social and natural systems we elders see as declining 
they taste as desert.
    Business has a role play in the turnaround. Focusing on the 
needs of others can be as good for businesses in society as it 
is for individuals within families, to ground business strategy 
and operations in the real world.
    In our experience at Patagonia, the social and 
environmental constraints we have placed on ourselves have led 
to innovations creating business that is better in all ways. 
Our customers are loyal and more numerous, our employees 
engaged, our ability to make a sustainable profit has not been 
hurt by the steps we have taken to do the right thing.
    The B Corps movement has been a critical part of our work 
and that of thousands of other values-based businesses. The 
independently verified B Impact Assessment provides our 
individual companies a thorough, systemic look at all our 
practices that benefit or burden all stakeholders from 
employees, to suppliers, to communities, to nature.
    Moreover, in light of the Business Roundtable's recent 
restatement of the purpose of a corporation, the Impact 
Assessment can now serve as a blueprint for those in publicly 
traded companies who wish to join us, who are willing to make 
in the words of Alcoholics Anonymous a ``searching and fearless 
inventory'' of their social and environmental responsibilities 
and then act on them. Thank you.
    Ms. HOULAHAN. Thank you, Mr. Stanley.
    Ms. Wallace, you are now recognized for 5 minutes.

                  STATEMENT OF KRISTY WALLACE

    Ms. WALLACE. Thank you for the invitation to testify today.
    Small businesses are at the core of our Nation's economy.
    From family stores on your street corners to bustling 
innovative start-ups, supporting today's and tomorrow's 
entrepreneurs is the responsibility of each of us in order to 
ensure continued economic and social progress.
    The very notion of the American Dream is built on the 
opportunities we provide for individuals to dream for a 
brighter future for themselves and their communities. I have 
seen this firsthand during my 30 years working with small 
businesses. From my dad's dental office, to waitressing for a 
family-owned restaurant, to multiple start-ups in NYC, and 
finally as the CEO of Ellevate Network, a community dedicated 
to supporting women at work, I have seen the obstacles that 
small businesses go through and the power that they are capable 
of achieving. Small businesses are resilient, strong, and 
innovative like no other.
    Recently, the Business Roundtable released a new Statement 
on the Purpose of a Corporation. Signed by 181 top CEOs, 
including Accenture and Apple, this statement signified a shift 
from businesses driven by shareholder primacy to businesses 
driven for the benefit of all stakeholders.
    This is an important step towards changing the landscape of 
business and the world. But now, it needs to be backed up with 
clear progress and action. Small businesses are in a unique 
position to pave the way for large-scale business 
transformation, and it is only fitting for our government to 
support small businesses further in being drivers of social 
good.
    First, we have to recognize that the corporate social 
responsibility landscape is changing and evolving. CSR today 
lies in ensuring transparency and ethical governance; providing 
training, benefits, decent compensation and flexibility to our 
employees; creating quality jobs in and for our communities 
that need it the most; and being intentional about our 
relationships with suppliers, distributors, as well as 
environmental impact. Adopting a holistic approach to corporate 
social responsibility is not only important to support our 
small businesses but key to supporting the future of our 
economy and our Nation as a whole.
    Second, we need to measure what matters. Just as businesses 
have set structures around financial reporting, businesses also 
need a framework for measuring social impact and 
sustainability. Several years ago, Ellevate Network joined 
companies such as Patagonia, Eileen Fischer, and the Honest 
Company by becoming a certified B Corporation in order to 
underline and measure our commitment to benefit the communities 
in which we exist and operate.
    In a span of 2 years, our B Corp score rose from 88 to 115 
on a scale of 200. That is progress. But I would also like to 
note that our business revenues doubled during that time period 
illustrating that being good for society is also good for 
business.
    Through certifications such as this one, we are able to 
clearly measure the impact our companies have on the greater 
society and hold ourselves to a high standard of reporting, 
transparency, and rigor. Without such standardized 
requirements, it is virtually impossible to distinguish those 
organizations that put social good at the heart of their 
business from the others.
    Once we have the measurement mechanism in place, we then 
need to put it into practice. When addressing distribution of 
funds, rewards, tax exemptions, and opportunities, we must 
prioritize those who make it their duty to prioritize the well-
being of their communities and environments. It is time that we 
harness the power of our legal and governing bodies to further 
support those small businesses that make social good a 
priority.
    Finally, we need to address the main obstacles keeping 
small businesses, particularly those of women and minorities, 
from achieving sustainability. Both groups suffer from unequal 
pay practices, lack of advancement opportunities, and implicit 
and explicit bias at work. Working caregivers face additional 
disadvantages due to insufficient paid leave funding. And even 
though entrepreneurship amongst these groups is on the rise, 
female founders still receive only 2 percent of VC funds 
available. Given the disparities in funding and access to 
opportunities, it is crucial that we support women and 
minorities financially in starting and sustaining their small 
businesses.
    Creating the future of entrepreneurship is no easy task, 
and I am grateful for the work that your Committee is doing and 
has done in the past to both empower and further support the 
groups that need it most. As small businesses continue to be 
change makers, we must address the systemic discrimination, 
inequalities, and barriers that they face every day. Ellevate's 
mission-driven approach, as well as B Corp certification is 
just a small example of how organizations can succeed 
financially while driving positive impact.
    With continued innovation, improved policies and 
measurement practices, and the never-ending dedication of the 
entrepreneurs who go to work every day in the hopes of building 
a better future, we have the unique opportunity to mold the 
American Dream into one that supports the social good of our 
people, our nation, and our world. Thank you.
    Ms. HOULAHAN. Thank you, Ms. Wallace.
    I now recognize Mr. Arroyo for 5 minutes.

                   STATEMENT OF JAIME ARROYO

    Mr. ARROYO. Good morning. Thank you, Representative 
Houlahan, and the entire Committee on small business.
    My name is Jaime Arroyo. I am the managing partner at Work 
Wisdom, a certified B Corp, that helps organizations 
revolutionize achievement by using a variety of tools, 
disciplines and evidence-based practices to instill high 
performance mindsets, behaviors, habits and organizational 
culture. I am a member of Global Shapers, an initiative of the 
World Economic Forum where we take global issues, like climate 
change, and execute on local solutions, like a Pass on Plastic 
Campaign that we did locally.
    I am also a graduate of Drexel University, where I earned 
my MBA with a focus on entrepreneurship and innovation 
management. And over the past few years I have helped over 100 
entrepreneurs from underrepresented communities start and grow 
their businesses in an effort to build an equitable and ethical 
economy using tools such as microfinance and business plan 
training.
    Today, I help organizational leaders embrace corporate 
social responsibility in an effort to shift the purpose of 
business from increasing shareholder value to increasing 
stakeholder value. This requires leadership in business to 
focus on the triple bottom line--people, planet, and then 
profit.
    Research done by The American Federation of Labor and 
Congress of Industrial Organizations shows that ?S&P 500 firm 
CEOs were paid 361 times as much as average U.S. workers in 
2017. Despite promises from over 200 nations to address climate 
change, a recent report from the United Nations states that we 
are no closer to slowing rising temperatures and we will need 
to take drastic action in order to reach climate action goals. 
Through business, embracing corporate social responsibility 
means empowering, caring for, and improving the quality of life 
for our most important asset, our people, and our most 
important resource, our planet. While we can spend hours 
discussing the troubles that our society faces today, the fight 
against inequality, and the war against climate change, we 
understand that our country was not built by being against 
something, but rather standing for a just cause.
    The American Dream that so many have sacrificed for 
includes the very powerful tool of entrepreneurship. Here lies 
not only the backbone of our economy, but the power to create a 
future that is sustainable and prosperous for all. It is 
through embracing corporate social responsibility in business 
that we can solve many of our challenges.
    In Lancaster, Pennsylvania, we have embraced business for 
good. As a growing part of the B Corp movement, many 
businesses, such as Work Wisdom, have used the B Impact 
Assessment by B Lab, creators of the B Corp Certification, to 
measure and improve social and environmental performance.
    Our business community understands that you cannot improve 
what you do not measure. After meeting the rigorous standards 
of the assessment, you are eligible for the B Corp 
certification. A stamp of approval that consumers in Lancaster 
have become familiar with and now use to make purchasing 
decisions to make sure that every dollar that they spend is 
adding value in more than just one way.
    Certified B Corps are taking corporate social 
responsibility a step further by voluntarily meeting high 
standards of transparency, accountability, and performance. 
These businesses do not look like Tesla and these entrepreneurs 
do not look like Mark Zuckerberg. They look like Passenger 
Coffee, a woman-owned coffee shop and roaster that has 
employee-friendly policies and environmentally sustainable 
business practices. They look like the Stroopie Company that 
not only makes delicious stroopwafels in Lancaster but also 
provides meaningful employment to refugees who are starting 
over in Lancaster, Pennsylvania.
    There is an opportunity for us to do more. Our leaders in 
government have the opportunity to encourage business to think 
long-term rather than short-term by encouraging states to adopt 
and promote Benefit Corporation legislation that would legally 
allow the ``best interest of the corporation'' to include 
positive impact on society, workers, the community, and the 
environment instead of only profit. Currently, only 35 states 
and Washington, D.C., have passed this legislation. Our leaders 
in business can challenge their peers to shift from a mindset 
of competition to a mindset of collaboration. Larry Fink, CEO 
of one of the world's largest asset managers, Blackrock, wrote 
a letter to CEOs in 2018 explaining that companies must be able 
to state their strategies for long-term growth that not only 
benefit shareholders, but all stakeholders using purpose to 
drive results and positive impact.
    Embracing corporate social responsibility does not mean 
sacrificing profits, but rather elevating the value of our 
employees and our planet. Thank you.
    Ms. HOULAHAN. Thank you, Mr. Arroyo.
    I now recognize Mr. McElwee, for 5 minutes.

                   STATEMENT OF SEAN MCELWEE

    Ms. MCELWEE. My name is Sandra McElwee, and I am the chief 
dream facilitator for Seanese, a T-shirt company founded by my 
son, Sean.
    Mr. MCELWEE. Hi. My name is Sean McElwee. I am the 
president and chief creative officer of Seanese, a T-shirt 
company I founded in 2017 and my business in Southern 
California. Seanese is a micro-enterprise with profits in the 
past 2.5 years totaling $32,000.
    I am on a mission to show the world that people with Down 
syndrome can have a business and give back.
    My mom is going to tell you the rest of the story.
    Ms. MCELWEE. So Sean is the creative genius between over 
130 designs on 12 different styles of shirts available on his 
website, and I assist him with the accounting and 
administration of his business. I am a volunteer employee, and 
Sean has threatened to fire me a few times.
    Sean is best known for his role on the Emmy-winning 
television show Born this Way on the A&E network. This 
unscripted show followed the lives of seven adults with Down 
syndrome and created many opportunities for Sean. Because of 
the show, Sean was invited to deliver keynote speeches, and 
while writing his speech, he had the idea to put his own words 
onto T-shirts.
    While I encouraged Sean's entrepreneurial spirit in hopes 
it can be a solution for long-term meaningful employment, many 
people with disabilities find their best option for employment 
is starting their own business. In fact, 1 in 10 employed 
persons with disabilities are self-employed. While Sean has had 
some jobs in the community, sadly, they did not work out on a 
long-term basis.
    As Sean's business conceptualized, there was never a 
question that Sean would give back in a way to promote social 
good. Sean initially made a list of 12 organizations that have 
provided him with support and advocacy and donated to one of 
each organization each month the first year of his business. 
Today, representatives from three of those organizations are 
present to support him--RespectAbility, The National Down 
Syndrome Congress, and the National Down Syndrome Society.
    Each month his first year, Sean donated a minimum of $100 
to each organization. And his first year donations totaled 
$1,690, which was 16 percent of his first year's profit.
    At Seanese, we measure success differently than most 
businesses. Seanese has not realized enough profit to live off 
of, but the creative outlet for Sean and impact he is making by 
showing the world that people with Down syndrome can contribute 
to their community is where we measure the success.
    Sean's donation program then evolved when he was contacted 
by the Down Syndrome Connection of the Bay Area in Northern 
California for a bulk order of his baby onesies for their new 
parent gifts. At the same time the disturbing news that Iceland 
had achieved a 100 percent abortion rate for babies with Down 
syndrome broke. Sean knew he wanted to inspire new parents and 
help their babies and he changed his program from cash 
donations to----
    Mr. MCELWEE.--to donate baby onesies.
    Ms. MCELWEE. So, to date, Sean has had 37 Down syndrome 
organizations in 22 states apply for 2,410 baby onesies.
    Sean donates $1 from every shirt sold towards the purchase 
of the onesies. He also includes a letter to the new parents 
encouraging them to never give up on their dreams for their 
babies. This program also shows the new parents that someone 
with Down syndrome is capable of owning his own business, as 
well as giving back with part of his profits. The remainder of 
the profits fund his ABLE Account.
    Thank you for allowing Sean and myself to tell the story of 
how a microbusiness with very low profits is still able to make 
a difference and give back to the community.
    Mr. MCELWEE. Thank you.
    Ms. HOULAHAN. Excellent. Excellent job, and right on time. 
Literally, right on time.
    So I now recognize myself for 5 minutes to ask a few 
questions.
    My first question is for Mr. Stanley, please.
    Market research indicates that over the last decade, 
consumer demand has shifted towards companies that market goods 
and services as more sustainable. How has this trend impacted 
Patagonia's profitability, marketability, and long-term outlook 
in your opinion?
    Mr. STANLEY. We have had a considerable amount of growth 
since 2007, which is I think the first year that you started to 
see studies that showed that people were willing to pay for 
sustainability. I think what we are hoping for is that the 
Sustainable Apparel Coalition, which is a coalition of all the 
major apparel and footwear companies that sell half of the 
clothing and footwear on the planet, will come up with a 
consumer-facing index this year that will give an environmental 
and social rating for every product in the store. You hold your 
cellphone up against a hang tag, see that rating, and we are 
hoping that with better information consumers will care even 
more about what goes into their clothes and what they will buy.
    Ms. HOULAHAN. Thank you. That was a terrific answer.
    Ms. Wallace, can you talk a little bit about how valuable 
it is for women entrepreneurs to have a network of similarly 
situated peers and what they can learn from one another?
    Ms. WALLACE. I love this question. Thank you.
    Yeah. I mean, it is all about your community and who 
supports you. If you are starting a business, it is an 
overwhelming time. You are thinking about legal structures, 
finance, accounting, building products and services. You do not 
have all of those skillsets. Being able to tap into a community 
that is there to support you is critical for small businesses 
to grow and grow quickly. It is also having the community's 
support, not just as customers. Those that are there to provide 
guidance and peer mentorship have been incredibly valuable for 
me as it is for all of the small business owners in our 
community.
    I think finally, there is a big connection between small 
businesses and bigger businesses and how we best support each 
other, learn from each other, and leverage those relationships 
to grow. And that is very important to Ellevate: it is how we 
really look at the diversity of our community and how we lift 
each other up as a community to see the greatest impact.
    Ms. HOULAHAN. Thank you.
    And with the remaining 2-1/2 minutes of my time I am going 
to try to get to everybody.
    Mr. Arroyo, we talked about CSR as having an important 
element which is diversity and inclusion, but we do not focus 
necessarily on this as being a positive thing. Can you explain 
why companies that get a competitive edge who have a diversity 
inclusion angle to them?
    Mr. ARROYO. Definitely. I mean, research studies have shown 
that companies that are more inclusive and have more equitable 
workplaces actually outperform their competition. And when you 
have a more inclusive workforce at all levels, not just at the 
frontline which we start to see a lot of diversity in the 
frontline, but once you started to get to management and 
executive levels it starts to look a certain way.
    The more inclusive an environment can be, the more 
different perspectives a business can have. And with those 
different perspectives come innovation and creativity to come 
up with problems and different challenges.
    Ms. HOULAHAN. Mr. McElwee and Mom, I would love to know 
what you found in your journey so far that would help enable 
more people like you to be able to create businesses. How can 
we be helpful?
    Ms. MCELWEE. Well, that is a very difficult question 
because there is so much that goes into a business in general 
that a lot of people do not have. I happen to have a business 
degree so I was able to help Sean with setting up his business. 
One thing I think that is very helpful is the small business 
associations that are in each city that help--SCORE I believe 
is what it is--that help people get started. And maybe to 
encourage them to reach out more to the community of people 
with disabilities, to help them start their businesses when 
their family does not have the expertise needed.
    Ms. HOULAHAN. That is a terrific idea, and we will 
definitely take that one back.
    And my last question for Dr. Strand, your focus and your 
research has been primarily on how other nations are handling 
this particular issue and challenge of evolving capitalism. 
What have we learned from them that we could possibly apply to 
our Nation as we are increasingly understanding the power of 
purpose in business? Five seconds.
    Mr. STRAND. The primary thing I take from the Nordic region 
is that they have drawn from the American economist, Arthur 
Okun that in a capitalistic society, the markets need a place 
and the markets need to be kept in their place. They 
pragmatically figure out where do markets work well and then 
use them. And where they do not, then we need different 
solutions.
    Ms. HOULAHAN. Thank you. Thank you.
    I now yield to the Ranking Member, Mr. Stauber, for his 
time.
    Mr. STAUBER. Thank you, Chair Houlahan. And thanks for the 
testimony from the witnesses. Everything, or much you said was 
very relevant to today. And Dr. Strand, coming from the 
University of Minnesota, we do a lot of great things in 
Minnesota as you can testify.
    My question is to Sean and Mom. In your testimony you 
discussed a few areas that helped lead you to the decision to 
donate to new parent baskets. Can you tell us why this specific 
mission was so important to you?
    Ms. MCELWEE. Do you want to answer that?
    Well, when Sean was born we learned that many people choose 
to not continue their pregnancies when they have a prenatal 
diagnosis of Down syndrome. And unfortunately, doctors do not 
always give the current facts on people with Down syndrome's 
abilities and possibilities. So we have worked for many years 
to try to correct that. And so it just kind of worked that, you 
know, Sean donating the baby onesies to encourage the new 
parents would be his mission.
    Mr. STAUBER. Sean, do you want to answer a little bit?
    Mr. MCELWEE. Oh, yes. I was advised by my people to listen 
to your advice because I manage to hold on to it because I love 
you.
    Mr. STAUBER. Oh, wonderful. Thank you, Sean. You know, you 
are an inspiration to us here today. Your abilities far 
outshine your disabilities.
    I appreciate you all being here today. Thank you.
    Madam Chair, I yield back.
    Ms. HOULAHAN. Thank you.
    I now recognize Representative Dwight Evans for 5 minutes.
    Mr. EVANS. Thank you, Madam Chair.
    I think Dr. Strand, I want to ask you this question.
    I am a member of the Ways and Means Committee, and trade 
has been an important issue recently. When trading with foreign 
countries, it is important to make sure that the countries we 
are trading with have fair labor practices and are not 
violating human rights.
    Many small businesses participate in international trade. 
To any member, particularly starting off with you, how can the 
owners of small businesses make sure the goods they are 
importing are not coming from companies with harsh working 
conditions using unfair labor practices?
    Mr. STRAND. Thank you very much for the question. Such an 
important question. And I would suggest a real challenge for 
small businesses that have limited resources to necessarily get 
out in their supply chains. Some of the larger companies that 
have resources, there is an imperative on them to actually go 
visit suppliers to be engaged. I would point to associations 
like what Mr. Stanley alluded to, the Sustainable Apparel 
Coalition, the SAC. Small businesses can join this and through 
that there is a wait. Fifty percent of apparel in the world 
produced by the SAC, that can help small businesses understand 
their supply chains where they could not do it alone. So they 
need to join in a cross-industry collaboration to do this.
    Mr. EVANS. Okay. Does anyone else on the panel like to 
comment on that question?
    Mr. STANLEY. Yes. I think for companies of any size, I 
think from the time we were doing about $50 million, we audited 
conditions in the factories that sell our clothes. That 
auditing has been going on for 25 years, and as you know, with 
limited success. And right now, companies are just beginning to 
audit conditions in the mills and finding very serious 
problems.
    What we do at Patagonia is we have a fairly large social 
environmental responsibility team that actually has veto power 
over our sourcing team if they determine that a factory or a 
mill is not ready or needs to meet certain conditions before we 
will do business with them, what they say has veto power over 
sourcing. So I think that would be a good policy for other 
companies to adopt.
    Mr. EVANS. Anybody else on the panel?
    Mr. ARROYO. Yeah. In Lancaster, there is a small business 
called Imagine Goods, which is a locally-owned and woman-owned 
business for apparel clothing. The makers of the clothing are 
survivors of human sex trafficking in Cambodia. And one of the 
things that they do I think is they actually travel to Cambodia 
and meet the women that are making the clothing. So the 
auditing of their supply chain is probably the biggest way to 
prevent, you know, unethical sources coming into the United 
States, actually physically going there and auditing these 
factories is a good step.
    Mr. EVANS. I would like to follow, diversity in businesses 
link to profitability. Currently, women earn 82 cents for every 
dollar that a man makes. Women of color, the gap is even more 
substantial. African-American women earn 62 cents. Native-
American women earn 58. Latino women earn 54 compared to white 
men.
    To any of the panel, what can small business owners do to 
make sure there is no gender or racial wage gap for their 
employees?
    Yes, Ms. Wallace?
    Ms. WALLACE. So there are a number of things that you can 
do. One is being very intentional in your hiring and hiring 
practices, ensuring that you have a diverse employee base and a 
base that is reflective of your customers and your local 
communities and society. It takes intent to make that happen.
    The second is creating hiring and pay structures. So what 
is the framework of your business? Who are you hiring? At what 
level? What level of experience? What department? If you create 
a databased framework for what the pay scale is at each level 
and use it as you are hiring people, it is a great way to just 
continue to keep yourself in check around those practices.
    Mr. EVANS. I yield back the balance of my time. Thank you, 
Madam Chair.
    Ms. HOULAHAN. Thank you.
    The gentleman, Representative Kevin Hern, is now recognized 
for 5 minutes.
    Mr. HERN. Thank you, Madam Chair.
    Sean, I especially want to thank you for being here, a 
fellow entrepreneur. It is great to see you here. Thanks to all 
the rest of the witnesses for being here as well.
    You know, as a small business owner for over 34 years, I 
have created a lot of jobs. Like many of you, if you are in 
business, you have had a lot of successes and a lot of failures 
and you remember your failures much more so than you do your 
successes.
    What I have found over the years, the successful 
businesspeople in the world are the ones who give back to their 
communities. They do this on a regular basis without any 
outside influence. They learn very quickly as part of the 
education process, which is much greater than any B school 
could ever teach you, or any government could ever impose on 
you.
    In fact, I would say that small businesses paly an 
instrumental role in the success of communities and have the 
ability to impact their cities and towns in ways that go way 
beyond job creation.
    As referenced by an article that our Ranking Member 
submitted for the record, a good example of this is Sonic's 
Limeades for Learning, a restaurant group. It is based on 
Oklahoma City. It has a large presence in my home state. I 
think over 3,500 restaurants around certainly the United 
States. It works with the branch franchisees and teachers to 
support educational programs or products for teachers. Through 
this program, customers at local Sonic locations are encouraged 
to vote online in support of educational materials which Sonic 
then delivers to classrooms. This type of investment is 
something that every member of this Committee should agree with 
and should support.
    However, we have a lot of colleagues that think government 
intervention and government mandates are the way that will make 
businesses be involved in hiring and inclusion, and I totally 
disagree. In fact, I remind us what I consider a person who 
really promoted free markets, President Reagan once said, ``The 
most terrifying words in the English language are, I quote, `I 
am from the government and I am here to help.'''
    As a small business owner I can tell you over 34 years, I 
ran on the notion in Congress for the first time, never been in 
politics before, was get government out of the way, let 
entrepreneurs create jobs and put Americans to work.
    Patagonia did not need the government to be involved to be 
where they are at today. In fact, they probably took business 
away from those who did not see what you all saw and found a 
lane to run in. And I think that is what free markets do; they 
give people with entrepreneurial spirit, willing to take risk, 
and when they get knocked down, they get back up again. That is 
the true definition of the American Dream. It is not having 
some outside force dictate to you how you are going to run your 
business.
    It is clear that small businesses will make a real 
difference in the communities without government. The 
government's involvement in this area will only further 
convolute this issue and scare the businesses involved. And so 
because of this I would like to focus on the great work that 
has been so far. And as I started earlier, there is a lengthy 
history of companies investing in their local communities, 
something the public needs to be better educated on.
    So Mr. Strand, Dr. Strand, I would like to start with you 
and kind of move down if we could quickly because I would 
certainly love to hear from Sean on this. In your opinions, how 
can we continue to grow public education regarding corporate 
social responsibility and message this great work which has 
been done by so many small businesses across America?
    Mr. STRAND. Thank you very much for the question. And I 
could not agree more.
    Small businesses has created such goods for the American 
society in terms of jobs, the products and services, and 
government did not create that. But I would say we need smart 
policy. We need good rules that make good sense and incentivize 
for the long term. And this is something where I think that an 
organization, this particular Committee, to look at small 
business and all the good that it has done and to figure out 
from a stewardship perspective, as opposed to an extractive 
perspective of ownership, how do we encourage stewardship? That 
is a long-term view. It is exactly what you are describing with 
the small business that you started. I would suggest that we 
need some policy frameworks, those legal frameworks like what B 
Corps presents, and we should encourage that to be more 
mainstream rather than on the fringe.
    Mr. HERN. Or possibly recognizes those who achieve certain 
standards in communities, that there is a place to be rewarded 
for those----
    Mr. STRAND. Absolutely.
    Mr. HERN.--successes they have.
    Mr. Stanley?
    Mr. STANLEY. You know, one thought I would have is a lot of 
the industries that are producing some of the greatest 
environmental harm are getting the greatest amount of 
government support. So if you want to equal the playing field, 
I would remove subsidies from some of those industries. And I 
agree with, I do not have a prescription for you but I agree 
with you that it is really important at this time to build up 
the capacity of communities to have a strong local economy. And 
whatever you can do on this Committee to support that I think--
--
    Mr. HERN. So that could be including making the small 
business tax cuts permanent beyond 2025 for small business men 
and women in America.
    Sean, could you wrap up? What could we do better to help 
educate folks on what you are doing in giving back to society?
    Ms. MCELWEE. You do not want to answer that question?
    I think simply, you know, letting people know, like today, 
giving us the opportunity to let people know the impact that is 
being made when people do give back to the community.
    Mr. HERN. We certainly thank you for being here. Thank you 
so much. Thanks to the witnesses.
    Ms. HOULAHAN. Thank you.
    I now recognize the gentlelady from Kansas, Ms. Davis, 
Davids.
    Ms. DAVIDS. Thank you, Chairwoman.
    Well, first of all, thank you to all of the witnesses for 
being here today and sharing some of your expertise with us.
    I sit on this Committee because the district that I 
represent, the 3rd District in Kansas, which is the Kansas City 
Metro Area, I often say we have entrepreneurship baked into the 
DNA of our community. And so getting the chance to sit here 
today and hear specifically about B Corps is a particular 
highlight because just last week I got the chance to 
participate with my colleague, Congressman Emanuel Cleaver in 
presenting and honoring a B Corp in our area, Travois, for all 
the work they have been doing in Native American communities, 
Alaska Native communities. And this concept of the triple 
bottom line--people, planet, profit--is something that I think 
a lot of businesses are moving toward. And in that vein, I 
think with Seanese, it is really awesome to hear that in 
practice where we have got what is an amazing example of a 
company that really it sounds like has defined success and what 
does success mean in your own way.
    So the first thing I would love to hear from you, Mr.--
well, I want to say Sean but I also want to give you the 
respect you deserve as an entrepreneur and someone who is 
testifying before Congress today, can you tell us what you 
think of as success for Seanese?
    Ms. MCELWEE. No, go ahead. You know what success is.
    Mr. MCELWEE. Success is like--my mom knows the answer. I am 
sorry.
    Ms. MCELWEE. Success would be, what, if Target and Walmart 
licensed your designs?
    Mr. MCELWEE. Oh, yes.
    Ms. MCELWEE. Is that not one of your dreams?
    Mr. MCELWEE. It does. Like a shopaholic.
    Ms. MCELWEE. A shopaholic. Yeah.
    Mr. MCELWEE. Right?
    Ms. MCELWEE. That is not one of your designs. But you would 
like that; right? For somebody to license your designs and take 
it into big stores?
    Mr. MCELWEE. Yes. I need a store like to go to Walmart, 
Target, GameStop, and those other things. I could go my own but 
if you guys help me out.
    Ms. DAVIDS. Well, thank you for being here today and for 
sharing. Some of the numbers that you have in your testimony is 
very enlightening. And I have had the chance to meet with folks 
in my district. In fact, one of the first meetings I had was 
with Jawanda Mast, and her daughter, Rachel Mast came in and 
told me all about her ABLE account and her about to embark on 
her college journey. And so I just really appreciate you taking 
the time to come and testify today.
    I guess the only other thing I would like to hear, maybe 
from the rest of the panel, is with B Corps, can you talk a 
little bit about how some of the existing SBA programs or those 
sorts of things that fall within the jurisdiction of this 
Committee, how we can help support that model moving forward?
    Mr. ARROYO. Actually, an organization, a nonprofit 
organization that was my former employer, called Assets, one of 
the things that I did there was start a microloan program using 
SBA funds for that that was meant for minority-owned businesses 
and women-owned businesses. One of the things that we did was 
pair that loan with the B Impact Assessment. So in order for 
small business owners to receiving financing, they also had to 
take the B Impact assessment so that way they can start to 
measure their social and environmental performance. And then 
along the way, we would actually incentivize them through rate 
discounts as they made improvements along that assessment. So 
it was a great pairing of finance and this measurement tool and 
assessment as a way to encourage folks to not just grow their 
own business but also impact their community.
    Ms. DAVIDS. Thank you. I see my time has expired. I yield 
back. Thank you, Madam Chair.
    Ms. HOULAHAN. Thank you.
    I now recognize Representative Bishop for 5 minutes.
    Mr. BISHOP. Thank you, Madam Chairman.
    I complement everyone on the panel, and I submit that Mr. 
McElwee in particular and all the folks who are entrepreneurs, 
you are actually great examples of capitalism. That is to say, 
individuals under no compunction or constraint of some outside 
force, acting in their own enlightened self-interest.
    In January 2012, Governor Mitch Daniels in Indiana made an 
important point regarding corporate social responsibility in 
his State of the Union response. He said that out here in 
Indiana, when a business person asks me what he can do for our 
state, I say, first, make money, be successful. If you make a 
profit, you will have something left to hire someone else and 
some to donate to the good causes we love.
    Jobs and philanthropy are only possible when businesses are 
successful. And a business can only be successful when it 
creates a good or service that provides value to its customers.
    In its essence, capitalism is a mechanism that is amoral in 
character but it produces outcomes that have broad social 
utility. It is capitalism that has reduced world poverty by 80 
percent just since 1970. In Asia, it is capitalism that reduced 
the number of people living in extreme poverty from almost 60 
percent to just 1.7 percent.
    As Arthur Brooks often notes, that is one of the most 
remarkable and compassionate achievements in human history. One 
could even say this is the most successful example in history 
of corporate social responsibility. It is clearly important for 
businesses to be good corporate citizens, but I think it is 
important that we, as policymakers, not mistakenly impugn 
capitalism and thereby lose sight of the most effective proven 
way in history to improve the lives of our constituents.
    Capitalism and successful business have, and will continue 
to provide the greatest benefit to the needy and those of most 
modest means.
    I have a question in particular I think for Professor 
Strand if I might. Would you agree that capitalism has been the 
most successful economic system in the world's history for 
reducing human suffering and making the world a better place?
    Mr. STRAND. There has been no greater poverty alleviating 
program in the history of humankind than the concept of 
capitalism and the application of it. Absolutely. So I think 
that it is imperative on us to ensure that this system broadly 
defined as capitalism survives and thrives. And with that then 
to recognize that capitalism is a very broad construct that can 
be applied in different places in different ways, so let's go 
about the pragmatic work of improving it to ensure that it 
lives on.
    Mr. BISHOP. And so if I could follow that up, Professor 
Strand, is it not also the heart of capitalism that individual 
decision-makers, individual entrepreneurs might subordinate 
narrow or short-term profit hearing goals in order to maximize 
profits in the longer term? For example, Henry Ford in 1914 
massively increased, doubled, prevailing assembly line wages in 
order to both produce a reliable workforce and create customers 
for his mass-produced Model T. Is that not an example of what 
capitalists may do, in fact, do every day, everywhere, every 
hour?
    Mr. STRAND. I think capitalism at its best is when the 
capital owners behave as stewards. That is a long-term view. I 
have some concerns about pressures in an American context on 
short termism. And in my past experience in corporate America, 
particularly when I was in investor relations, I felt at times 
the owners had a more extractive view of their ownership role. 
And I think we need good policy and mechanisms to ensure a 
stewardship model.
    Mr. BISHOP. Would you agree that the best way to do that is 
to increase the ability of individual actors to make decisions, 
or do you think they need to be compelled to make decisions by 
government policy?
    Mr. STRAND. I think we need smart policy. And within smart 
policy framework, then individuals can maximize their own self-
interests and it benefits society.
    Mr. BISHOP. I thank the Chairman, and I yield back.
    Ms. HOULAHAN. Thank you.
    I now recognize Representative Hagedorn for his 5 minutes.
    Mr. HAGEDORN. Madam Chair, thank you for yielding. I 
appreciate all the witnesses' testimony. I first off would like 
to associate myself with the remarks of Representative Bishop. 
I thought he was absolutely on point. That was just terrific. 
And we will talk just a little bit about that in a second.
    But first, Mr. McElwee. Do I have that right? Ms. McElwee. 
Thank you for being here. Your mere presence today you can tell 
has made a profound impact on this panel, on our Committee. And 
Ranking Member Stauber, other members of the Committee, my 
family and others have folk with special needs, and you being 
here helps in a number of ways. And I just would say the most 
basic fundamental way, you have demonstrated that every life 
has value. And we appreciate you bringing your story to the 
Committee and to explain to us how you have a small business 
interest and how you are using that to help other people 
realize that every life has value. So it is very important.
    As an entrepreneur and a philanthropist, you are way ahead 
of the game. You are ahead of about 97 percent of Americans who 
have never had that luxury to be in that position. What do you 
think is the future of your business? And then, also, have you 
heard from some of the people, for instance, that you have sent 
some of your wares to and back from the families? What has 
their reaction been to your products and to your business line?
    Ms. MCELWEE. You are deferring to me again?
    We receive, well, Sean has his own social media accounts 
and he gets pictures of the new babies wearing his baby 
onesies. Even though Sean cannot pronounce onesies.
    Mr. MCELWEE. It is onesies.
    Ms. MCELWEE. He gets pictures of the adorable babies.
    One of the goals of the letter that he sends, and the goal 
of us being on the TV show Born This Way, our family being on 
there, is to help parents move through the grief process of 
having a child with Down syndrome quicker because, you know, 
with lack of information at the beginning after they have 
received a diagnosis, many people go into the grief process. 
And our goal is to help them get to the point of acceptance 
quicker so they can enjoy their babies and then help them with 
their development from then.
    So Sean has received quite a few letters from parents who 
have received them, and the Down syndrome associations that he 
has donated to have been very grateful.
    Mr. MCELWEE. Thank you.
    Mr. HAGEDORN. Thank you. I will be sure to try to log on 
and like some of your social media sites and follow you from 
now on. So I appreciate that.
    So Mr. Strand, to kind of follow up, I wanted to talk with 
you just a little bit about your testimony because I was 
concerned that it was a bit of kind of a, you know, going 
against capitalism and almost undercutting some of the things 
that we have proven in the United States with our free 
enterprise capitalist system that really there is no better 
system. And when you look around the world, almost every 
breakthrough technology, everything that helps improve the 
standard of living way of life, where was it developed and 
perfected? Right here in the United States. And it was through 
our system of free enterprise that that was possible.
    I mean, look at abundant, reliable, low-cost energy. That 
is the United States. That is the stuff that we did. All the 
things now where we are able to go find that energy and deliver 
natural gas at historic low prices, abundance, that is all 
because of our technology and what we have done here. And 
transportation. The world thrives on that. Communications. 
Agriculture. In my district, we lead the world in how to go out 
and produce with higher yields and using even less land if we 
had to. You can go on through the list. Medical devices, 
medical therapies. You know, the world piggybacks on what the 
United States does. We subsidize them in many ways and the rest 
of the world steals our technology. China and Russia and 
others. If it were not for the United States, which I would 
subscribe that we have done more for the world than the world 
has done for us, where would we be? And I think it is most all 
because of our system of free enterprise capitalism that gives 
people the incentive and allows the markets and individuals as 
Mr. Bishop said to go out and work their magic. And that is a 
lot better system than having a bunch of academics, 
politicians, bureaucrats or whoever from the top down telling 
us how to do it. That would be my position.
    If you would like to respond, I am sorry, you only have 16 
seconds. I do apologize. I did not do that on purpose.
    Mr. STRAND. That is great, but America is not the only 
place in the world that has practiced capitalism. So I look to 
the Nordics and, I mean, the pacemaker was invented in the 
Nordic region. You have got Spotify. You have got Skype and all 
these other things. So they do quite well on the innovation 
scale, and it is because of capitalism. But they have also put 
in very smart policy and they recognize where do markets work 
well and where do they not. And they have pragmatically, rather 
than ideologically, pragmatically developed their version of 
capitalism. And I think we can draw inspiration. Just like they 
have drawn inspiration from America, I think that maybe we can 
look outside of our walls also and draw inspiration from 
elsewhere, too.
    Mr. HAGEDORN. All right. Thank you for your testimony.
    Ms. HOULAHAN. Thank you.
    The gentlelady, Representative Radewagen is now recognized 
for 5 minutes.
    Mrs. RADEWAGEN. Thank you, Chairwoman.
    And I want to welcome all of you here today. Special 
welcome to Sean.
    Let's see. So some may think CSR means only one 
philanthropy or environmental sustainability, and some may 
think companies do not do enough in all areas of CSR. How can 
we recognize all efforts in a way that encourages people to 
follow their conscience towards what is most needed?
    Dr. Strand?
    Mr. STRAND. You know, purpose is such a strong motivator. 
And I think each and every one of us, we can connect on 
purpose. And it might mean different things to different people 
what that purpose is. But I think this is something that a 
reason I welcome the Business Roundtable's expression is I 
think it opens up the door for us to be able to actually talk 
about things that historically were not allowed in the rough 
and tumble sort of financially-oriented model of capitalism 
that we have here in the States. And I think that purpose is 
such a strong motivator, and I have the privilege to work with 
these wonderful students every single day. They want to work 
for firms that are purpose driven. They want to work for a firm 
like yours that is so fundamentally oriented to purpose. So I 
think that that is something that we need to encourage and 
foster.
    Mrs. RADEWAGEN. Mr. Arroyo?
    Mr. ARROYO. Yeah, I would like to second that. I think 
having a purpose-driven organization or small business is a 
great way to make sure that, you know, we are not seeking 
profit for profit's sake but a tool to allow us to solve 
problems. And one of the things I do want to comment on is we 
can think of capitalism and government almost as a mentor for a 
lot of us; right? Setting guidelines for small business owners 
to think about how can we do this better? And a lot of times 
people, entrepreneurs enter the small business world with no 
barriers or not understanding how they can do this better. So 
we can provide that framework for them to do things in a good 
way.
    Mrs. RADEWAGEN. Ms. Wallace?
    Ms. WALLACE. So, the majority of entrepreneurs are creating 
businesses to solve their problems and the problems that are 
meaningful to them that need to be solved. So, they are laser 
focused on that aspect of it. But there is a greater framework 
that ties into not just solving the problem but building a 
business that is sustainable and long term. There are 
resources. There is funding, of which there is a great lack of 
when it comes to women and minorities, but there is also the 
framework for success.
    So, as the CEO of Ellevate, when we took our B Corp 
assessment, we received our score and through that assessment 
saw a number of ways in which we could improve our workforce 
policies, our impact on the world. We made those improvements. 
We saw not only an increase in our profits, but also an 
increase in the retention of our employees, in their focus and 
productivity, in their satisfaction with the business. So, 
having the tools and the framework to not just solve the 
problems that you care about but to do it successfully and 
sustainably is a key aspect that I think is important to 
cultivate.
    Mrs. RADEWAGEN. Mr. Stanley?
    Mr. STANLEY. I would echo what Ms. Wallace says. And I do 
think that the B Corp movement is a significant asset in 
building businesses that are governed well, that are 
successful, and that are serving some kind of common good. It 
is interesting with the assessment that has been referred to. 
The assessment allows 200 points for businesses. And what 
happens is you create a kind of virtual competition.
    So Patagonia has been lauded by a number of people because 
we have a score of 152, which is very high for a B Corp. But we 
are looking at Dr. Bronner's Soap Company which has a score of 
175 and wondering what we can do in order to improve our 
practices to reach a level like that. And I think that that is 
the kind of framework that would help a number of small 
businesses be successful in all ways.
    Mrs. RADEWAGEN. Thank you, Madam Chairwoman. I yield back 
the balance of my time.
    Ms. HOULAHAN. Thank you very much.
    And I appreciate all the time that we have all taken out of 
our schedules to be with us today. We have heard today that 
there is a value generated by companies that is broader than 
just financial return. They provide jobs, develop communities, 
produce valuable goods that benefit consumers. For businesses 
to act in a responsible way towards their employees, suppliers, 
communities, and environments is not only the right thing to do 
but it is good business as well. Small firms already know that 
being socially and environmentally responsible by treating 
customers and employees fairly leads to more sales, happier 
employees, and a stronger Main Street. I look forward very much 
to working with my colleagues on both sides of the aisle to 
craft policy that encourages large and small businesses to see 
the value of acting in a socially and environmentally 
responsible way that benefits our society and economy.
    I would ask unanimous consent that members have 5 
legislative days to submit statements and supporting materials 
for the record.
    Without objection, so ordered.
    And if there is no further business to come before the 
Committee, we are adjourned. Thank you.
    [Whereupon, at 12:46 p.m., the committee was adjourned.]
                           
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