30 Nov What’s a B Corporation and Why Your Company Should Consider Becoming One
By Mark Frieden, President of Crossbow Strategies
In the 20th century, the business model for companies was to maximize the profits for their shareholders. There was only one reason to exist: make money. As companies targeted higher and higher quarterly profits, shareholders and company executives made more money. If this continues, what is the effect on a company’s stakeholders which include employees, customers, suppliers and the community as well as the impact on the environment?
Just as there are third-party certifications for products such as Fair Trade, Energy Star or USDA Organic, there is a third-party certification for companies called B Corporation where the “B” stands for Benefit. B Corporations meet rigorous standards of economic, environmental and social performance, accountability, and transparency. The standards were developed by the non-profit B Lab in 2007.
In today’s marketplace, consumers want honesty and transparency from the companies they do business with. They want to be assured that employees are paid a fair wage, product materials are ethically sourced and produced, the company gives back to the community and that they minimize their impact on the environment. The B Corporation logo (below) on a company’s website, product packaging, and marketing materials is that proof of honesty and transparency.
To achieve B Corporation certification companies must score at least 80 points out of 200 on the B Impact Assessment which covers five areas: Governance, Workers, Community, Customers, and Environment. Any for-profit company can go through the B Impact Assessment free of charge. If a company decides to certify, they pay an annual fee based on their revenues.
As of late 2017, there are over 2,300 Certified B Corporations in 50 countries and 130 industries, and B Lab reports 20% growth year over year. Some more well-known B Corporations include Laureate Education, Ben & Jerry’s, Method, Seventh Generation and Patagonia. One of Made In Baltimore’s members, HEX Ferments, is now a Certified B Corporation. They became certified in September 2017 with a B Impact Assessment score of 109 points! HEX Ferments is now part of a local group of Certified B Corporations and other sustainable businesses in Maryland, Virginia and the District of Columbia called B Local Mid Atlantic.
So why does a company decide to become a Certified B Corporation? Here are just a few reasons:
- Differentiate from Pretenders – B Corp certification provides proof that a company is doing what it says it’s doing.
- Attract Investors – Impact investments are growing with over $7 trillion in investments annually in companies that are socially and environmentally responsible.
- Benchmark Performance – The B Impact Assessment tool (free) helps companies measure their impact and set goals for continuous improvement.
- Attract and Engage Talent – Millennials and other generations increasingly want work that connects to a larger purpose.
- Generate Press – With the strong growth of the B Corp movement, articles about B Corporations have been published in Forbes, Bloomberg BusinessWeek, Inc. Magazine, Baltimore Business Journal and numerous business and trade publications and media.
- Partner With Peers – B Corps often do business with other B Corps, and the B Hive social media platform is a great way to connect with employees who work for B Corporations.
A company does not need to be large or in business for a long time to become certified. In fact, over 70% of Certified B Corporations have 100 employees or less. Companies can become fully certified if they’ve been in business for at least one year. New companies can become Pending B Corporations.
If you’re a new or growing company, now is the time to take the B Impact Assessment. You’ll also want to create written policies if you don’t already have them, that will enable you to achieve a higher score on the B Impact Assessment. These policies can include but are not limited to:
- Diversity Policy that covers hiring and working with employees and customers who are different as it relates to gender, race, sexual orientation, physical or developmental disabilities
- Employee Handbook that covers hiring, discipline and firing policies, benefits, sick and vacation days, volunteer opportunities, etc.
- Environmental Management System that covers recycling, use of energy and water, ethical and environmentally responsible sourcing of materials, use of chemicals and toxic materials, transportation for employees and deliveries, etc.
- Supplier Code of Conduct that covers human and workplace rights, wages and benefits, health and safety and environment
The path to B Corporation certification is a long one, and it’s a rigorous process to become fully certified. However, that should not stop you from taking the first steps to becoming a more sustainable and responsible company. Even small steps towards becoming more socially and environmentally responsible will make a difference and increase the long-term value of your company. Record everything you do for continuous improvement of the business and set achievable goals that will make your company a better company. You’ll be on your way to Using Business As a Force For Good.
Crossbow Strategies is a sustainability and CSR consulting firm based in Alexandria, Virginia and works with companies of all sizes in the Mid-Atlantic area to become Certified B Corporations and create key performance indicators that can be tracked year over year and published in an annual impact report. Questions? Contact Crossbow Strategies at firstname.lastname@example.org