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