Consumers are demanding more sustainable products, regulators are coming in and companies are embracing sustainability. Gen Z “cares more about sustainable buying decisions than brand names“.
Since 2006 B Lab, a US not-for-profit has fostered the movement of “business for good” through a voluntary certification process, the B Corp, a holistic certification for businesses.
But what is a B Corp?
In the podcast we discussed with some of them, but I have been asked many times to provide more information since awareness is still quite low. In his Better Business Chris Marquis argues that in fact “general consumer awareness [is] just 7% in the United States“.
We are heading towards the hashtag#bcorpmonth and the slogan is hashtag#WeGoBeyond, as a “community of businesses that beyond business as usual”. But still many people do not have a clear idea of what a B Corp is. Consequently, I thought to prepare this post to answer some questions.
Where do you need to start?
B Lab offers a free tool, the B Impact Assessment (BIA). It is a rigorous set of questions, now at the 6th revision, which scores the business in 5 critical areas, Governance, Workers, Community, Environment, and Consumers. Each question has a score based on multiple answers, and for certification, a company must score a minimum of 80 points. The assessment is then verified and audited by B Lab. The B Corp certification has to be renewed every three years with another BIA, and each year, B Lab assesses around 10% of certified B Corp for annual audit. It is important to note that the certification is voluntary.
Is it standard?
The questions on the BIA vary depending on several factors, such as the business category, the number of employees, and the geographical location (emerging or established markets). Those criteria differentiate the set of questions presented to the company. After the audit, a company is issued a certification, valid for three years, upon payment of fees. To be certified, companies must also sign the declaration of interdependence, a general commitment to a vision of a new economy “that uses business as a force for good” (B Lab). In addition, they have to change their corporate statute to mission lock stakeholders’ consideration.
Recently B Lab has launched an overall revision of the system, shifting from the “flexible approach linked with the score” to 10 core requirements on social, governance, and environmental impact (B Lab). It is important to note as well that the BIA is not just for certified companies. In fact it has been used by many companies just to benchmark and assess their social and environmental performance.
Which are the benefits?
From my own research (and many others) the main benefits are employee attraction and retention, consumer preference, investor attraction and strong collaboration with fellows B Corps.
And those are just some of the benefits. There is a growing trend of studies on B Corps and B Academics is at the forefront “to advance the state of academic study into business as a force for good”. (Full disclosure- I am a board member of B Academics).
The certification is not the golden ticket, but a step towards sustainability. The BIA is useful as a learning tool, to benchmark and compare your companies with peers. The integration with the SDGs in the SDGs Action Manager is another great tool for companies.
There are now over 6,000 certified companies and the numbers are growing very fast. In 2021, there were just 4,000. As well the importance of certification in influencing the decision to purchase is definitely there and growing! See data here.
Challenges
B Corp has got definitely got traction and the numbers are growing. Even mainstream media are interested in the phenomenon and a recent article from Anjli Raval in the Financial Times, “The struggle for the soul of the B Corp Movement“, touched on some critical points.
The key one is credibility. From my research, credibility emerged as a critical factor for the future of the moment and especially early adopters and small companies voiced their concerns.
Why?
The opening up to multinationals, like the recent certification of Nespresso, has ignited a debate within the movement.
The trade-off for B Lab is high, from one side, more relevance and revenue, and on the other the watering down of the certification.
B Lab wrote an open letter to the community “When large companies pursue certification or use our standards and tools to improve their practices and take responsibility for their impact, the changes they make have a big influence on the broader economy”.
The reply from B Lab is quite clear. In the journey towards sustainable business, we should not consider perfect the enemy of good. B Corp certification is far from a perfect solution but a considerable improvement from business as usual. Additionally, the constant improvement for recertification aims at constantly improving the results of the company in each of the 5 areas of the BIA.
Of course, the community must remain vigilant and act. As the number of certified businesses increases, the possibility of deviant behaviour might be there. Nonetheless, B Lab has set up a robust complaint mechanism to “identify possible instances of misconduct or misrepresentation by B Corps and [it] is an essential complement to the review and verification process in maintaining the integrity and value of B Corp Certification” (B Lab Europe Statement from the ongoing Fileni review)
As two scholars have rightly summarized, the movement needs to perform a delicate balance between ensuring “credibility” and “accessibility” (Liute and De Giacomo, 2021).
So If you want to know more, feel free to contact me or comment! Samuele Tini