Doing Good Is Good for Business: Measuring the Impact of B-Corps
You don’t have to be Bill Gates or Warby Parker or Toms or Patagonia, or any large company, to start doing good by donating money to causes or giving away your product to those in need. As Jason Lim points out in Forbes, “A company simply needs a conviction and attitude of doing things that are bigger than themselves.”
The growing movement
And this is exactly what a legion of B Corps — which calls itself a “movement” — is proving, with 1,767 certified companies, in 50 countries, representing 130 industries. According to B Lab, a nonprofit that offers the certification, 450 new B Corps were certified in 2015, and about 11,000 new companies have used the B Impact Assessment (more on that later).
Investment groups love it
Investors are getting in on this too. Just last week three Colorado investment groups, Colorado Impact Fund, Foundry Group and Greenmont Capital, received a B Corp certification. As Shay Castle notes in his article, 75 B Corp-certified companies are located in Colorado, and 30 investors nationwide have also received the certification.
Castle quotes B Lab Colorado Director Kim Coupounas, who commented on why the investors are interested in joining B Corp:
“Investors of this caliber choosing to become B Corps marks a major milestone in the business and investing landscape. These are investors who are thinking deeply about how they can make a positive impact, both through their portfolio investments and their own business operations. Their certification represents a convergence of the innovation and impact communities, and together they are helping lay the foundation of the emerging economy where profit and purpose are interdependent, not mutually exclusive.”
The comment applies to all companies that want to give back while making a profit. Jonathan Ferrari, cofounder of Goodfood, a meal delivery company based in Canada, shared his experienceof becoming a B Corp and the reasoning behind it. Goodfood donates a meal to a schoolchild in need for every meal kit purchased from the company via subscription.
“We knew we wanted to give back to the community eventually,” Ferrari wrote. “I say ‘eventually’ because the demands of getting a new venture off the ground are extreme.”
Some of the company investors turned out to be B Corps, and that helped make the decision, according to Ferrari. He recalls:
“We had concerns of course. The overriding issue was around how we could implement the necessary changes during a period of unprecedented growth.
Becoming a B Corp isn’t easy — it involves navigating a road strewn with roadblocks and red tape…
Most companies will have issues explaining the business value of doing good to a board. […] There’s certainly a cost associated to better-business practices — staff time gets zapped on reporting, senior executives are stretched figuring out ways to make systems more environmentally efficient, and new purchases have to be made to upgrade infrastructure. However the benefits far outweigh the costs at our company.”
Those benefits, Ferrari adds, include:
- It just feels good to know that your company has an impact beyond making a profit and return on investment.
- Recruiting and retaining millennials, who tend to be attracted to companies with a “purpose that’s greater than profit.”
- Greater transparency because of the high standards required of a B Corp. “We were initially apprehensive about the work involved in reporting on activities to a big range of stakeholders, vetting suppliers and partners, and keeping our employees in the loop,” wrote Ferrari. “In truth it takes time, but the impact on a business is profound.”
- Better understanding of how the company is run by all members of the team. Increased transparency means that more people are privy to how the company is doing financially and how it impacts the bottom line.
“Many employees had no idea how to even read statements, nor had they any use for ratios and other analysis. What’s happening now is they’re becoming better business people and more entrepreneurial as a result. I’d never have guessed this would be an impact if I hadn’t seen it with my own eyes. It’s quite incredible.”
Meeting the requirements
Redefining what it means to run a successful business while also making a positive change in the world is not an easy ride: A company that wants to obtain a B Corp certification must jump through some hoops first.
The B Lab website lays it out:
“B Corp is to business what Fair Trade certification is to coffee or USDA Organic certification is to milk.
B Corps are for-profit companies certified by the nonprofit B Lab to meet rigorous standards of social and environmental performance, accountability, and transparency.”
The steps toward becoming certified involve completing the B Impact Assessment (you have to earn a minimum score of 80 out of 200 points), meeting legal requirements, determining your company structure and state of incorporation, and signing the paperwork (the B Corp Declaration of Interdependence and Term Sheet). All companies are asked to complete the Disclosure Questionnaire, to voluntarily “disclose to B Lab any sensitive practices, fines, and sanctions related to the company or its partners.”
Also, background checks are conducted. In addition, 10% of certified B Corps are randomly selected annually for a thorough Certification Evaluation. And, finally, a recertification is required every two years.
Image: B Lab; fair use.