You may have noticed the use of ‘B corps’ by different companies, but have you wondered what it means?
B Corps are accelerating a global culture shift to redefine success in business, and to build a more inclusive and sustainable economy.
About B Corps (source: B Corporation)
Certified B Corporations are businesses which meet the highest standards of “verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose”.
Society’s most challenging problems cannot be solved by governments and non-profits alone. Through harnessing the power of business, B Corps use profits and growth as a means to a greater end: positive impact for their employees, communities, and the environment. The B Corp community works toward reduced inequality, lower levels of poverty, a healthier environment, stronger communities, and the creation of more high quality jobs with dignity and purpose.
B Corps form a community of leaders who drive a global movement of people using business as a force for good. The values and aspirations of the B Corp community are embedded in the B Corp Declaration of Interdependence.
B Corp Certification (source: B Corporation)
B Corp Certification assesses the overall positive impact of the company.
Certified B Corporations achieve a minimum verified score on the B Impact Assessment—a rigorous assessment of a company’s impact on its workers, customers, community, and environment—and make their B Impact Report transparent on bcorporation.net. Certified B Corporations also amend their legal governing documents to require their board of directors to balance profit and purpose.
The combination of third-party validation, public transparency, and legal accountability help Certified B Corps build trust and value. B Corp Certification is administered by the non-profit B Lab.
Kelly Kovack, of Beauty Matter, spoke with Jenifer Gorin, CEO and founder of Impact Growth Partners, about the structure, the certification process, and how B Corps create a path to a better life for everyone; Jenifer and her team help businesses navigate the B Corp Certification process.
Can you share a little about your background and the impetus for launching Impact Growth Partners and the services you offer?
The majority of my career has been spent in traditional business—in Corporate and Political Market Research and then Investment Banking. Interestingly, as a banker, I was skeptical of “Triple Bottom Line” strategies (People, Profit & Purpose) that were beginning to be discussed more widely in the early 2000s. I thought business should solely focus on profit and leave helping people and society to philanthropy and government. In 2014 I was introduced to the idea of Impact Investing, and I realized how wrong I was earlier in my career. When searching for a way to identify what potential investments would qualify as Impact, I discovered Certified B Corps, and I saw the importance of having a universally recognized label and measurement infrastructure to ensure the growth of socially and environmentally responsible businesses. As I dug in, I realized there were so many other benefits to a company and to society as a whole for the B Corp movement to grow.
B Corps are a relatively new concept with the first companies being certified in 2007, and there’s also a fair bit of confusion. One of your overarching services is to help businesses navigate the B Corp verification process. What is a Certified B Corp?
B Corps are for-profit companies certified by the nonprofit B Lab that meet rigorous standards of social and environmental performance, accountability, and transparency. There are over 3,200+ Certified B Corps across the globe in 71+ countries, across 150+ industries. They have one unifying goal: to redefine success in business to include benefiting all stakeholders and not just shareholders.
To achieve B Corp Certification, companies must complete a very thorough audit of their business practices across governance, and all stakeholders, including community, customers, workers, suppliers, and the environment. If the company achieves a certain score and makes it through a rigorous verification process, they then become part of the B Corp community and can use the B Corp logo. B Corps help consumers, workers, and investors identify and support businesses that operate responsibility and, at the same time, provide a clear set of standards and criteria businesses can use to measure, track, and improve their social and environmental impact.
There is also confusion about B Corps vs Benefit Corporations. Are they the same thing? If not, what are the differences?
The premise of B Corp Certification is to enable a company to take into consideration all stakeholders in making decisions. However, current corporate law requirements are based on “shareholder primacy” which requires Managers/Boards to make decisions based on the impact on shareholders. In order to be a Certified B Corp, a company must adopt legal language in its operating documents to reflect a commitment to all stakeholders.
A Certified B Corp has a Certification that is conferred by the nonprofit B Lab. A B Corp certified company meets the highest standards of social and environmental impact AND makes a legal commitment to consider all stakeholders. It is not a legal entity, however. Any for-profit company in any country with any legal designation from LLC to C/S-Corporations can pursue B Corp Certification.
A Benefit Corporation is a corporate form, taxed like a C-Corp or an S-Corp, that has a higher level of accountability, transparency, and purpose. It is a legal entity that has protection and permission to consider its impact on all stakeholders, not just shareholders. Benefit Corporation status is available in 37 states in the US. A C- or S-Corp that becomes B Corp certified, must become a Benefit Corporation within 2 years. LLCs need to change their Operating Agreement to reflect their commitment to all stakeholders, with legal language provided by B Lab.
There seems to be an inflection point happening in corporations shifting from shareholder value to stakeholder value. Why are businesses becoming B Corps?
Companies are realizing more and more that customers and employees alike are expecting more from them. They expect a company to contribute to their community, to be environmentally sound, and to “do good.” Becoming a B Corp is a highly prestigious stamp of approval, so to speak, that signals to the consumer and employees that this company cares and this company gives back and this company cares about more than just the bottom line. B Corps are proven to be more resilient during trying times such as these, as they have strong relationships with their customers, employees, suppliers, and other stakeholders.
Making the decision to go down the path to becoming a Certified B Corp is a commitment. This is not a “tick the boxes, write a check, get a seal” process. Can you share a little about the process, what’s required, and how long it takes?
As consultants specializing in this, we help make the process a bit more efficient and easier. We act as project managers to keep our clients focused and on track, while we take care of most of the organizational aspects. The assessment involves five sections (governance, workers, community, environment, and customers). The questions vary according to your company size and industry. There are a total of 200-300 detailed questions (not yes or no) that often require backup documentation. It takes about 5-6 weeks for our clients to complete the assessment and then another 4-6 months to have B Lab process it and go through an intensive review process with a B Lab analyst. Our clients are thoroughly prepared for this review as we have worked with them beforehand to be sure they are ready.
Why do you believe it is worth the investment in time and work for a business to go through this process?
The world is demanding it. COVID-19 and the recent awakening regarding racial inequality have both been wake-up calls for our generation. What role will we play in the future of this planet? Are we, as individuals, going to be on the sidelines or are we going to be participants in the solutions? The same can be said of businesses. Are we going to watch our world be destroyed and be a witness to future inequities, or are we going to create policies and procedures that are catalysts for change? Joining the B Corp movement helps create the structure and community needed to make a difference across all areas of change that are needed. If all companies were to strive to achieve these goals, this world would be in a very different place.
In your experience how does B Corp Certification impact the ability to raise capital or sell your business? Does it limit the pool of investors to just those focused on impact?
We are seeing in the investment sector that, more and more, investors are looking for purpose-driven companies. Furthermore, by going through the certification process, companies have had to be transparent with their financials, their governance, their documents and policies, and so much more. They have set themselves up for the long haul, and investors really like to see that. We also tell our clients, if you care about an aspect of social and environmental responsibility, your investors should too.
I read in Forbes recently that during the 2008 financial crisis, B Corps were 64% more likely than other businesses of a similar size to make it through the downturn. We’re also seeing businesses adopting tenets of B Corps to navigate the COVID-19 crisis. What is it that makes the B Corp model so resilient?
The actual process of going through the assessment forces the CEO/founder/senior management to really stop and reassess the company’s purpose, mission, and goals. This pause strengthens a company. Policies are reevaluated, adjusted, and communicated with the staff, suppliers, and customers. As these relationships become stronger, they remain that way (or even improve) during more trying times. Customers, staff, and suppliers remain loyal and support the company during these challenges. A B Corp certified company is also secure in its mission and clearer in its goals. They are more apt to weather the storms that we are confronting today. The leaders feel more confident steering the ship through the storm, so to speak.
You are an all-female-run business and you have built an entire business around education on and supporting B Corp certification. Why are these two things so important to you?
We are a team of women supporting each other. It is so important for women to lift each other up. We do that every day as we work together to build the business and support our clients. We are committed to this planet and to making the world a better place. As cliché as that sounds, it is true. With each B Corp we certify, we are secure that, going forward, that company is going to take care of all of its stakeholders—the environment, the community, the customers, and the workers. Little by little, we are contributing and making this world a gentler and kinder place. We are always learning and sharing that knowledge with those who are interested. If anyone is interested in hearing more about B Corp and how we can help, please reach out. We love to talk B Corp!
What predictions do you have for the B Corp movement?
It is a very exciting time right now in the B Corp world. I really do think we are on the cusp of a B Corp revolution in this country. It is the perfect answer to our concerns and a way to create order out of the chaos that is all around us. Both COVID-19 and the recent protests and (finally) the acknowledgment of racial inequity and injustice in this country have forced companies to take a look at their policies and strategies. The B Corp process forces a company to look at its policies on diversity, equity, and inclusion. It forces a company to look at its outlook on work flexibility for its staff. It forces a company to look at its relationship with the environment. It forces a company to take a look beyond the bottom line and look at how it can help the world be a better place. Isn’t that something we all need right now?
Is there anything else you’d like to add?
The process is intense and unfortunately, many companies begin the process on their own, get stuck or busy, and place B Corp Certification on the back burner. We completely understand this as life/work gets hectic and busy. As a company, Impact Growth Partners keeps the client on track and does a lot of the work for our clients so they can focus on running their business. We have discovered that some companies have found this lockdown to be an ideal time to get the assessment done with us as they may not have as many distractions while working from home. Of course, that depends on your personal situation.
We work with companies of all shapes and sizes, in all different industries, from start-ups to well-established corporations. We are hoping to educate the public about B Corp and hope that within a short period of time, folks will be looking for the B Corp logo on products or services before making a purchase. We would love to see this logo on storefronts and for those businesses to receive the kudos they deserve. We really do believe B Corp creates a path to a better life for everyone.