In the last decade, more and more organisations have started on the journey of merging their business approach with environmental and social goals. As a result, the lines between the private, public and social sectors have become increasingly blurred. This trend has led to an uptick in sustainable businesses, community development and company social responsibility.
Alternative forms of corporate entities have also emerged, one of the most widely established being the Benefit Corporation or B Corp. This is a type of business that aims to have a positive impact on the community and the environment. In the U.S, B Corporations are authorised by thirty-eight states including the District of Columbia, but they differ from traditional C corporations in many ways.
What is a B Corporation?
Unlike conventional businesses, B corporations don’t prioritise financial profitability. They focus on a triple bottom line to achieve profits in ways that are better for people and the planet. B Corporations, or B Corps, make decisions that positively impact their people, customers, suppliers, community, and the environment to use the power of business to solve societal and environmental issues.
To be a B Corp Certified business indicates that you are accountable and have proven you ‘walk the walk’, that you have reached transparency, accountability, sustainability, and performance standards, creating massive value for society.
A company can only be certified as a B corporation by standards analysts at B lab, a non-profit organisation founded in 2006 to serve a global movement to redefine business success. Its independent standards advisory council oversees all certifications. According to the definition by B lab, “Certified B Corporations are businesses that meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose. B Corps are accelerating a global culture shift to redefine success in business and build a more inclusive and sustainable economy.
Any company that applies to be a B corporation is required to go through a rigorous certification process. This involves taking steps to improve their environmental and social impact, rather than just claiming to be a socially responsible business. Having their practices vetted by a third party involves a high level of trust and transparency. It displays their commitment to using their business as a force for positive change.
Some great examples of certified B Corps:
However, a B Corporation is not just a business with a dedicated sustainability plan. The difference lies in the fact that there is an added societal layer that is not a part of traditional sustainability strategies. This certification reduces the chances of greenwashing, something prevalent in the corporate world. Let’s explore some of how a B corporation is different from a conventional business.
Unlike more traditional businesses, the fundamental purpose of a B corporation lies in benefitting the public. As a result, there is a positive impact on society and the environment in the long term.
On the other hand, becoming a B corporation gives the company added protections and options if and when it is sold or taken public. Several factors other than price, such as the mission to benefit the public, will be considered.
Companies that get certified as B corporations gain the reputation of being a business with a social conscience. The business or brand becomes known in industry circles as one that aspires to a higher standard than simply maxing profits for stakeholders. B corporations provide additional choices for consumers and investors who value environmental and social responsibility.
Most publicly traded B corporations need to have a “benefit director” appointed to ensure that the company meets its purpose and goals of benefitting society and the environment. A B corporation also needs to create value through customer loyalty and employee engagement initiatives to honour its commitment towards stakeholders’ interests. This increases accountability and improves outcomes for all stakeholders, including company shareholders.
A B corporation must submit a benefits report annually that complies with the standards set by a third party, such as B Lab. The company’s performance concerning meeting its public purpose is assessed yearly. Several meetings will be held, and supporting documentation will need to be submitted to verify claims.
The third-party organisation then verifies if the B corporation continues to meet the standards set for certification. Then, the report is published on the company website to maintain complete transparency,
B Corps are sparking a global culture shift. Success in business can also mean a more inclusive and sustainable economy, forging a Win/Win for business, people and the planet. Traditionally, our understanding of the way businesses operate has been limited to the conventional corporate framework and thankfully now we can start to look through a new lens and pave a new way.
New Zealand has more than 40 Certified B Corporations with the community growing swiftly. Within that group there is a mix of business from large-scale retail and technology companies through to manufacturers, coaches and service based operations.
So, if you are considering taking steps toward a B Certification, some of the key benefits are:
- Customers and clients are more motivated by purpose than ever before so love businesses who are too
- B Corps grow faster than their peers and/or competition
- New recruits are strongly attracted to B Corps – especially Gen Z’s
To become certified, a company must do the following:
Meet the Performance Requirement: Complete the B Impact Assessment—a comprehensive audit of a company’s practices and policies. The company must earn a minimum score of 80 out of 200 points.
Meet the Legal Requirement: Adopt the B Corporation Legal Framework to bake the triple bottom line mission of the company into its legal DNA. This allows the company’s values to thrive under new management, new investors, and new ownership.
Make it Official: Sign a Term sheet and Declaration of Interdependence to make the certification official.
Want to assess if your business could reach the standard?
Click here to take the free B Impact Assessment.