For centuries, the prevailing goal for businesses has been the same: to make money. A new kind of entrepreneurship is emerging, however, as people and companies recognize the need for positive social impact. Social entrepreneurship is hot, as is “going green” and a number of other terms that make for good marketing but may not actually tell you much about the company’s true ethos.
That’s where B Lab, and their B Corp designation, comes in. A nonprofit with the mission of transforming business into a “force for good,” B Lab has created a certification that denotes high standards of social and environmental performance, public transparency, and legal accountability, among other positive factors.
Over 2,000 businesses around the world are now B Corporations. Technology consulting firm Innovation for People was Georgia’s state’s first B Corp (and it remains one of the state’s few tech-related B-Corps).
ifPeople, founded in 2004, helps organizations work together and communicate more effectively using software. Online collaboration is their focus — helping non-profits and for-profits understand new platforms and how to best use them through training and advising.
Co-founder Christopher Johnson says while the company has changed its focus over the last decade-plus — effective collaboration requires more technology today than ever before — their basic goal has remained the same. “If you don’t have a common language or common ground, it makes it hard to really engage and go deep,” Johnson says. “Our long-term commitment and our values led us to [B Corp] certification—it was a natural fit.”
But if being a B Corp is, to put it simply, being responsible and accountable, then why go through the process of certification? Why not just “be” responsible and accountable? There are a few reasons.
B Corp versus…
A B Corp certified by B Lab shouldn’t be confused with a benefit corporation, which is an incorporating structure like an LLC or C Corp. Benefit corporations do have founding documents that differ from typical corporations that account for “stakeholders” such as the community, workers, and the environment, not just shareholders.
But state tests to qualify as a benefit corporation vary, so forming under this structure is more about giving the company legal wiggle room to do good, i.e., they won’t be sued by investors for not turning the greatest possible profit — they are allowed to give up some revenue for more socially or environmentally-responsible practices. B Lab encourages B Corps to pursue benefit corporation structures.
Like cage-free eggs and organic produce, there are a lot of terms thrown around the social entrepreneurship space that can mean any number of things. B Corp provide a universal standard, setting a bar that consumers and other businesses can recognize and understand.
“We’re making this the new norm,” says Johnson. “It’s kind of like organic food, or LEED-certified buildings: those things set a bar, and you can do more interesting things than that, but once you meet the bar you’re in a different group. And I think those things should be the norm — every building should be at least LEED-certified. But that’s what B Corp is doing for us from a communications perspective, it’s setting this bar, and once you’re in that group, it is a community.”
That’s a community that includes companies like Warby Parker, Ben & Jerry’s, and New Belgium Brewing, as well as Change.org, Etsy, and Varsity Technologies.
Here’s how to make the cut
Companies interested in becoming a B Corp start by filling out the B Impact Assessment with a goal of scoring at least 80 out of 200 possible points. Johnson says the survey can take as little as a few hours.
“For the most part it’s a bunch of questions about the practices of your company. And the questions vary by what industry you’re in, the structure of your company,” he says.
According to B Lab (which maintains an accessible, transparent database), ifPeople scored a 95 on their assessment. That’s thanks to factors including: recycling more than half of their office supplies, using renewable energy, putting at least 15 percent of net profits into a profit sharing plan, covering more than half of individual health insurance premiums, committing more than 40 percent of expenditures to local suppliers, and allocating more than 10 percent of net profits to charity.
For comparison, Rubicon Global, a provider of sustainable, cloud-based waste and recycling solutions and another Georgia B Corp, got points for some of the following practices: 50-99 percent of full-time managers have social or environmental mission-related responsibilities or expectations, sponsoring fitness sessions to support employee health, offering flexible work schedules and sabbatical opportunities, and four of five company facilities satisfy accredited green building programs.
Point being, there are lots of practices and policies that can lead to a high enough score for B Corp accreditation.
The next step involves meeting legal requirements such as amending your legal structure and state of incorporation. As mentioned above, B Lab encourages companies to adopt benefit corporation status, which typically involves including board members and investors. It’s a big step, but one that makes the mission more sustainable, even if new management and investors enter in the future.
Then you sign B Lab’s official documentation and agree to annual fees, which vary depending on your annual sales. That’s it.
“It actually took us an extra two years to go through certification because I thought it was going to be much harder than it was,” Johnson says.
The why of B Corps
There still may be some question as to why a company would go through the trouble of changing their governing documents and paying fees just to get a certification.
As for changing your documents, Johnson says that’s a necessity.
“It gets around this whole Milton Friedman logic of, if you run a company you must maximize profits, that’s your only goal. You’re not only encouraged, but oftentimes obligated. Profit is the only metric you have as the leader of a company. That’s going to motivate a certain level of behavior,” he says.
“So when you finish this process, you change your articles of incorporation to enable directors to be able to govern the company with interests in mind other than just shareholders; it’s open to all your stakeholders.”
The question remains, does this lead to good business? Yes, according to the Harvard Business Review. In an analysis of several studies, they show that it actually pays to not just become more sustainable, but to obtain a B Corp certification. Why? Consumers will pay more for sustainable brands, but they aren’t accepting companies’ claims at face value. B Corp’s designation is proof that a company is putting its money where its mouth is.
It can be a boon internally as well: According to Deloitte, millennial workers (who are set to be the largest demographic in the workforce) want to have an impact and contribute to good causes through their work and companies that don’t share their employees’ values will have a harder time retaining, or hiring in the first place.
To put it simply, Johnson says “You distinguish yourself on your brand to your customers, and you create more meaning and engagement with your employees.”
Additionally, Johnson says being a part of the B Corp community has gotten his company more business. “I’m part of an internal B2B group within the B Corp community, where we have aligned business,” he says. “I’ve gotten new clients through it. We even won a project where we had much higher costs of implementation, and they ended up going with us anyway, [partly] because we’re a B Corp.”
B Corps in the South… still a small contingent
As of right now, there are just 10 B Corps in Georgia (according to the B Corp website), compared to 244 in California. Although it’s expected that the West Coast might be ahead of the South in this regard, Georgia’s number is particularly low—North Carolina has 36 B Corps. Alabama, on the other hand, has just one.
Why the slow uptake?
“B Corp had a presence in North Carolina, which helped them build that community, but I don’t think they have anybody on the ground in the south now,” says Johnson. “Over the years we’ve done various things like give talks, and somebody once said, ‘I want an A-company, I don’t want a B-company.’”
“We don’t have a critical mass in the community, and there’s not as much that we’re doing together,” he says.
In order to foster that community, southern companies and entrepreneurs will have to recognize the benefits of B Corp certification.
“The B community has grown organically across the U.S. The amount of B Corp in certain areas can be attributed to strong communities of champions (i.e. North Carolina),” B Lab’s Callie Rojewski tells Hypepotamus via email. “Other areas have been able to grow because of B Lab offices/reps, depending on funding (i.e. Colorado). A lower amount of B Corps in Southern states could be attributed to a smaller amount of B Corp Champions and smaller B Corp communities.”
Rojewski, however, is confident in a future upswing in the region.
“Southern states like South Carolina, Virginia, Arkansas, and Tennessee voted unanimously to pass benefit corporation legislation. Georgia is the home of Rubicon Global… [which] was named Best for the World by scoring in the top 10 percent of all B Corps and has taken a lot of initiative to make their B Corp certification a highlight for their employees and their customers. As stronger B Corp communities continue to build and B Corp champions like Rubicon pop up in the region, I believe the number will grow,” she says.
Featured image and logo via B Lab