There is a growing need to adopt a new set of Sustainable Development Goals that aim to “Transform the World”. Change comes with collective effort, mutual understanding and knowledge towards specific goals.
Despite the UN and other international organisations making crucial decisions, the result is far from expected. It made me wonder what it is that we are falling short on? Is it the lack of interest or lack of awareness?
That’s when I had a eureka moment, and it suddenly started to make all sense. Many people don’t know the complicated terms and references that are used when we talk about sustainability. The idea inspired me to create a new series called “The ABCs of Sustainability Development”. I hope that this series of blogs is well received and serves its purpose.
This week I will be talking about B Corps.
Over years of consulting with brands, businesses and organisations, I have never come across one that wishes to damage the environment. Each institute works to the best of their abilities to minimise their ecological damage within their frameworks. However, for many, that may not be enough. That’s where B Corps come in place.
B Corporation is frequently described as a company that is held accountable for its social and environmental actions, which may not seem appealing to many businesses as making profit is the sole basis of a capitalist venture. However, since 2007, B Lab has been granting B Corp certification that offers organisations a platform to assess their environmental impact, align with SDGs, while still making money.
This blog is a guide to learning all about the world of B Corp—what it is, its standards, the need for a certification and the application process, all while simplifying the surrounding jargon.
What are B-Corporations? How do you get certified?
B Corp companies aim to be as transparent as they can in their functions which are often overlooked by general certifications that mostly focus on financial profitability. These companies meet the highest standards of environmental and social performance, as laid out by the B Lab, a non profit organisation that verifies businesses as B Corps.
B Lab defines B Corps as follows:
“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.”
Since 2007, there are only 4000 certified corporations in more than 70 countries and over 150 industries whereas over 100,000 have signed up.
So it’s not surprising that getting yourself the certification is quite a hefty process. It began with B Lab’s aim to maximise profit with a social mission. Interestingly, it looks at the triple bottom line to process socio-economic problems. To become a B Corporation, evaluation of revenue and company size sits as a criteria for the B Impact assessment. The comprehensive process includes risk reviews, disclosure of company data to prove transparency and efficiency in different sectors, an evaluation phase and legal verification. Once certified, companies have to prove their status every three years to maintain the certification.
In order to achieve the status, general guidelines as listed on the website include:
- Demonstration of high social and environmental performance by achieving a B Impact Assessment score of 80 or above and passing our risk review.
- Making a legal commitment by changing their corporate governance structure to be accountable to all stakeholders, not just shareholders, and achieve benefit corporation status if available in their jurisdiction.
- Exhibiting transparency by allowing information about their performance measured against B Lab’s standards to be publicly available on their B Corp profile on B Lab’s website.
Why are companies becoming B corporations?
All B Corps leaders strive for a positive and meaningful environmental impact. These are determined, self-sustaining organisations with a strong vision and strategy that wish to take it up a notch. Interestingly, B corporations are bringing in a new type of capitalism, where the idea of minting money comes with a realised do-gooder need. This is made possible as B corporations aim to become a part of the environmental solution rather than the problem, without completely detaching themselves from the fundamental structure of businesses.
How is it helpful to you?
Becoming a B Corporation directly helps you align with Sustainable Development Goals. Not only are you enhancing your work performance and output, attracting investors and generating press, you also lead an environmental movement by taking care of your employees, increasing transparency and showing accountability.
An interesting aspect about the certification that sets it apart from others, is that it asks companies to show their primary responsibility to stakeholders rather than shareholders. The difference between two is simple but impactful — shareholders are individuals who own shares in a company, whereas stakeholders are the ones with a stake in a company and not necessarily have shares. These include employees or local communities engaged in production or anyone who is directly affected by the actions of the company.
So by taking direct responsibility and accountability towards stakeholders, B Corporations are able to prove themselves as sustainable and environment-friendly businesses, with no chance of greenwashing their operations. A 2019 CSR Survey reflected that 77% of consumers in the United States felt motivated to make purchasing decisions from companies committed to making the world a better place.
Moreover, with the Covid-19 pandemic, businesses have realised the importance of positive impact and aligning themselves with conscious consumerism. In other words, realising their Corporate Social Responsibility.
Next week, I will be diving further into the UK’s B Corp movement, businesses making impact and B-Leadership.