Should your business become a B Corp?

In 2005, Jay Coen Gilbert and Bart Houla­han had had enough. On the face of it, that might seem odd: they’d just made mil­lions sell­ing AND1, a bas­ket­ball appar­el busi­ness that had start­ed as a grad­u­ate school project in the ear­ly-1990s. But hav­ing worked hard to build an eth­i­cal com­pa­ny, they watched on as the new own­ers quick­ly sac­ri­ficed sus­tain­abil­i­ty for mon­e­tary gain.

It was time for a change, they thought. So they set up B Lab, a non-prof­it designed to help busi­ness­es simul­ta­ne­ous­ly grow and do good. B Lab cer­ti­fied its first B Cor­po­ra­tions in 2007, launch­ing a move­ment that has since become one of the most respect­ed glob­al stan­dards in cor­po­rate sus­tain­abil­i­ty. 

B Corps – B stands for bet­ter – are com­mit­ted to bal­anc­ing pur­pose and prof­it, and must con­sid­er the impact of their busi­ness deci­sions on work­ers, cus­tomers, sup­pli­ers, com­mu­ni­ty and the envi­ron­ment. 

While labels like Fair­trade are award­ed to spe­cif­ic prod­ucts, B Corp cer­ti­fi­ca­tion scru­ti­nis­es a company’s entire oper­a­tions. It’s a rig­or­ous process that can take many months. Tens of thou­sands of com­pa­nies have applied for B Corp sta­tus, but only 3,720, in 74 coun­tries, have made it. Most are small busi­ness­es, with a sprin­kling of big­ger names, includ­ing Brew­dog, Patag­o­nia and Danone’s North-Amer­i­ca arm. 

The black-and-white B label is a sim­ple, but increas­ing­ly pow­er­ful, way of com­mu­ni­cat­ing a business’s ethos to clients, employ­ees, part­ners and investors. “It’s made it much eas­i­er to give those in the know an instant sense of what we’re about,” says David Hunter, con­sul­tant at Bates Wells, the UK’s first B Corp-cer­ti­fied law firm. “The label imme­di­ate­ly posi­tions us as a busi­ness that has tak­en mean­ing­ful steps to lit­er­al­ly put our mon­ey where our mouth is.” 

For Bates Wells, cer­ti­fi­ca­tion meant the firm’s part­ners agree­ing to place greater focus on stake­hold­er inter­est as well as social and envi­ron­men­tal impact, rather than finan­cial gain. 

Consider the implications before applying

This change in legal struc­ture is a key part of B Corp cer­ti­fi­ca­tion. Any com­pa­ny think­ing about apply­ing should give it seri­ous con­sid­er­a­tion, says Hunter. “B Corp sta­tus may affect how attrac­tive a busi­ness is for third-par­ty invest­ment. If it is already, or may become part of a group of com­pa­nies, how does the B Corp ethos sit with­in the wider group?” 

With coro­n­avirus increas­ing focus on sus­tain­abil­i­ty and “build­ing back bet­ter”, inter­est in B Corp has risen sig­nif­i­cant­ly in the past year, says James Ghaf­fari, direc­tor of cer­ti­fi­ca­tion at B Lab UK. The first port of call for any com­pa­ny is typ­i­cal­ly the B Impact Assess­ment, a free tool offer­ing insights on how to improve a busi­ness for peo­ple and plan­et. “Pre-COVID, we had around 100 com­pa­nies in the UK using this each day,” says Ghaf­fari. “In the last 12 months, this has risen to 500.”

This assess­ment can be com­plet­ed in as lit­tle as 30 min­utes, but obtain­ing full cer­ti­fi­ca­tion is a dif­fer­ent mat­ter entire­ly. Any for-prof­it com­pa­ny with at least a year of oper­a­tions can apply, but will have to part with between £500 to £50,000 to do so, depend­ing on its turnover. 

Busi­ness­es are then grad­ed on their answers to near­ly 200 ques­tions, rang­ing from social and envi­ron­men­tal impact to parental leave poli­cies and salary ratios. Only those that score 80 points and above receive cer­ti­fi­ca­tion and, because B Lab updates its stan­dards, busi­ness­es must recer­ti­fy every three years. 

“It’s quite an oner­ous task,” says Shau­nagh Dun­can, head of sus­tain­abil­i­ty at Bulb, a Lon­don-based renew­able ener­gy provider. “I have to cir­cu­late spread­sheets around the com­pa­ny to gath­er all the nec­es­sary data and sup­port­ing doc­u­men­ta­tion. We’re recer­ti­fy­ing in August, which means start­ing the process in April.” 

This is too much for some. Kishore Shah, own­er of Kha­di Lon­don, decid­ed against pur­su­ing cer­ti­fi­ca­tion for his tex­tile busi­ness sev­er­al years ago. “I like what B Corp stands for, but I couldn’t jus­ti­fy the time and the finan­cial expense to cer­ti­fy,” he says. 

B Corp can bring multiple benefits

Those who have suc­cess­ful­ly com­plet­ed the process often say the effort is worth it. “Our B Corp sta­tus is increas­ing­ly impor­tant to Bulb’s cus­tomers, employ­ees and poten­tial new staff,” says Dun­can. “It’s also been vital in inspir­ing our com­mit­ment to become car­bon neu­tral by 2030.” 

Whether it boosts a business’s bot­tom line is tough to prove, though. Accord­ing to research by Dr Eleanor O’Higgins, of Uni­ver­si­ty Col­lege Dublin and the Lon­don School of Eco­nom­ics, there is no evi­dence that B Corp cer­ti­fi­ca­tion adds to finan­cial per­for­mance, although it does boost a company’s rep­u­ta­tion and social­ly respon­si­ble action.

For some busi­ness­es, full cer­ti­fi­ca­tion may not be nec­es­sary. Adam Gar­funkel says the assess­ment alone “is like hav­ing a sus­tain­abil­i­ty con­sul­tant guide you through a busi­ness audit”. He should know as Gar­funkel is co-own­er of Junx­ion Strat­e­gy, a B Corp-cer­ti­fied con­sul­tan­cy, and a reg­is­tered B leader, who helps com­pa­nies with cer­ti­fi­ca­tion. 

Can B Corp drive significant change?

B Corp is undoubt­ed­ly gain­ing trac­tion in the UK. In Feb­ru­ary, online super­mar­ket Oca­do joined Wait­rose in launch­ing a ded­i­cat­ed “aisle” for B Corp brands that already has more than 1,000 prod­ucts. 

But some say it has nei­ther the resources nor the author­i­ty to dri­ve change fast enough. Dr Michael O’Regan, senior lec­tur­er at Bournemouth Uni­ver­si­ty, points to a lack of scal­a­bil­i­ty: in the UK, just 450 busi­ness­es have been cer­ti­fied since 2015. There is also a dan­ger of it attract­ing “low-hang­ing fruit”, he says. “Yes, it’s eth­i­cal and try­ing to do a good thing, but many of these com­pa­nies are already oper­at­ing respon­si­bly,” says O’Regan. “Reg­u­la­tions and glob­al stan­dards will force boards to make changes, a label will not.”

Not sur­pris­ing­ly, B Corp’s advo­cates dis­agree, at least to an extent. “It’s not our aim to cer­ti­fy every busi­ness,” says Ghaf­fari. “But we do believe we can help change the sys­tem. Ulti­mate­ly, though, we want to make our­selves obso­lete. Our prin­ci­ples should just be the way the world is.”