The Ultimate Guide to B Corp Certification
With customers and employees now demanding businesses be sustainable and socially responsible, there’s one certification that many companies want to have. Here’s a comprehensive guide to B Corporations.
The number of B Corps around the world looks likely to double in coming months as businesses in almost every sector rise to the challenge of balancing profit and purpose by officially becoming ever improving forces for good.
“It took 15 years to get to 4000 B Corps globally, a milestone passed in 2020,” says Andrew Davies, CEO of B Lab, Australia and Aotearoa New Zealand, the organisation behind B Corp certification in this region. “Then in the first 15 months of the pandemic, we had more than 4000 applications to be certified.”
The momentum continues. B Corps have grown to more than 6100 globally, with the same again reportedly waiting to be verified. Although it’s mostly the preserve of smaller businesses, some larger companies– such as Nespresso, Danone, Kathmandu and luxury label Chloe – have signed up. Unilever Australia and New Zealand became the first regional subsidiary of the worldwide Unilever business to become a B Corp last year. And Australia’s second-biggest asset manager, First Sentier Investors (formerly Colonial First State Asset Management), also joined the movement. In Australia and New Zealand, some 500 B Corps employ more than 30,000 people and turn over $13 billion-plus annually.
Here’s what you need to know.
What is a B Corp?
In 2006, three American businessmen – Jay Coen Gilbert, Bart Houlahan and Andrew Cassoy – set up B Lab, the non-profit organisation behind B Corp, which “serves a global movement of people using business as a force for good”. A year later, they certified the first B Corporation.
The B in B Corp stands for “benefit” and certification zooms in on five distinct categories: how strong the business is on governance, community, environment, workers and customers. Central to the process is its rigorous B Impact Assessment (BIA) that poses potentially hundreds of questions across those categories. The BIA runs on an AI-powered decision-tree model and responses to questions may elicit further questions.
After that there’s the audit process, conducted by an international B Lab team, which further interrogates, seeks evidence and suggests changes to be undertaken.
In short, it’s tough. “Measures must be scientific and, where possible, third-party validated,” says Rosanna Iacono, managing partner at The Growth Activists, a B Corpcertification strategy consultancy that has helped 24 businesses through the process and is part of a network of 50 B consultants accredited by B Lab Australia and New Zealand. “Our job is to check everything is fully documented before they press the submit button. It’s about measurements, policies and procedures.” Her catchcry for clients? “No proof, no points.”
Why B Corp?
A rising tide of accountability for business has come with climate change awareness and a new era of social consciousness accelerated by the pandemic. While some companies have their own sustainability guidelines because it attracts employees in a critically talent-short world and to satisfy customers who want brands to do the right thing, others embrace B Corp status.
Millennials, in particular, have a fresh set of values about what business can and should do, Davies notes, and on a planet inundated with greenwashing it’s a surefire way to differentiate.
On the path to becoming a force for good, companies are also navigating a tangle of sustainability standards and frameworks. “It’s the most comprehensive, whole-of-business certification and it measures the impact for all stakeholders,” says Iacono. “B Corp considers an even bigger group of stakeholders – customers, suppliers, employees, community partners – and it’s a powerful trust mark.”
Companies are looking for the “how”, the architecture to become an exemplary business, says Davies. They need a definition of what that looks like and which practices they should bake in.
What’s the score?
A pass mark to enable B Corp certification is 80 or above. The average score for those who use the open-source BIA tool is about 50. Some companies never qualify for certification and some choose not to, preferring to use the process for their own benchmarking.
Transparency rules. As part of the certification, final scores are published on the B Lab website and B Corps must also disclose them, along with any relevant past misdemeanours. Once certified, businesses are expected to continuously improve and go through recertification every three years with the aim of improving their impact and raising their scores.
For its extreme rigour, achieving and retaining B Corp certification delivers what many describe as an authenticity halo – and successful B Corps like to shout about it.
How long will it take?
Unilever ANZ’s general counsel, David Dwyer, was gobsmacked by his company’s two-year process. “But as a lawyer, I like that it’s not easy. It really drills into every function and analyses it.”
Complex companies take more time, says Davies, and it depends on the changes you need to make to your business but “12 to 18 months to go through the process is not an unreasonable expectation for most”. Some might fly through one category but fall short in another, he says. “And a lot have been operating sustainably since they started, well before it became a buzzword.”
Can you play to your strengths?
Companies that were founded with an Impact Business Model (IBM), in which the organisation has been established to solve a societal or environmental problem or has a charitable giving model, earn super-charged points.
Subscription toilet-paper brand Who Gives a Crap, which donates 50 per cent of its profits to improve sanitation in developing nations, is a standout example. Another is KeepCup, the Melbourne company established with the aim of ridding the world of disposable coffee cups (and one of the first B Corps in Australia).
Customer-owned mutual Beyond Bank, which recently completed its third recertification since 2015, boosted its B Corp score to a whopping 146.7 due to its numerous services for customers and communities, says CEO Robert Keogh. The bank also maintains branches in small, under-served rural and regional communities, supporting individuals and their economic development through local businesses. On the environment, though, the bank’s score was comparatively low so green loans and services to help its customers transition to renewables and electric vehicles are now being introduced.
One aspect that Beyond’s sustainability manager, Kate Carroll, particularly likes about the B Corp process is the ability to play to your own strengths in areas where you “can create the most meaningful impact”. It links directly to how you drive revenue and profitability, she says, “and that’s how you drive change”.
Will you need additional resources?
Both the speed of certification and the size of scores rely on the resources that a business can devote to the assessment process. Sole traders and early-stage startups can do it but in bigger businesses, a cross-functional team is needed.
Unilever ANZ’s initial team of eight ballooned to 20, for example. “And the biggest challenge was finding people who were prepared to put in discretionary effort,” says CEO Nicky Sparshott.
“This wasn’t about bringing together an army of additional resources to get certification – this was about leveraging the goodwill and expertise that sat in the business.”
At Torrens University, with 10 campuses in Australia, New Zealand and China and almost 20,000 students, it’s a full organisation effort. While just a couple of people manage the certification process, the B Corp principles are embedded across the entire business model, says Todd Wegner, chief of staff of Torrens University Australia, Think Education (Australia) and Media Design School (New Zealand), who has led 75 companies through the certification process.
“We strive to integrate the B Corp social and environmental performance metrics holistically across our business, from our strategic plan and annual priorities down through our operations,” he says.
Are you fully prepared?
Surprises invariably abound in the B Corp process. For KeepCup’s co-founder and managing director, Abigail Forsyth, it was the life-cycle assessment that revealed 97 per cent of the company’s carbon footprint was due to fossil-fuel generated electricity for the hot water used by customers to wash their cups. “When the world moves to renewables, our emissions will drop radically.”
Recertification can also be an eye-opener, according to consultant Iacono, whose team has received SOS calls from businesses that certified on their own the first time but received a low score the next time, after resting on their laurels for three years. “The standards are dynamic. B Lab constantly lifts the bar.”
What are the other benefits?
Companies often use the B Corp process as an organisation-building tool. Zorali, a newly certified B Corporation that creates apparel and products for outdoor adventures, used B-Lab smarts to produce its employee handbook – even before anyone was hired – along with a code of conduct for manufacturers in China and Sri Lanka.
“We put in systems to collect the data we needed about the percentage of organic or recycled fibres we use,” says co-founder and managing director Cam Greenwood. Today, all of its products have information about their carbon footprint.
Larger organisations also use the certification process like a management system or roadmap to increase ESG awareness and action across the board.
On the outside, there are countless marketing benefits, not least from the increasing recognition of B Corp branding on products, services and websites – it’s an instant stamp of independently evaluated credibility. On the inside, there’s a particularly strong people story.
Unilever ANZ witnessed the power of purpose-driven work for employees. “The team-building effect is already showing up in our employee engagement survey scores,” says Dwyer.
And no-one is objecting. Dwyer, the self-described “battle-hardened lawyer who likes the evidence”, says he also found it transformative. “It was really challenging in terms of the time spent but when I realised the goal, it didn’t feel like hard work.”
A further benefit is the opportunity for engagement with other businesses that are doing good in the world. B Lab provides resources, guidance, webinars, networking opportunities and events.
How can B Corps work together?
As the B Corp community burgeons, there are plenty of opportunities opening up for them to collaborate and extend the movement. Across the globe, they’re getting together to find solutions to common problems. In the United Kingdom, a coalition of beauty sector B Corps is tackling the industry’s environmental issues, including the ubiquity of small plastic bottles.
Offshore manufacturers are sharing ways to wrangle supply chain issues and modern slavery legislation. In Australia, Torrens University offers a free online Introduction to B Corps course, while Beyond Bank provides fee-free banking to other B Corps.
Many companies share open-source tools to help others become forces for change. KeepCup gives access to its Impact Calculator tool, formulated by Edge Environment, another B Corp.
How will B Corp itself change?
The global organisation has been taking feedback on a set of new draft standards across 10 topics: governance; fair wages; worker engagement; climate action; diversity and inclusion; justice, equity, human rights; environmental stewardship; collective action; impact management; and risk. A phased introduction is planned from 2024.
“Business as a force for good is an ethos that compels us to keep doing better for people, the planet and communities,” says Davies. “For B Corps, there is no finish line.”
