Decades ago, customers only wanted to know how good a company’s products were. Increasingly, they want to know how good the company is.
More businesses are waking up to the appeal that doing the right thing can have with customers and potential hires. You can tell just by looking at their marketing.
Locally sourced! Environmentally friendly! Investing in your community! Honest wages for honest work!
But who decides what’s honest, local or environmentally friendly?
Until recently, it was virtually impossible to verify those kinds of claims. Then, a few years ago, a nonprofit group known as B Lab introduced a certification, Certified B Corporation, or B Corp for short.
The certification provides a measurable, transparent system for gauging a for-profit business’s social, environmental and financial performance—what’s called the triple bottom line. The B in B Corp stands for “benefit,” meaning the company is trying to do more than generate profit, but create some other positive outcome, too.
More than 1,200 companies in 38 countries are Certified B Corps. Many of them are brands you’ll recognize: Ben & Jerry’s, Patagonia, Etsy, the Honest Company and more.
Missouri is home to two—Arnold Development Group of Kansas City and Microgrid Energy in St. Louis—while Kansas has three: Ogden Publications of Topeka, MutualAid eXchange (MAX) Insurance enterprise in Overland Park and Hilary’s Eat Well of Lawrence.
When Hilary Brown, founder and chief innovation officer of Hilary’s Eat Well, first heard about the certification, she immediately knew it would make her company stand out.
“It’s deeper than just an organic certification,” Brown said. “It’s a story. Are you taking care of the people that work for you? Are women paid as equally as men? Are you poisoning the rivers?”
Here’s how B Corp certification through B Lab works:
For-profit companies interested in earning Certified B Corporation status are required to fill out a free online assessment on B Lab’s website. They’re asked about everything from office paper to C-suite salaries and bathroom hand dryers. How does their company affect air quality and nearby rivers? Does the business pay a living wage? Are employees encouraged to volunteer?
The assessment weights certain questions higher, such as the salary structure of the business. (Businesses that don’t pay a living wage won’t score well.) The assessment also takes into account that not every company owns its own building and therefore
might not have the most efficient HVAC systems.
There is a fee to become certified, which is reassessed every two years. It’s based on a sliding scale according to business revenue. In return, companies are able to use the Certified B Corporation logo and name on their packaging and marketing, and access other benefits.
It all might sound a bit touchy-feely for some. But B Corporations hardly dismiss profits.
“You have to be a smart, successful business to create a large impact so that you can scale and grow and also create jobs,” B Lab spokeswoman Katie Kerr said. “If you’re struggling, it’s harder to create great places to work or give back to your community.”
But B Lab does believe its approach forces businesses to think with more depth and breadth about their long-range forecasts. Instead of focusing on the next quarter, B Corps tend to think about their operations over years or decades.
“It’s about changing your definition of profit from a short-term view—which we did for much of the 80s and 90s and you see where that got us in the financial crisis—to a long-term view,” Kerr said.
PROTECTING YOUR VISION
B Lab started in 2006 after the team behind AND1 sold their basketball footwear and fashion business and watched as many of its core qualities—a good workplace, quality product and environmental reach—were systematically changed. It got the former owners thinking: There must be a better way.
That’s why, in addition to the Certified B Corporation certification, B Lab and other activists have worked to pass model legislation that allows companies to officially register as benefit corporations with their state governments. So far, 26 states and the District of Columbia have passed benefit-corporation legislation. (Missouri and Kansas have not.)
Registering with your state as a benefit corporation is different from earning the Certified B Corporation label. For one thing, getting certified is arguably harder—Certified B Corps have to meet certain standards as determined by B Lab. Any company can file to be recognized as a benefit corporation by the state.
But doing so puts it on the record that a company is trying to produce “a material positive impact” on its community. It also means that company leaders will not only take investors’ interests into account, but also consider the impacts on employees, the community and the environment.
All this provides a company’s leadership some legal protection for making decisions that, while they might not generate the most profit, do help them meet their social and environmental goals.
Kerr dismisses the idea that benefit-corporation status could make startups or small businesses less attractive to big money offers from corporations.
Plum Organics, a veteran B Corp that makes organic baby food, was bought out by Campbell’s last year. Campbell’s supported Plum Organics registering with its state commerce department to further solidify its benefit-corporation status, Kerr said.
Several states don’t have any benefit-corporation laws, so B Lab offers model language that individual companies can add to their articles of incorporation or term sheets.
But even without official government recognition, businesses say that having B Corp certification helps them protect and emphasize their mission.
Brown introduced the B Corp certification during a growth stage when investors had already stepped up to help with funds. At times, it’s created some thorny conversations with traditional capital investors, but it’s a dialogue worth having, she said.
She suggests entrepreneurs keep the B Corp standards front and center when bringing on potential investors.
“Even get in writing that this is something that they will support,” she said. “I think that it’s important as a founder, an entrepreneur, a visionary to ensure that you bring on partners that share similar belief structure.”
The process also was a significant boost for MutualAid eXchange (MAX) Insurance, president and CEO David Wine said, because it keeps employees and board members focused on MAX’s mission, even as the company experiences occasional turnover over the years.
The company has always had a mission of social responsibility and mutual aid ministry. The insurance enterprise, consisting of five major companies, primarily writes home, farm, small business and church policies in 30 different states and five provinces in Canada.
But MAX goes further with a mission to also provide emotional, spiritual and financial help to those in need and has set up two self-funded charitable organizations to enable those ministries.
“I don’t think there are a lot of companies that are against those principles or ideas,” Wine said. “It just takes a lot of effort to embed those into your company, and it’s much easier to focus on your core business at times rather than working at those other things.”
While B Corp status can help sustain a company’s mission, it can also lead good businesses to become even better.
At Ogden Publications in Topeka, sustainability has always been part of the business’s mission. Yet CEO Bryan Welch knew that he wanted Ogden, which publishes Mother Earth News, to do more. Welch believes the B Corp certification has the power to revolutionize business and consumer practices.
“If consumers know that they have a choice and that they can buy food or cars or clothing and in the process of doing so make someone’s life better or a lot of people’s lives better, I think the majority of human beings will choose to do that,” he said. “And I feel that momentum is building and that the impact of this change is going to be greater than probably any other social movement of my lifetime.”
The B Corp assessment tool pointed out several ways that Ogden could improve.
Some, like changing bathroom hand dryers, were minor. One of the biggest changes was pressing paper suppliers—an influential cost driver for publishing— to offer high-quality, recycled paper for an affordable price.
Brokers didn’t carry it. Printers didn’t trust it, fearing it wouldn’t be reliable.
Welch pressed on. His suppliers ultimately found a product that was reliable and marketable to other publishers.
“It gives you a concrete reason to push suppliers hard to meet your needs,” he said. “I think that’s a good platform for negotiation.”
B Lab encourages companies to take the assessment even if they don’t expect or want certification. Maybe that will convince a company to make one small, simple change.
“People see it as black and white, as all or nothing,” Kerr said. “Either you’re a super green company or you don’t
“What’s important to us is to reach out to all businesses no matter where they are and say, ‘Just see where you stand and pick one small, simple thing to do in the coming month or two. And you’re creating more positive impact which is better for our world.’ It doesn’t have to be all or nothing. It’s a journey.”