Explainer: What is B Corp status?
- 24 March, 2021 10:00
When people think of an ethical company, Patagonia will often come to mind. It takes a minimalist approach to its environment impact with its materials and recycling and reuse policies for instances. It’s also a B Corp organisation.
But it’s not alone on this.
A growing number of organisations are looking to prove their credentials as businesses that care about more than just profit. So is doing good also good business sense? To find out, we've delved into the world of B Corp certification and how organisations are adopting the standard to show their worth.
What is B Corp?
B Corp certification, similar to the ‘triple bottom line’ is a way that for-profit organisations can show they give equal weight to people, planet and profit. Certified B Corporations, or B Corps, meet a verified standard of social and environmental performance, public transparency and legal accountability to balance profit and purpose. There are 3500 global BCorps and 257 in Australia, including brands such as Patagonia, Aesop and Beyond Bank.
The growth of environmental and sustainability initiatives, along with rising awareness of the need to rectify racial and gender inequality, create high-quality jobs and address wage fairness, is seeing B Corp status an enviable achievement.
B Corp certification is administered by the non-profit organisation B Lab, which assesses an organisation’s products or services, along with the overall positive impact it is making. B Corps must achieve a minimum verified score on the B Impact Assessment, a rigorous assessment of workers, customers, community and environment and make its B Impact Report transparent on bcorporation.net. In addition, Certified B Corporations must alter the legal governing documents to require the board of directors to balance profit and purpose.
B Lab says its the combination of third-party validation, public transparency and legal accountability that ensure certified B Corps qualify for the additional trust and organisation value which comes with being recognised.
Fuller's sustainability efforts
Fuller Brand Communication, a medium-sized family business based in Adelaide, was recently awarded B Corp certification, following a rigorous audit of its financial accounts, management policies around staff, customers and suppliers, and contributions to the community and the environment.
“The move towards creating a more sustainable business started about five years ago when management and staff collaborated to find ways to reduce our impact on the planet,” Fuller Brand Communication MD, Peter Fuller, told CMO.
“Fuller is a family company – not just family owned and managed, but also an employer of more than 25 families. This gives us a heightened sense of responsibility to contribute to a society that we are proud to hand on to our children and grandchildren."
B Corp status doesn’t just put the onus on the business, but also extends to its customers who are part of the processes and external parts of the business. Fuller said the agency's clients will need to engage with their customers in new ways as they grapple with the new economic and social order.
“So we need to be authentic and ‘walk the talk’,” he said.
For Fuller, this has seen in-house recycling and composting, staff wellness programs, volunteering and community service initiatives, a supplier review and a ban on takeaway coffee cups and plastic drink bottles, giving staff refillable bottles and encouraging the purchase of keep cups.
“In that first year we stopped an estimated 2500 coffee cups going to landfill, which was a great result,” he said.
Fuller’s new sustainability initiatives in 2021 will include the purchase of its first Tesla company vehicle and changing to a green electricity supplier to reduce emissions. Fuller used Carbon Neutral Adelaide and one of the organisation’s sustainability consultants Suzanne Ridding to evaluate its footprint.
“We were surprised to find we emitted 180 tonnes of greenhouse gases in 2019-20. While the new electricity and transport initiatives are expected to bring this down, it has signed a Climate and Diversity Protection Agreement with sustainability organisation South Pole,” said Fuller.
“To achieve carbon neutral status we have signed up to an offset scheme and contributed to two projects: one is a tree planting program at the Indigenous-led Mt Sandy Conservation Project on the Coorong, and the other is a wind power farm in Taiwan."
While B Corp certification may be a business and income generating exercise to address profit-created problems, it still remains a way for organisations to have a program and system to assess and improve their processes towards address their environmental impact and improving their social good.
There's no doubt with consumers increasing their focus on ethical consumption, the movement to support sustainable brands is growing quickly.
In fact, demand for B Corp Certification rose 23 per cent globally last year, while registrations to the B Corp Business Impact Assessment (BIA) saw a 60 per cent increase. Across Australia and New Zealand, a 12 per cent increase in B Corp applications was seen, along with 21 per cent growth in registrations to the BIA.
It may be the global pandemic has forced businesses and individuals alike to hit ‘reset’ on their priorities and start exploring ways to contribute to a better future. And with unprecedented natural disasters - drought, bushfires, floods - coming one after the other, there’s a growing acceptance and urgency that business must take the reins on climate change action.
Sendle's B Corp journey
Sendle is another organisation that continues to be committed to B Corp certification. The company was Australia’s first certified technology B Corp in 2014.
Chief marketing officer of the logistics technology provider, Eva Ross, said taking responsibility for climate change is more important than ever for businesses of all sizes.
“As a 100 per cent carbon neutral shipping service, our commitment to the environment runs deep. We are ‘shipping that is good for the world’,” she explained. “Every time you send a parcel with us, we offset the carbon emissions and invest in remarkable environmental projects, such as the Myamyn Conservation and Boobera Native Forest Regeneration projects in Australia to name a few.”
But the B Corp journey doesn’t end there and Ross pointed out B Corp certification is a very rigorous process that gets more complex as a company grows. “And as the world changes, so too do B Corp requirements — ensuring that every company with the badge is addressing what the world needs right now,” she said.
Sendle has just recertified as a B Corp and renewed its commitment to this growing global movement of people using business as a force for good.
“We also want to remind Aussie businesses, both big and small, along with individuals, that we all have a part to play in saving our planet. Rallying behind the B Corp movement and raising awareness of its mission to balance profit with purpose helps us do this,” she continued.
With interest and demand in social and cultural conscience taking centre stage during 2020, Ross saw even more interest in B Corp certification long-term.
“The global pandemic has forced businesses and individuals alike to hit ‘reset’ on their priorities and start exploring ways to contribute to a better future. With consumers increasing their focus on ethical consumption, the movement to support sustainable brands is growing quickly,” she said.
“By serving the needs of small businesses and helping them on their growth journey we hope we are supporting the underserved and providing them access to a level playing field to compete on.”
Is it failsafe?
But while B Corp certification is a welcome thing in getting organisations to commit to policies and practices that have positive environmental and people impact, there has been some scrutiny of the certification.
Key questions include the cost, full transparency of certified organisations and the fact that commitments to people and profit are not legally enforceable. Organisations can also simply abandon their B Corp status if it no longer suits their interests or they are bought out and there is no register of previously certified organisations.
Bournemouth University senior lecturer in events and leisure, Michael O’Regan, writing in The Conversation, noted certification isn’t a binding guarantee companies will give equal weight to caring for people, planet and profit.
“The closed nature of a private certifying body that sets and regulates its own standards is problematic, even if well intentioned, and especially so if it seeks to control the process by which certified businesses are held accountable,” O’Regan noted.
"Certified corporations are as accountable to B Lab as they are to their stakeholders. The lack of full transparency and rigorous vetting in the face of its aggressive expansion indicates that B Lab’s certification should not be seen as a reliable method for certifying corporations to some standard, from the perspective of either the general public, investors or regulators.”
While B Lab’s efforts have been worthwhile and certification may help organisations with brand building, O'Regan nevertheless saw this is market-driven certification offering solutions to market-produced problems.