With corporate sustainability more important than ever, interest in B Corp status is growing rapidly. But is the long, costly certification process worth it?
As originally seen in ‘Sustainable Business’ published by Raconteur Media on 06/04/2021 in The Times.
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 nonprofit designed to help businesses simultaneously grow and do good. BLab 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.
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 Londonbased 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. 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.
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.”