People are becoming increasingly aware of the ethical implications of their purchases, the services they use and the companies they support. In response, more organizations are making claims of how they’re “doing their part” in the quest to “protect the Earth”. To avoid greenwashing, businesses need something credible to back up their claims, hence why the term ‘B Corp’, is increasingly prolific. But what does this claim actually mean?
B Corporations are companies that have been certified by B Lab. Since 2006, more than 100,000 businesses have signed up for the B Corp Impact Assessment, yet only 3905 have been certified. These businesses cover 150 industries across 74 countries that have one unifying goal – they’re all committed to building their businesses as a force for good, as well as for profit. B Corps are accelerating a global culture shift to redefine success in business and build a more inclusive and sustainable economy.
To become a certified B Corp, businesses must meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose. Companies are scored on five categories: governance, workers, customers, community, and the environment. Once a business passes the strict standards for admission, it is then committed to monitor and improve its performance every three years.
According to Andrew Davies, CEO of B Labs Australia, “the businesses that tend to become B Corps are the ones that have a lot of passion. You don’t wake up one day and think I need to do a bit better so I’m going to become a B Corp. It’s an enormously challenging process and often takes years and huge amounts of resources to get there, so it’s not something that you do lightly”.
Through its rigorous processes and standards, B Corp remains a symbol that the public can trust as a business committed to making positive changes. As Andy Fyfe from B Corp was quoted last year, “it’s a way to separate a good company from good marketing.” Becoming a B Corp is not only a sure sign to customers that impact is woven into a company’s DNA, but also allows access to a community of like-minded innovators, and attracts and engages with the best talent who want to work with value-aligned companies. As impact becomes an increasingly important global issue, becoming a B Corp allows a company to stay ahead of future regulation that could limit growth further down the line.
For-profit organizations are rewriting the rules of business to create a more ethical future. Patagonia is one example of a successful, global enterprise that has never steered far from its original beliefs, remaining synonymous with the movement of good business. “Patagonia is trying to build a company that could last 100 years,” said Founder Yvon Chouinard in January 2012 on the day Patagonia signed up to be a B Corp.
Lemonade was one of the most talked about IPOs last year. The online insurance company uses artificial intelligence to process claims and payments. By charging a flat fee for its services, Lemonade usually donates its excess premiums to nonprofit organizations selected by its customers. This socially conscious approach earned it a B Corp certification.
These are just a couple successful B Corps that illustrate the value companies can provide if they have a societal mission attached to their business model.
Early last year, B Lab partnered with the UN Global Compact to develop the online tool, known as the SDG Action Manager. The business case for action on the SDGs is strong. By working toward and achieving the SDGs by 2030, businesses in four sectors — food and agriculture, cities, energy and materials, and health and well-being — could realize $12 trillion in market opportunities as well as a healthier future for our global community, according to a 2017 report by the Business & Sustainable Development Commission.
Speaking at the Future of Corporation Summit, Al Gore, highly recommended B Corps adding that, “the global sustainability revolution is the biggest investment opportunity in history and the data shows that green investment brings better returns in the long term.”
The B Corp model is becoming more relevant as more businesses are choosing to build a better version of capitalism, and close in on inequalities. During the 2008 financial crisis, B Corps were 64% more likely than other businesses of a similar size to make it through the downturn. This can be attributed to the strength of relationships and innovation that remain critical ingredients to resilience.
A B Corp organization sees business as a force for good, harnessing its power to advocate for stronger communities and a healthier environment. B Corps and the increasing number of organizations taking this initiative are creating waves of inspiration across the business community. In an interconnected world, we have many socio-environmental issues that must be addressed, and we cannot do it without the partnership, cooperation, and leadership of businesses.
As a Venture Capital firm, we are ideally positioned to infuse a business philosophy into startups from the very early-stage. It is our intent to be a launchpad for other B Corps to be born in the world. We want to inspire entrepreneurs to build market-based solutions to tackle humankind’s most pressing challenges, and investors to allocate capital to companies yielding financial returns as well as social and environmental positive impact.
As the community celebrates B Corp month this March, businesses are reflecting over the last year of the pandemic and continuing to collaborate to create a better, more inclusive future.
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