The COVID-19 pandemic has brought some fundamental changes in the way corporations conduct business. As COVID-19 continues to challenge our economy, environment, health, and financial security, the World Economic Forum has highlighted the concept of “shareholder capitalism” and the importance of “Stakeholders for a Cohesive and Sustainable World” in recovering from this and new crises.
Indeed, many organizations focus on creating stakeholder value, particularly tackling social and environmental issues. This relevant new trend in corporate governance has led to the creation of a new organizational form: the Certified B Corporation. The recent estimate is that there are currently over 2,500 Certified B Corporations in more than 50 countries. What does it mean to be a Certified B Corporation? What does the process of becoming one involves? Why should companies become a Certified B Corporation?
A Certified B Corporation – What does it mean to be the one?
Certified B Corporations (B Corps) “are businesses that meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose. B Corps are accelerating a global culture shift to redefine success in business and build a more inclusive and sustainable economy”.
Profits and growth are used to achieve a higher goal: a positive impact on employees, societies, and the environment. The B Corp community works to address global issues such as inequality, poverty, and environmental degradation and by harnessing the power of business, to accelerate the global cultural transformation to redefine business success and build a more inclusive and sustainable economy.
Being given the title of the Certified B Corp means that these for-profit companies have been thoroughly vetted by B lab that is a non-profit that serves a global movement of people using business as a force for good. B Lab decides on whether a company passes the rigorous tests for proving that it meets the required high standards (social and environmental performance, public transparency, legal accountability, and aspiration to solve social and environmental problems).
The process of becoming a Certified B Corp
B Corp Certification doesn’t just evaluate a product or service, but it also assesses the overall positive impact of the company that stands behind it. Moreover, it is the only certification that measures a company’s entire social and environmental performance. Becoming a Certified B Corporation is an extensive process and follows the four phases:
- Meeting Performance Requirements by completing the B Impact Assessment. The B Impact Assessment (BIA) is a free, online platform that evaluates how your company interacts with your workers, customers, community, and environment.
- Meeting Legal Requirements by using the Legal Requirement Tool to determine how your company can integrate stakeholder consideration into your governance structure. The company’s specific legal requirement and timeline will depend on location and structure.
- Verification and Transparency: Upon completing the BIA, B Lab will verify the score to determine if the company meets the 80-point bar for certification. To maintain certification, B Corps update their BIA and verify their updated score every three years.
- Signing the Agreement and the B Corp Declaration of Interdependence as well as paying annual certification fees that vary depending on the company’s revenue.
Why Become B Certified Company?
Doing business as usual and being solely focused on making profit has become outdated and sticking to the old business model can be punished by the new generation of aware and responsible consumers. Becoming a Certified B Corp allows the company to avoid risks and to present to its stakeholders that it takes measures and actions to solve the global social and environmental issues.
B Corps are more likely to attract investors due to the strict and rigorous standards that translate into stability. Also, by getting certified as a B Corp, the company avoids being targeted as belonging to the greenwash crowd. According to the research, B corporation certification would help companies stand out “in the midst of a ‘greenwash’ revolution” among large companies, and “help consumers sort through the marketing hype to find businesses and products that are truly socially and environmentally responsible”. During the crisis, stakeholder-focused companies have proven to be genuinely more resilient in the face of economic downturns and crises. Anthea Kelsick, Co-CEO of B Lab U.S. & Canada – pointed out that during the 2008 financial crisis; B Corp was endured 64% better than other similar-sized companies were. B Corp’s focus on stakeholder engagement has contributed to an excellent position to weather financial storms such as the storm caused by COVID-19.
Since B Corps are committed to maintaining strong relationships with employees, customers, suppliers, and societies, they are more willing to make the necessary adjustments in the face of economic turmoil. Their corporate business model provides value to stakeholders and these companies will adapt their business model more intuitively when the needs of stakeholders change. Especially after the COVID-19 outbreak, B Corps offered their employees a number of benefits including as paid leave, health care, additional parental leave, financial support relatively seamlessly. B Corps are responsible for measuring the impact of their business on the environment, providing their employees worldwide with opportunities to use alternative mobility and remote work options before the “remote work” trend sparked due to the pandemic. They have also provided more equitable terms to suppliers and manufacturing conversion. B Corps are transparent throughout their supply chain, and they track the impact of their businesses on energy, water, and other natural resources consumption.
Will B Corps Reshape the Corporate Landscape?
As the pandemic rages, B Corps have proven to be incredible resilient; B Corps may be the key to building a more equitable economic system that meets everyone’s needs – and especially now, provides greater job security. B Corps are definitely reshaping the corporate landscape by incorporating both social and environmental performance standards and it pays off. The B Corp movement is directed mainly to small and medium enterprises making them more competitive and attractive to the investors.
So far, over 3,000 companies worldwide in more than 70 countries, 150 industries, are abiding by this new business model. Now is the time for more companies to walk the talk and adopt models that deliver true, measurable value and are build to last.
Photo by Hutchison PLLC