The landscape of business is changing. The once sole focus of increasing shareholder value has expanded to include social and environmental concerns. This emphasis on ensuring a more ethical business sector led to the emergence of a new organisational entity: the Certified B Corporation, also known as the B Corp.
The idea that for-profit businesses – and leaders – can be a force for good and reap the benefits has been gaining momentum for some time. Patagonia is one example of a successful, global enterprise that has never steered far from its original beliefs. Since day one, it has remained 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.
Identifying as a B Corp has helped guide the business to meet the highest standards of verified social and environmental performance, public transparency and legal accountability.
"We wanted to operate a business that balanced purpose and profitability." – James Thornton
It paves a new way of doing business that is not only moving companies and leaders to be better but also redefining the meaning of success. "B Corp creates the legal framework to help mission-driven companies like Patagonia stay mission-driven," explains Dane O’Shanassy, Patagonia’s Country Director for Australia and New Zealand.
"From succession to capital raises and even changes in ownership. It does this by institutionalising the values, culture, processes and high standards put in place by founders."
The American business specialising in outdoor clothing and equipment was born out of a desire to provide high-quality, ethical and long-lasting products. "This belief is what has guided the ship – from seeking B Corp Certification to making a 1% For The Planet commitment, and to holding those in power accountable to protect our wild places," O’Shanassy says.
Becoming a B Corp
Certified B Corporations are social enterprises verified by B Lab, a not-for-profit organisation founded in 2006 by US entrepreneurs Jay Coen Gilbert, Bart Houlahan and Andrew Kassoy.
B Lab certifies companies based on how they create value for non-shareholding stakeholders, such as their employees, the local community and the environment. B Lab sets the global standard and awards B Corp Certification to purpose-driven businesses.
In 2015, Intrepid Travel analysed its entire business and homed in on two areas. "We decided to focus on growing the market for sustainable, experience-rich travel," CEO James Thornton says. "We wanted to operate a business that balanced purpose and profitability."
Growing the market for sustainable, experience-rich travel is quantifiable. "You can measure your growth in passenger numbers, revenue, improvement and profitability," he notes. "But how do you measure if you’ve balanced purpose and profitability?"
The question led Intrepid on its journey to becoming a B Corp. Over three rigorous years, the whole company, including all 30 of its legal entities across the globe, underwent assessment. The result was worth it.
Thornton explains that the process also highlighted elements of where the company could further improve. In 2018, Intrepid received its B Corp status – making it the largest Certified B Corp travel company in the world. The certification confirmed that Intrepid is a genuine force-for-good company.
"B Corp Certification promotes openness and transparency," Thornton adds. "The notion that, as a company, you are incredibly open and transparent. That means talking about the good things, but it also means highlighting what you don’t do so well and the plans you’re going to put in place to improve."
Becoming a B Corp also provides companies with a new community. Having succeeded in achieving certification twice, Amy Hall, Vice President of Social Consciousness at Eileen Fisher, says there is much pride to be among the 3,300 certified businesses around the world.
"There is a palpable sense of community within the B Corp world. More important, there is a sense of possibility that there is a better way to conduct business – better for the world and her people."
The American clothing label, which sought the certification in 2015, is working to make a positive impact on the fashion world. "We felt it was important to support this growing movement of values-aligned businesses," Hall says.
"We also thought it would support our evolution towards a quadruple-bottom-line company." Since receiving its certification, the business has introduced several adjustments, including a board of directors and written guidelines to encourage suppliers to act more ethically and sustainably.
"In our supply chain, we have exciting initiatives exploring how to ensure fair wages and benefits for all workers," tells Hall. "As a woman-founded and majority women-owned company, we are also actively looking at all aspects of our business to understand how we can lift women and create a more gender-equitable world."
Transparency with customers
Many consumers have also changed – they’re becoming more conscious of the companies behind the products. In April 2020, Bird Eyewear became the first UK eyewear company to receive B Corp Certification.
The company’s Founder, Ed Bird, shares that every pair sold distributes solar light to remote communities in Africa through its Share Your Sun partnership with SolarAid. "The B Corp community works towards reduced inequality, lower levels of poverty, a healthier environment, stronger communities and the creation of high-quality jobs with dignity and purpose," Bird explains.
"By harnessing the power of business, B Corps use profits and growth as a means to a greater end." CEO of B Lab Australia and New Zealand Andrew Davies confirms that the B Corp market is growing. "We’ve been around since 2013 and grown to just short of 300 B Corps in Australia and New Zealand," he explains.
"It’s about 10% New Zealand and 90% Australia. But the bigger trend in the past 18 months to two years has been increasingly bigger businesses seeking out certification." He notes that Kathmandu is one of the recent businesses with a significant footprint to be certified.
"We are also seeing an increase in interest from consumers and employees who are looking at businesses not only in terms of what they do, but how they do it or what their impact is," Davies relays.
"I think that is going to lead to more businesses pursuing things like B Corp Certification because people are asking the hard questions: ‘Why should I support this business? Why should I buy its product? What type of business do I want to associate with?’ Those questions become more acute when we get into periods of economic disruption."
Davies further says that B Corp Certification forces companies to look deeply at its supply chain. "Supply chain resilience has been a big issue for many businesses during COVID-19, where they’ve found that overseas partners can’t supply them anymore," he notes.
"And so businesses, not just B Corps but all companies, are looking at their supply chains to see how they can reduce risks and increase localisation. "That’s what B Corp Certification rewards. You get credits for having the closest supply chain and working with more local businesses," Davies adds.
"It’s a good example of where the certification is not just about a brand proposition and sending a message to consumers; it’s also a framework for effectively helping companies in this environment by making them more resilient."
Making the B Corp move
All businesses – no matter the size – are encouraged to apply. Australian Ethical Investment is one of Australia’s first B Corps listed on the ASX. CEO John McMurdo says the certification has enabled the company to endorse its story of positive impact in a way that’s easy to recognise.
It also differentiates the business from others. "Certification and recertification has put us on a path of best practice through continuous improvement and access to other mission-driven organisations," McMurdo says.
"Together with other B Corps, our success redefines business success in Australia and offers an inclusive, equitable and sustainable economy. As the COVID-19 crisis unfolds and impacts us all, this new type of economic system is needed more than ever."
Achieving B Corp Certification provides businesses with validity and a positive standpoint. It is the ultimate stamp of approval that benefits the customers, employees, environment and shareholders.
"All of those things can work together in unison and not be at the expense of each other," Thornton confirms. "That’s going to be the way forward for businesses."
Feature image: Tim Davis, courtesy of Patagonia.