Why so many companies are buzzing to become a B Corp

15 Apr 2022

From left: Coopman Search and Selection co-founders and directors Andrew Murphy and Mark Fallon. Image: Alan Rowlette

Strong Roots, Coopman Search and Selection, and Kin and Carta told SiliconRepublic.com their reasons for becoming certified B Corps, which requires putting sustainability as a company focus.

There has been a greater focus on sustainability in recent years, with both consumers and organisations taking note of the impact companies can have on the environment.

One way businesses around the world are now showing a sustainability commitment is by becoming a certified B Corporation.

A B Corporation – or B Corp – is a company that has been certified by nonprofit organisation B Lab for meeting high standards in various areas, from environmental factors to employee diversity.

B Lab was founded in 2006, with the first 82 B Corp companies certified in 2007. Since then, the number of companies applying for the certification has increased dramatically. There are currently more than 4,900 companies that have B-Corp certification in 79 countries.

Dublin-headquartered specialist recruitment firm Coopman Search and Selection became a B Corp last December.

“Our company ethos aligns with all that B Corp stands for and so we are very proud to join this positive community of businesses working together for a better future,” Coopman director and co-founder Andrew Murphy said at the time.

Murphy told SiliconRepublic.com that B Corp first came to his attention when an insurance tech company he followed became certified.

“I saw them as a company that was quite disruptive, that was trying to shake up an industry that had huge trust issues,” Murphy said. “So I had to look into the B Corp certification to see what it was.”

Murphy described the process to become a B Corp as an extensive “look under the bonnet of your company” approach. He said Coopman had to submit an assessment answering questions on various topics, such as how its workers were treated and how it engaged with the community.

According to B Lab, companies must demonstrate high social and environmental performance, make legal commitments by changing their corporate governance structure and exhibit transparency in order to receive the certification.

B Lab said there has been “extraordinary” growth in the number of companies interested in certification, with more than 6,000 applications received between the start of 2020 to 2021.

How does a company become a B Corp?

A B Corp certification is billed as a way to measure a company’s entire social and environmental impact. A company that wishes to become a B Corp is assessed on its sustainability practices in five different areas: community, customers, environment, governance and workers.

The certification process involves the completion of a B Impact Assessment review, in which a company needs to reach a total assessment score higher than 80. In order to retain the certification, a company is also reassessed every three years to ensure it is maintaining standards and making progress on any goals it has set.

Plant-based food brand Strong Roots became a certified B Corp last year. The company’s corporate social responsibility manager, Louise O’Connor, told SiliconRepublic.com that the process was very thorough, taking around six months from the initial submission to receive the certification.

“They ask for a lot of documentation so it wasn’t simply a chat and it wasn’t simply me sending word documents either,” O’Connor said. “I was having to do screen grabs of bank accounts and things like that, they were pretty forensic in what they were looking at.”

Some of the initiatives Strong Roots took on that contributed to its environmental score included adding cardboard packing to some of its products to reduce plastic consumption, verifying the sustainability practices of its ingredient suppliers and making a plan to develop a carbon footprint measuring tool to assess its where to reduce its carbon output.

The benefits of being a B Corp

There are costs companies must consider if they are making changes to their corporate structure and placing greater focus on sustainability. There is also an annual fee that companies pay to B Lab to retain the cert and use the B Corp logo, which is based on regions and the company size.

In Europe, companies submitting a B Impact Assessment for verification pay a submission fee of €250. Certification fees are then paid annually, calculated based on the company’s total revenue and starting from €1,000 per year.

However, B Lab says there are many benefits for companies that become B Corp certified. B Lab research in the UK claimed that B Corp SMEs recorded faster growth in annual turnover and greater levels of employee retention when compared to their peers.

Towards the end of 2021, London-based digital transformation consultancy Kin and Carta became B Corp certified across all the markets it operates. The company’s CEO, J Schwan, said being a B Corp has helped it to attract new staff and keep its attrition levels “way below the industry average”.

“If you talk to our talent acquisition team, they will say the number one reason that differentiates us and why people say they’re coming to work for us is because of our work in the social responsibility space, and B Corp in particular,” Schwan said.

Schwan said Kin and Carta made the decision in 2018 to put social responsibility at “the centre of our offerings and the culture and how we were going to differentiate ourselves”. He said one of the reasons it chose the B Corp framework was due to its brand recognition in the consumer sector.

Issues with B Corp certification

Just because a company has become a certified B Corp does not automatically mean that it is an environmentally conscious company. A business can receive a certification if it scores highly in areas such as workers and customers, while it may not have a high score in the environment section.

B Lab says that any company can become a B Corp. However, it has been making adjustments over the years by releasing specific entry requirements when it comes to controversial issues and industries, such as for bottled water or fossil fuel companies.

For example, companies involved in the production and sale of fossil fuels need to show they are not engaged in specific prohibited practices, have successfully transitioned their energy portfolio to be at least 50pc carbon free, and have plans to be completely carbon free within specified timeframes.

B Lab also mentions the legal requirements a company must agree to in order to become a B-Corp.

Online marketplace Etsy became a B Corp in 2012 to show itself as a sustainable business. However, one of the requirements to retain the cert for a corporation incorporated in Delaware was that it had to change elements of its corporate structure. As Etsy did not wish to do this, it chose to cancel its B Corp certification in 2017.

“Although Etsy will no longer be a certified B Corporation, Etsy and B Lab share a long-term vision for the role of business in society and the positive impact companies can, and should, have on the world, and we look forward to exploring new opportunities to work with them to advance that shared vision,” Etsy CEO Josh Silverman said in a statement at the time.

While there is a risk that businesses could use the label as a form of greenwashing, this could stem from potential abuses by companies rather than with B Lab itself. The nonprofit organisation maintains transparency by listing every B Corp on a publicly accessible page, showing when the company was certified and a breakdown of its scores.

It also continues to update its assessment of B Corp applications with feedback from stakeholders. In February, B Lab announced plans to add new performance measures for the certification.

“The goal with new standards is not to remove companies from the B Corp community, or necessarily to make the certification more exclusive or difficult to obtain,” B Lab said in a statement.

“Rather, the goal is to ensure that the movement continues reflecting the leadership necessary for the moment and the future, which includes ensuring it is feasible and accessible for a variety of businesses, such as those that have been historically marginalised.”

While there can be a wide variety in terms of what a company has promised and achieved to get the certification, O’Connor believes that seeing a company become a B Corp suggests that it is avoiding a number of bad practices.

“I think for me the main thing as a consumer – and I am a consumer as well as working for Strong Roots – I now look at the B Corp logo and I think, OK there are certain things, they can’t be doing this or they wouldn’t be a B Corp, like slavery and the supply chain,” O’Connor said. “To the extent that it is knowable, I now know that the company has been audited for that.”

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Leigh Mc Gowran is a journalist with Silicon Republic