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Profit Not the Only Motive for B Corporations

By Greg Gonzales

One of several antagonists in the 1995 comedy “Tommy Boy,” Ray Zalinsky, goes from trusted face to villain in one telling line: “Truth is, I make car parts for the American working man because I’m a hell of a salesman and he doesn’t know any better.” B Corporations are the antithesis to that attitude. The certification is a stamp of approval for companies that pass rigorous standards of environmental impact, social missions, corporate transparency and employee satisfaction.

“If you’re not measuring impact in business, you’re already behind,” said Katie Holcomb, B Lab’s Director of Communications. “It’s become a more mainstream idea, and we’ve been painted as the next big thing.”

Since 2006, more than 1500 businesses in 22 countries have been certified as B Corporations by B Lab, which certifies each and every B Corp. B Lab’s community sees business as a force for good, and the future of business, said Holcomb. She also said the approval process is simple, but thorough.
The B Corp qualification process begins with a 150-question assessment. A passing score is 80 out of 200, and companies can work to improve the score, which is listed online. B Lab estimates that the questionnaire takes 90 minutes to complete, though some B Corp members joked that it’s closer to 90 hours.

“You really have to prove what you’re saying,” said Dana Ginsberg, Director of Marketing at Bare Snacks, a B Corp since 2013. She added that the assessment is rigorous and detailed, and that qualifying companies must back up their statements with documentation. It’s essentially an audit that proves the company’s claims are legit, and that there’s nothing to hide. There’s also a phone interview that applicants must complete.

Prospective B Corps must also prove that they take care of employees. Ethical Bean‘s Sales and Marketing person, Lauren Archibald, has worked for two B Corps, and said she considers B Lab as much a resource for companies as for job seekers. “When you’re coming in to work for a B Corp, you know they treat their employees well,” she said.

She also added that it’s about respecting customers, employees and the public, and being honest. “If people are asking questions and you can’t answer them, you probably have something to hide,” she said. “B Corp status opens you up, keeps you transparent and aligns your values.”

In addition to the rigorous certification process, companies commit to their cause by amending corporate bylaws to include social and environmental missions. That is, B Corps choose to make themselves legally beholden to work toward missions other than profit. And in states where Public Benefit Corporations (PBCs) can incorporate, B Corps must make the switch from corporate structures like Limited Liability or C Corporation within two years of certification. Companies in states and countries where PBCs cannot yet incorporate must make the switch within four years from the time legislation does pass. In doing so, B Corps become equally bound to shareholders, employees, social good and environmental impact, not just the former.

“We were able to integrate all the elements of our mission into our articles of incorporation,” said Mathieu Senard, Co-Founder and Co-CEO of Alter Eco, a B Corp since 2009. “Legally binding, our product has to be organic and non-GMO.” He added that Alter Eco made the switch as soon as the possibly could, in 2013, right when the company’s home state of Delaware passed the legislation.

There’s also an annual fee, and companies must requalify every year. The cost is $5000 a year for companies making less than $20 million in annual sales, while companies that make more than $20 million pay $10,000. Members of what’s lovingly referred to as the “B Community” say the benefits are well worth the costs.

“This model works! It’s showing businesses that they can do good for people and the planet and also be comfortable and keep a healthy business,” said Senard. “It’s a way to show your impact and your mission, too. It’s one thing when you talk about your company and say you’re doing all these great things, but it’s more powerful when a third party certifies you and tells the whole world what you’re doing.” Companies can also add the B Corp seal to their websites and packaging to let everyone know they’re part of the B Community.

“Once you become a B Corp, you work with other B Corps,” said Ginsberg. She added that becoming a B Corp comes with a few discounts and a large number of important contacts. They can learn from each others’ example, or work with B Lab to improve.

B Lab’s online system enables businesses to increase their score year round. “You can modify and update that score anytime you want,” said Ginsberg. “It’s a free-flowing process that helps you track where you are and to get to higher standards. You can change your policies, recycle a different way, put in a greener refrigerator.”

And that’s one of the ways Bare Snacks improved upon its own score. The company asked employees what mattered to them, which included axing the break room paper plates and cups, getting an efficient refrigerator and replacing plastic water bottles with a faucet filter. In addition, the company raised its score by updating some of its HR policies. The result, said Ginsberg, was very positive employee response.

Alter Eco‘s score increased from 125 to 148 last year, and Senard attributes that improvement to the company’s acting on suggestions from B Lab. “What B Corp has helped us to do is put the spotlight on areas where we can improve,” he said. “B Lab didn’t force us to do it — we just saw we can be better, and we want to be better for our employees, too.”

Ginsberg said many food producers have been leaders in this movement. “It’s really going to help differentiate your brand for consumers,” she said. “People are getting more skeptical about the products they buy, and really want to support positive brands because, nowadays, on social media, people see brands they support reflecting their identities. They want their identity to align with their values, which is what B Corps are all about.”

Even though B Corp certification does appear advantageous to brands, Senard and other B Corp owners specifically pointed out that it’s hard to quantify the benefits. Ultimately, they said, it’s about making a better business and working toward a brighter future.

“Consumers care about the products they buy and how they were developed, how those companies produce and operate,” Ginsberg said. “Further, employees care about the companies they work for, and they want their employers to do that as well. I see this trend continuing to grow.”

“I hope we’re going to be a model for other companies to become that,” said Senard. “We hope to inspire the entrepreneurs of the future to start their companies like that, from day one, where the company has a mission to bring some good into this world.”
Interested parties can head to bcorporation.net to put their business to the test.

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