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Purpose Meets Profit: 5 Things to Know if Your Business Is Considering Becoming a Certified B Corporation
If you’ve spent any time in a shopping mall, you’ve surely passed by, or perhaps made purchases from, The Body Shop, which for decades has been selling ethically sourced beauty, skincare, bath and body products. The company has done so since 1976, all the while adhering to a rather admirable vision: that business can be a force for good. With that as its driving force, The Body Shop has launched a series of activism campaigns over the years and even became the first international cosmetics brand recognized under the Humane Cosmetics Standard.
Patagonia is another socially conscious and much beloved company. The manufacturer and retailer of apparel and other outdoor products opened its doors in 1973 and is celebrated for its environmental efforts. In fact, Patagonia was named a UN Champion of the Earth in 2019—the United Nation's top environmental honor—for its practice of building the best products, causing no unnecessary harm, and using business to inspire and implement solutions to the environmental crisis. No doubt, Patagonia’s mission statement best articulates its commitment to the world we share: “we’re in business to save our home planet."
Founded in 2016, Allbirds is a relative “new kid on the block,” at least as compared to The Body Shop and Patagonia, but it too is dedicated to the greater good. The eco-friendly brand sells what are often referred to as the “world’s most comfortable shoes,” many of which are made from merino wool that meets stringent standards for sustainable farming and animal welfare. Allbirds has taken its environmental priorities a step further by promising to cut its carbon footprint in half by 2025, reducing it to near zero by 2030, and continuing to be carbon neutral in the meantime.
What The Body Shop, Patagonia, Allbirds and approximately 3,500 other companies in 70 countries all have in common is that they’re Certified B Corporations (B-Corps) that meet the highest standards of verified social and environmental performance, public transparency and legal accountability to balance purposes and profit.
At their core, B-Corps are for-profit, mission-driven businesses that aspire to “do no harm and benefit all” through their products and practices. It is important to understand that a B-Corp is a certification only—not a legal entity form—and to become a B-Corp, a company must be certified by B Lab, the governing body of B-Corps that’s working toward an inclusive, equitable and regenerative economic system for all people and the planet.
If you want to follow the lead of The Body Shop, Patagonia, Allbirds and thousands of additional companies worldwide by pursuing B-Corp status, here are five things to consider:
1. Step One Toward B-Certification Is Taking the B Impact Assessment (BIA)
The BIA is a comprehensive evaluation of how a business interacts with its employees, customers, community and environment. More specifically, the BIA measures the impact a given company’s operational practices (read: its chosen suppliers, manufacturing processes and governance) and products or services have on the world. Of note, over 50,000 businesses across the globe have used this assessment tool to improve not just their businesses, but also the way in which they engage with society and the environment.
Depending on the size, age and complexity (number of operating locations) of the business under the microscope, the BIA can take up to several hours to complete. To qualify as a B-Corp, a business must score at least 80 points out of a possible 200, which is no easy feat, with most companies earning between 40 and 100.
Taking the BIA will provide your company with a baseline measurement of where it falls within the B-Corp scale and highlight potential areas of improvement should you decide to pursue B-Corp certification.
2. Adopting Benefit Corporation Structure
In addition to scoring at least 80 points on the BIA, a company looking to become a B-Corp must complete certain B-Corp legal requirements prior to achieving certification.
To be precise, a company with 50 or more employees has to adopt the benefit corporation structure or an equivalent. The benefit corporation structure is different than a traditional for-profit corporation to the extent that its purposes is to benefit the public good in addition to simply generating profits for shareholders. To do so, the company must amend its governing documents (e.g., the articles of incorporation) to include specific mission-aligned language. Should the company be incorporated in an area that doesn’t have a designated legal framework for benefit corporations, then it must support B Lab’s public policy objective of passing benefit corporation legal designation where it doesn’t already exist, including within the region where that company is located.
A company with 50 or less employees would be required to undergo a review process tailored to its enterprise and industry by which B Lab evaluates whether the company’s structure and characteristics are sufficient to deem the entity a B-Corp.
3. Appealing to Socially Conscious Consumers and Investors
The benefits of B-Corp designation are many. When your business becomes a B-Corp, you appeal to like-minded, socially conscious consumers who are rather thoughtful about where they put their money. In recent years, a broad swath of potential customers, including millennials and Gen Z, have increasingly developed a more conscientious approach to their purchasing decisions, as Nielsen has reported in The Sustainability Imperative. Furthermore, this demographic is willing to pay more for sustainable brands. In terms of marketing to them, as a B-Corp, you can distinguish your website, products and services by using the widely recognizable B-Corp logo. That way, purpose-driven buyers will know that your business aligns with their own values.
Qualifying as a B-Corp can open up opportunities for your business to attract socially- minded investors as well. These investors, who want to invest in companies that enact positive change, see value in B-Corps for several reasons. For instance, B Corps have standardized benchmarks for management best practices; they’re subject to third-party audits of their progress and performance metrics; B-Corps are accountable to the public; and they’re likely to have improved governance standards.
4. Attracting Dedicated and Engaged Employees
B-Corp certification could help your business thrive in terms of attracting talent. These days, more and more employees want to work for companies that stand for something other than the sole pursuit of profit. As such, B-Corp status might give you a leg up in hiring and retaining passionate individuals who want to help further your company’s mission and relish in the fact that their efforts on your behalf would contribute to the greater good. There is more. Because B Lab imposes upon B-Corps certain work culture and governance, existing and would-be employees would be assured that your company will maintain a positive and healthy workplace once certified.
5. Joining a Network of Other Like-Minded Companies
Upon becoming a B-Corp, you would have access to B Lab’s online global platform called the “B Hive” that would connect you to the global community of over 3,500 B-Corps now in existence. This resource could be leaned upon to facilitate collaboration with other like-minded businesses and assist you in making the most of your B-Corp classification.
Though the process may take some time, B-Corp certification is well worth the effort for companies that place purpose and profit on equal footing. If that describes your business, the time is now to emulate The Body Shop, Patagonia, Allbirds and all the other socially- and environmentally-focused companies worldwide that are proud to call themselves B-Corps.
This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.