If you open up the mind, the opportunity to address both profits and social conditions are limitless. It’s a process of innovation. — Jerry Greenfield, Co-Founder of Ben & Jerry’s
A new type of business rises in the horizon beyond a new conscious economy skyline. This generation of businesses differentiates from traditional corporate actors in the way they relate to the world. In short, B-Corps strive to be the best for the world. They also have a lot to gain, which we will address shortly.
At Cascade Engineering, everything we stand for culminates in our Triple Bottom Line (TBL) — People, Planet, Profit. Looking across our operations, this focus has become a permanent and palpable part of our culture. It feeds our drive to create a winning mentality, new innovations, and prosperity for every individual.
— Cascade Engineering, B-Corp, Michigan, United States
The why of becoming a B-Corp
Becoming a B-Corp has a lot to do with intrinsic motivation. Companies are launched as or applying to become B-Corps because their leaders believe the current economic system is not working for everyone. New generations of entrepreneurs, particularly, are increasingly interested in engaging in work that aligns with their inner values.
This applies to employees, too. A recent study about millennial employees showed that 75 percent of respondents favored a responsible company over a higher salary and 76 percent included the employer’s socio-environmental commitments in their job decisions.
An external pressure also applies. Society, nonprofits, and governments also require companies to become more socially and environmentally responsible. The 21st century responsibility of business extends to all its stakeholders, not just shareholders. Thus, a great motivating factor to become a B-Corp is the opportunity to improve business impact and protect the company’s mission. Moreover, the certification itself is a great way to identify in the market, in order to influence the capital allocation decisions of investors.
My biggest surprise was the social capital B Corp community membership gave me with millennials… I no longer search for high-potential staff; they now come to me.
— Tiffany Jana, TMI Consulting
Step 1: Complete the B Impact assessment
At the start, any company aspiring to a B Corporation certification needs to perform an internal evaluation of its business model, operations, and goals and set out a strategy that involves the triple bottom line: people, planet, and profits.
To that end, B Lab offers a free assessment with questions that helps companies assess the sustainability impact of their operations on employees, communities, and the environment. You can always start with the 30 minutes snapshot and advance to the 2–3 hours full impact report.
Step 2: Meet the legal requirements
Another requirement of the B-Corp certification is that companies obtain legal accountability that balances profit and purpose. The expectation is that once a company realises that it has crossed performance thresholds on the triple bottom line dimensions, it can create a legal ground in the firm for incorporating the interests of all stakeholders. This means that the fiduciary duties of directors and managers must incorporate sustainability impact.
Step 3: Get verified and finalise certification
The process of verifying compliance with standards and earning the certification from B Lab is a rigorous one. The impact assessment is challenging enough to ensure that companies are truly operating sustainable business models and that greenwashing behaviour does not pass.
Businesses further need to provide documentation that attests the online assessment data, commit to change their legal status, sign the necessary paper, and pay some licensing fees.
In 2007, the first generation of B Corporations was certified. Since then, the number of firms complying with these standards has increased exponentially. Today, B Corps have obtained legal recognition to pursue a higher mission than profit in over 40 states. Is highly likely that the future will be shaped by these organisations, while traditional corporate forms gradually lose their traditional status.