As a startup founder, you have the unique opportunity to build a socially-conscious company from its foundation. Adopting values-driven business practices can help your startup become a more attractive and competitive choice for engaged and high-quality talent and loyal customers to choose you over other options. In this post, we’ll dive into why building a socially-conscious startup matters, share case studies on venture-backed startups that have pursued B Corp Certification, and offer real-world examples of how to implement better business practices now.
Glossary of Terms:
Certified B Corporation — A company that receives the third-party certification administered by the non-profit B Lab. Certifying your startup is to business what USDA Organic is to your milk, Fair Trade is to your coffee, or LEED is to your office building. Certification is based in part on a company’s verified performance on the B Impact Assessment.
B Impact Assessment (BIA) — To become a Certified B Corporation, or Certified B Corp, a company must complete the BIA, a free and confidential survey designed to help measure and manage your company’s positive impact on your workers, community, customers, and environment.
Benefit Corporation — A Benefit Corporation is a legal structure that empowers and protects a company to pursue positive stakeholder impact alongside profit. Becoming a Benefit Corporation legally protects your startup’s mission through capital raises and leadership changes and prepares businesses to lead a mission-driven life post-IPO. Startups that convert to a Benefit Corporation can still elect to be taxed as a C Corp. A Benefit Corporation does not need to be a Certified B Corp.
Note: Incorporating or converting to a Benefit Corporation is not a requisite to becoming a Certified B Corp.
Why Building a Socially-Conscious Startup Matters
We know that consumers are more conscious than ever before. They are not just focused on what their favorite brands deliver, but how they deliver on their brand promise as well.
- 80% of global consumers agree that business must play a role in addressing societal issues. (Conscious Company, 2017)
- 86% of employees believe it is important that their employer is responsible to society and the environment. (Conscious Company, 2017)
Completing the B Impact Assessment (BIA) is one free and simple way to create your roadmap to better business practices, helping you evaluate what is already in place and ideate other ideas to implement that will expand your startup’s impact — whether or not you choose to formally certify your company.
If your startup receives a score of 80+ on your B Impact Assessment, you can choose to become a Certified B Corporation alongside peers like Warby Parker, Prose, Hootsuite, and Bombas socks. Once becoming a Certified B Corp, there are measurable benefits that can add value to your startup, such as:
- Attracting and Engaging Talent: Certification can help validate that you are building an employee-centric culture for recruiting purposes and better connect your employees with your mission, leading to a more engaged workforce.
- Building Brand Trust: Becoming certified authentically and transparently demonstrates your startup’s commitment to social and environmental impact, which in turn can build consumer trust.
- Benchmarking Your Impact: Based on data from the B Corp community, certified startups can compare and improve their social and environmental programs to other leaders in the tech space.
Venture-Back Startups Can Also Become Certified B Corps
Most startups incorporate as a C Corp if they intend to raise institutional venture capital. Becoming a Certified B Corp does not change or impact your C Corp standing — only the requirements of corporate purpose, accountability, and transparency achieved through the BIA.
In fact, institutional investors are already paying attention to companies with a social or environmental impact, and mainstream tier 1 venture firms like a16z, First Round Capital, Benchmark, and Founders Fund have backed Certified B Corp and Benefit Corporation startups.
Venture-Backed Startup Case Studies:
- Founded in 2014, became a Certified B Corp in 2016
- Raised $202.5M at a $1.75B valuation from investors including Lerer Hippeau, Fidelity Investments, and Franklin Templeton
- Example: Partners with Soles4Souls® to give lightly used Allbirds a new life all around the world, helping communities in need thrive in the process.
- Founded in 2015, became a Certified B Corp in 2016
- Raised $480M from investors including Sequoia, Thrive Capital, and GV
- Went public in Spring 2020 as one of the first few public B Corps
- Example: Created a giveback program for customers to give unclaimed money from their insurance policy to a nonprofit of their choice, totaling $1,128,109 in give-back dollars in 2020 alone.
- Founded in 2014, became a Certified B Corp in 2016
- Raised $145.6M from investors including Khosla Ventures and Goldman Sachs
- Example: Uses only natural ingredients, bottles are 100% post-consumer recycled plastic that is 100% recyclable.
You Don’t Have to Certify to Reap the Benefits
The B Impact Assessment (BIA) measures your company’s impact on its workers, community, environment, and customers. Whether or not you intend to certify, reviewing the BIA questions can serve as an inspirational blueprint to set up your company on a socially responsible path — and to benchmark your efforts over time.
“For a group of nerds who love data and measurement tools, this was the perfect framework. There were a lot of company-wide things we were doing, like composting our lunch waste and supporting local small businesses, but we had never actually measured any of those efforts. Now that we have measurements and goals around our efforts, it felt really gratifying for everyone.” — Jennifer McKaig, Etsy’s Social Impact Lead on the BIA framework (Source)
Here are some examples that can be implemented to create positive change in your startup now:
- Know your local living wage and pay that rate as a minimum for your employees
- Promote internally for open or new positions when possible
- Provide paid leave for primary caregivers following birth or adoption
- Offer paid time off for your employees to volunteer in addition to their PTO allowance
- Purchase company swag, office goods, or team lunches from local, minority or woman-owned businesses locally
- Partner with local charities to set annual goals for formal donations, around the holiday season or throughout the year
- Encourage or provide a stipend for public transit for your team’s commute
- Implement energy-efficient improvements and waste reduction programs (like recycling) within your office
- Purchase carbon offsets, such as Sustainability-as-a-Service platform Cloverly
- Monitor and measure the outcomes and well-being of your customers from using your product
- For DTC product startups, aim to use packaging materials that have a high % of post-consumer recycled cardboard or can be repurposed for other uses
- Reference the impact of your business in your mission statement
- Provide formal employee training about your mission statement
- Include social or environmental goals in annual performance reviews
Florida-based startups who are interested in learning how to build socially-responsible practices into the foundation of their company can contact Lorin Augerie at Florida for Good for guidance and free resources.
Specials thanks to Florida for Good for sharing information with Embarc Collective startups on the B Corp movement.
Inspired by the global B Corp movement, Florida for Good is an initiative which funds free resources, collaborative opportunities and networking connections to facilitate the spread of business for good and Certified B Corporations®. Florida For Good is the connector between B Corps, Conscious Capitalism, 1% For The Planet, like-minded organizations/networks, governments/chambers, academia, and the local For Good ecosystems throughout the state. FFG and the For Good Movement were co-founded in 2018 by Jared Meyers, owner of two Certified B Corporations in Florida (Legacy Vacation Resorts and Salt Palm Development).
Additional Resources to Leverage