The B Corporation Certification

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where signaling is not possible. Branding yields lower efficiency gains than third-party certification, as CSR brands are not of higher quality than those when there is no signaling.

[…] CSR must be incorporated into brand-building strategies through third-party certification.”

(Etilé & Teyssier, 2016, p.426).

2.3. The B Corporation Certification

2.3.1. What are B Corps?

B Corps are all companies that receive the certification “B Corporation” delivered by the B Lab.

The B Lab is a non-profit organization, co-founded in 2006 by Jay Coen Gilbert, Bart Houlahan, and Andrew Kassoy. They believed that non-profits and governments lack the resources to solve social issue, and that the best way to solve them is to use businesses. They believe that businesses should be used as a force for good! The first B Corp was certified in 2007. To be certified you must be “meeting rigorous standards of social and environmental performance, accountability, and transparency” (bcorporations.net). Therefore, you must meet the performance and legal requirements of B Lab. The performance of a company’s impact on stakeholders is done through the B impact assessment. The B impact assessment is a questionnaire comparing companies’ practices to the “highest standards of overall social and environmental performance, public transparency, and legal accountability” (bcorporation.net).

It focuses on 5 aspects, governance, workers, community, customers and environment. The legal requirement is there to make sure that social values, sustainability is part of the DNA of the company and will stay this way through company growth, change of leadership, even from going from private to public (bcorporations.net).

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B Corps are for-profit companies, they can be start-ups, SMEs, multinationals, subsidiaries, public or private, or even transit from private to public. They all must have to meet the same performance requirement (which is a score of 80/200 on the impact assessment). However, they do not have to hold themselves to the same standards of transparency. All companies must disclose their summary results of the B impact assessment, however public companies and subsidiaries must disclose a more complete version of their B impact assessment. Out of April 14^th, 2018, according to the B Corporations website, there is 2,457 B Corps across 54 countries and 130 industries. According to a study of April 2017 by KKS advisors 62% of B Corps were in the United-States (where the movement was born), 15% in Europe (led by the United Kingdom), South America (12%, led by Chile), and Oceania (8%, led by Australia) (“B Corps

& Benefit Corporations[...]” by KKS advisors, 2017). There is 20 B Corps in Taiwan (reported on the B Corps website) the first one was certified in June 2014 (DOMI Earth) and the last on in October 2017 (OBank).

Moreover, going back to our first discussion, B Corps are find across 130 industries, therefore they do not necessarily need to serve a social mission. Indeed, all B Corps are not Social Enterprises. For instance, the latest company joining B Corps rang and which is now the biggest B Corp in the world is the North American subsidiary of the French Company Danone (certified April 2018). Danone is not a Social Enterprise has its products (food and beverages that can be find in regular supermarkets) do not serve a social mission. However, there is among B Corps community companies that serve a social mission and that were qualified of Social Enterprise.

However, because of the standards of the B impact assessment all B Corps are engaged in CSR activities, and even more use CSR as a “value-creator” (Top of the pyramid, see p.13). Therefore, we can qualify the relationship between CSR, Social Enterprise and B Corps as described in

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the diagram⁵ below:

2.3.2. Why Choose B Corps

The Best of the Best for the World!

The movement B Corp is considered to be the most powerful and influential to have a real impact on business, change their mind and create a community. This is because companies with the B Corporation certification must hold theme-self to the highest standards and the B Lab, through its certification process make sure that they do. Indeed, first of all, the B impact assessment is assessing companies based on the best up to date standards. The oversight of the assessment is the responsibility of the Standards Advisory Council. An independent committee which is composed of 20 to 22 members each the best in their field. The first assessment was constructed by analyzing the best practices in recognized sustainable firms. The B impact assessment is renewed every 2 years to include the newest standards. (bcorporation.net)

Moreover, the B Corporation certification is a 2 years term, meaning that after 2 years

5 Source figure 5: Own.

Figure 5: Relationship CSR, SE, B Corps

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companies must retake the assessment. This forces companies to be constantly maintained to the highest standards, benchmark themselves to other companies and ensure that social and environmental impact follows the company’s growth. When retaking the impact assessment, it doesn’t only measures if you are still doing what you were doing two years ago, but also measures your improvement. To get the same or a higher score you must have improved. Not evolving will result in a lower grade. For B Lab there is always the possibility to do more!

Finally, the process of getting accredited is long and difficult. After doing the B impact assessment test it needs to be reviewed by B Lab. The companies will be interviewed and not only executives but employees to ensure the truthfulness of the answers. The companies need to submit additional documentation to support the answers to the assessment… After being certified all B Corps are subject to at least a 20% chance of onsite company visit by a B Lab employee to check if “what is preached is practiced”. Moreover, there is some types of B Corps, such as for subsidiaries, for which this visit is mandatory. A proof that B Corps movement is the path to the future, is that world known socially responsible businesses decided to join the B Corp community because they believe in what it stand for and its mission. Such businesses are Patagonia, most recently Danone, but most importantly Ben & Jerrys, the first company in the world to produce a social report. (bcorporations.net)

Therefore, I believe that B Corps are the best companies to represent positive social and environmental impact. When studying a phenomenon, you should focus on the bests that exist, and therefore bring the best examples possible. Doing so brings meaning to the research and can help future companies to benchmark themselves to the highest level.

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The number of B Corps has been steadily growing for the last 10 years. With the exception of 2017 with a slower growth (only 10 new more B Cops certified compared to 2016). With the data given in the B Corporation website you can see on the growth chart below of the B Corp movement (bcorporation.net/recently certified).

We can see that there is a difference between the number of B Corps cited on the literature review and what the website discloses. For instance, according to Harriman in 2015 there was 1358 B Corps. However, the data of the B Corporations shows that there was only 1097 B Corps at the end of 2015. This is because the website only discloses the companies that are still certified in 2018. This demonstrates that not all the companies are fit to comply with B Corps high standards, and do not get reaccredited.

Figure 6: The Rise of B Corps the last Decade

25 28 59 68 124 181 257 355

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Evolution of B Corps

Total per year Cumulative

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Why companies are becoming B Corporations?

In the recent years there has been an increase in research on the B Corps movement. Some of them have focused on understanding why this movement has gained recognition and why companies choose to become a B Corporation. In a Harvard Business Review article, Kim and Schifeling conducted a research and concluded that there were two main reasons why businesses are becoming B Corps. The first reason is because they want to stand out. This relates to our discussion on greenwashing earlier. They found that in industries where companies tend to engage in small acts of CSR to demonstrate a social image there was more B Corporations.

This because those companies want to stand out, showing their real commitment to a social cause. This is mainly the case for small companies “that have long been committed to social and environmental causes” (Kim & al., 2016). The second reason is that “certifying firms believed the major crises of our time are a result of the way we conduct business, and they became a B Corporation to join the movement of creating a new economy with a new set of rules and redefine the way people perceive success in the business world.” (Kim & al., 2016).

Another research, conducted by KKS advisors 2017, states four reasons why companies become B Corporations. Those reasons are: pursuing a purpose beyond profits, upholding transparency, demonstrating authenticity and gaining recognition for what’s already there. We can see that there is similarity between those motivations and the ones stated in the Harvard Business Review. The main common point is that most of those motivations relate to business that were

“born to be B corps”. Meaning that those companies acted as B Corps before being certified.

Therefore, most of the current B Corps didn’t need to change how they were operating. Their mission and values and those of B Lab seemed to be a perfect match. This is also the conclusion of Harriman, 2015 “The vast majority of the 1,358 B Corps certified to date were operating in

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the spirit of a B Corp prior to the existence of the term or the standards that substantiate it.”

(Harriman, 2015, p.49).

In her research Harriman also states that the rise of the B Corp movement as mainly been concentrated in the growth of a community for now. Business sharing the same values finally found a way to show it to the world and join the community. However, for now the B Corp movement as less efficiently attracted other businesses. Convincing businesses to change and adopt this new mentality. This is also what the data on the number of B Corps found on the website suggests. Not all newly certified corporations always renew their certification and stay a part of the B community. This is due to the level of the standards but also the difficulty for B Lab to convince still for-profit business to become for-benefit businesses on the long term.

According to Harriman this is the new challenging step for the growth of the B Corps movement.

(Harriman, 2015).