The B Corp Path to Business — and Planetary — Success

By Robert McGarvey | Wednesday, 29 September 2021 | Feature, Business

A corporation is all about making money for its owners, right? That is one philosophy. But another that is fast gaining popularity is the Certified B Corp — a credentialing program that certifies a company as balancing profit and purpose and always considering the impact of decisions and actions on workers, customers, suppliers, community, and the environment. It is a wide look at a company and its many impacts on its stakeholders, broadly defined.

A B Corp puts planetary wellness right up there with personal wealth. Who would agree to that? Right now there are 4,088 Certified B Corps, in 153 industries and 77 countries. Many are companies you know: Ben and Jerry’s, Cabot Creamery, Patagonia, and Stonyfield Organic. 

That’s an elite group, but it’s intended to be. A reason the Certified B Corp process was created in 2006 is simply because many companies talk the talk but just don’t walk it. This certification process makes sure they do walk it.

A big advantage is that much of the application process is fee-free, said Jed Davis, an executive at Cabot who spearheaded that company’s effort to win B Corp status, which it did in 2012. Only when a company has completed the forms and clicked “Submit for Review” is there a cost, and right now, that is a nominal $150 submission fee.

Annual fees, once a company is certified, vary with size but are designed to be affordable. A business with sales of $150,000 or underpays $1,000. A behemoth with sales up to $999.9 million pays $50,000.

Now are you interested?

For starters, however, understand that a Certified B Corp is not the same as a benefit corporation. That’s a common confusion but the two are fundamentally very different. A company wins Certified B Corp status based on verified performance. A benefit corporation is a legal status similar to LLC or a C corporation. 

There’s no intended disrespect of benefit corporations; it’s just that it is a different matter.

Now for the big question: how hard is it to get certified as a B Corp? About one in three companies that initiate the process successfully complete it. A lot of details and facts are required and everything is validated. 

How Hard Is the Certification Process?

Allison Chaney, a digital marketer, related her experience in seeing a company where she had worked get certified as a B Corp: “I think it was just the right amount of difficult to get certified because we had to actually implement and prove that we had sustainable and responsible practices. It made me more confident that B Corps were actually making an impact. It wasn't easy, but it shouldn't be.”

She is not joking: The certification process is rigorous. It takes many companies a year to successfully pass. Big companies — with complex operations — may take several years to complete the documentation. In the process many companies discover they have to change their policies and practices to win certification. At Stoller Family Estate, a winery in Oregon, Michelle Kaufmann, who led the company’s application process, said there were many weeks where she put in 15 to 20 hours in gathering and writing up needed information to get certified. Along the way, Stoller learned it had to write up employee job descriptions to win certification — documents that had never seemed necessary before. But they got written, and Stoller won Certified B Corp status.

Know this, however: it’s not one and done. To keep Certified B Corp status, a company has to recertify every three years. Recertification is no easier, say companies that have been through this. 

The Badge for Startups

Can startups qualify for Certified B Corp status? Not exactly. A business has to have existed for a year to begin the process. A company wins Certified B Corp status with verified performance, and a startup, definitionally, does not have that.

But there is a kind of back door that Eloise Skinner, founder of One Typical Day, an innovative edtech startup intended to help employers recruit new hires, highlighted. It’s called Pending B Corp Status, and it’s a shorthand way to communicate the business’s beliefs to investors, employees, customers, and potential customers.

Skinner explained the plusses of this status: “This is a way to show your commitment to the B Corp movement without necessarily needing to complete the rigorous steps/reorganization that a larger company may be required to undertake.” The cost is $1,000 in the US.

Over 100 startups have applied for the label, which can be kept for a year. Then a company needs to go after the regular certification.

As for full certification, although there are mammoth businesses that are Certified B Corps (Ben and Jerry’s, Natura, Danone), many are small. In fact, B Lab, the nonprofit that runs the certification process, says the majority of Certified B Corps are small businesses.

What’s In It for a Small Company to Be a B Corp?

Why would a small company want B Certification? Kate Flynn, CEO and founder of Sun & Swell, which sells organic food in compostable packaging (Whole Foods in Southern California is a customer), offers one take: “After our first year we applied for and got it. The certification is a set of guardrails for us. It helps us adhere to certain standards as we make decisions and grow the company.”

She added that she sees two other big benefits of Certified B Corp status. First: some consumers are very aware of the B Corp label, and they want to buy products from certified companies. The other benefit: “It has helped us on the sales front — selling to corporate offices. Industry buyers know what B Corp means, and it gives us a leg up.” That’s a particular boon to Sun & Swell because a big part of its business plan is selling into corporate snack programs for employees — and a growing number of companies just like to supply B Corp made snacks, said Flynn.

A third benefit, named by many Certified B Corps, is that the label can help with employee recruitment, especially with younger workers (who generally score higher on awareness of environmental issues). That can be a crucial advantage in today’s tight labor market. “We have attracted excellent employees because of this,” said Cabot’s Davis.

Add it up, and there’s no disputing the impacts of becoming a Certified B Corp. Vicki Bohlsen, who runs a marketing agency in Indianapolis, said, “I believe B Certification is the single most important thing we have done.”

She added: “You don’t get certified as a marketing tactic. You have to be passionate about this.” But, paradoxically, she admitted that clients are starting to seek her out precisely because they want to work with a B Corp.

That is especially true in states with many Certified B Corps and with high awareness of the status. Vermont, for instance, is the nation’s smallest state but it has over three dozen Certified B Corps — including Cabot, Vermont Creamery, 7th Generation, Ben and Jerry’s, King Arthur Flour — and most say that where it is possible, they prefer to do business with another Certified B Corp. Shared values are why. “We have created terrific relations with other B Corps,” said Davis.

That can be a huge plus, especially for a young, small company.

For its part, B Lab, the company that runs the certification process, is encouraging certified companies to play together. In San Diego, for instance, Tori Callahan, chief of staff at Classy, a tech company engaged in helping nonprofits raise money, said there is an active group of Certified B Corps that work together to share ideas and best practices. B Lab, she said, provides the 31 San Diego area B Corps tools and resources so that they get the most out of the process.

Callahan also observed that Classy, which became a Certified B Corp in December 2020, is already getting inquiries about what the status signifies from prospective clients. Awareness, she indicated, is growing.

And that’s good for the health of B Corps.

B Lab has claimed that the survival rate for small Certified B Corps is higher than for other small businesses and the reason, it suggests, is precisely because there is an engaged community of B Corp enthusiasts that includes other companies, consumers, and possibly investors.

The Bold B Corp Challenge

Know too that Jay Coen Gilbert, a co-founder of B Lab, knows small business. He co-founded and helped build AND 1 into a $250 million basketball apparel and footwear company. When he sold AND 1, he knew he wanted something different, and B Lab was born.

“We are challenging American business to fulfill its own promise,” said Gilbert. “The B Corp challenge is to be who we say we want to be.”

Is that a challenge you are up to?

About the Author

Robert McGarvey

Robert McGarvey, a veteran journalist who has long covered startups and small businesses, created and hosts the CU2.0 Podcast for credit union and fintech executives which is at 120 episodes and counting.