Business Certifications: B Corporation
What is a B Certified Corporation?
A certifying entity is a third-party that runs an audit of a firm’s practices with the goal of confirming that specific promises are being met. Some most common certifications are the Non-GMO Project and Certified Organic. While the latter is administered by a government agency, many certifying entities are private or nonprofits, developing their own standards as well as their own certification mark to be issued typically to for-profit companies for social and environmental performance or other matters. Businesses can obtain certification by submitting to the certifying entity’s review process that often involves a fee. It should be noted that with all certifications, only certified companies can use a certification mark and any unauthorized use of a certification mark can constitute an infringement. The certification procedure is designed to build trust between a company and its various stakeholders. One certifying entity is B Labs, which is a global nonprofit network, which is known for certifying B Corporations and is different from a for-profit Benefit Corporation or a Benefit LLC.
How it all started
B Lab was founded in 2006 by Jay Coen Gilbert, Bart Houlahan, and Andrew Cassoy. Two of which, Gilbert and Houlahan, founded the basketball clothing and footwear brand AND 1 (a former category leader behind Nike). The inspiration behind the B Certified Corporation or “B Corp” movement rose from the forced sale of AND 1. Gilbert and Houlahan, saw their former employees stripped of benefits and treated unfairly by the new ownership. Their experience with AND 1 became a catalyst for wanting a better future, not just for their previous stakeholders, but for society at large. Thus, Gilbert and Houlahan partnered with Andrew Cassoy to create B Lab.
How it works?
The first step in becoming a B Corp is completing an impact assessment questionnaire found on the B Lab website. The criteria categories include high social and environmental performance, legal commitment, and transparency. Some questions include “What percentage of management is from underrepresented populations?” and “Does your company monitor and record its universal waste production?” The second step involves comparing assessment results with similar B Corp companies to identify what benchmarks are being met and what areas the firm requires improvement. Lastly, B Lab offers the company valuable resources and tools to aid the firm on its path to improvement. Only when a company has scored at least an 80 on the B Lab point system, does the company finally become certified. If a company is in sound shape, it may take an average of three years to reach certification. However, it doesn’t stop there, companies can expect to file for recertification every three years to keep their B Corp standing.
What is the business relevance of certifications?
Consumer trends are shifting to a more ESG conscious consumer. People are more motivated to understand the implication surrounding their purchases. Certifications, like B Corp’s, give conscious consumers confidence to buy from companies that follow the highest of ethical practices. Although, B Corp’s may bare the cost that comes along with holding higher standards, research is beginning to show that being a better business has its payoffs.
This article is for education purposes only.