Another look at the benefits of B Corp certification
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An article in the March 29 edition of LNP highlighted the reasons why local businesses have not chosen B Corporation certification — a type of outside verification of socially and environmentally friendly business practices — or to register as a benefit corporation — a legal registration allowing companies to make business decisions with the whole community in mind, rather than maximizing profits for the shareholders at all costs.
At ASSETS, we take a much more positive view on the value proposition and potential impact of B Corp certification than was posited in the article.
While there are certainly risks and extra effort required to achieve the certification or to register as a benefit corporation, we are of the strong belief that those efforts are very much worth it.
Here’s why:
To begin, we operate under the assumption that “business as usual” simply is not enough.
Nationwide, inequality continues to grow and wages remain stagnant. Closer to home, Lancaster city has a rapidly growing poverty rate with 60 percent of the population living in economic distress, a budding housing crisis, and a shortage of skilled workers in many industries.
Traditionally, government and nonprofits are tasked with addressing these issues. While necessary, the public sector is simply insufficient to address these challenges.
In order to reverse these trends, we have no choice but for the private sector to take a hard look at its “traditional” practices and determine how they have, perhaps, contributed to these problems, and consider how they can be a bigger part of the solution.
To put things in perspective, in 2014, Americans gave $360 billion to charity but we spent an almost equal amount, $341 billion, in restaurants alone.
What if just a portion of that spending went to companies that were more socially responsible? This shift is already underway nationally, especially in some East and West Coast cities, and among a younger generation of business leadership. But it has yet to fully take hold here.
The time is now for Lancaster-based businesses to become leaders in this growing, powerful movement to use business as a force for good in our community. The B Corp certification is the best tool to achieve this lofty goal and celebrate businesses that do so.
The B Corp assessment process highlights business practices which intentionally build up the economic and social fabric of our society. The certification is rigorous, yes, as it should be. However, if a company can meet the requirements, then consumers can be sure that their money is going to make our community stronger.
Examples of business practices that pass muster with B Corp include: livable wages paid to employees, employee ownership, underrepresented people in leadership and governance, intentional hiring practices that seek out vulnerable populations, environmentally sustainable supply chains and local supplier preferences.
It is important to highlight that, despite the effort involved in initial certification, B Corps have proven beneficial not just to the community, but to the financial bottom line as well.
Improved environmental, social and governance practices reduce financial risk due to higher visibility, greater competitive advantage, and access to new sources of capital.
Businesses with these values and practices also have greater luck attracting and retaining a talented workforce. In a community such as Lancaster with a labor shortage, movement toward B Corp certification could be a key employment strategy.
After all, millennials comprise more than 50 percent of the workforce, and 88 percent of them say money is not the best measure of success. In fact, they’d rather take a lower-paid job with meaning.
Lastly, B Corps tend to be more resilient. During the financial crisis, B Corps were 64 percent more likely to survive than traditional businesses.
In the end, the most valuable outcome of more businesses pursuing B Corp certification may not be from an increased number of business that actually meet the rigorous standards and achieve certification.
The true benefit likely will come from an even greater number of businesses taking the assessment and identifying the myriad of areas in which they can improve their practices.
Most businesses will not achieve certification on the first or second attempt — the bar is set too high.
However, each business that takes the assessment will be able to compare with other businesses around the country and identify clear areas for improvement.
As more businesses improve their social and environmental practices, we all win. As businesses begin to measure social and environmental performance with the same rigor that they measure financial performance, they will have the ability and the impetus to improve their performance on those measures.
The business community knows better than most that we can’t count on government to fix our problems, which in many ways are getting worse, and unfortunately even our greatest charitable generosity can’t fix it alone.
But there is a path where business can be a bigger part of the solution and help the bottom line at the same time —this is true business excellence.
Over a generation, this will redefine success in business, to include not only financial gain, but also successful business practices that help alleviate poverty, rebuild communities, preserve the environment and create great places to work.
Financial metrics won’t be the only way we evaluate success.
Jonathan Coleman and Jessica King work for Assets, a Lancaster-based nonprofit that works to create economic opportunity and cultivate entrepreneurial leadership in order to alleviate poverty and build vibrant, sustainable communities. For more information about B Corps, visit assetspa.org.