Increased scrutiny seen to benefit B Corps
The owners of The Stroopie Co. didn’t need a label to let customers know they wanted to make more than profits and cookies. But they decided to pursue one anyway.
The business, which bakes and sells crispy Pennsylvania Dutch cinnamon cookies, was founded in 2008 with a mission of providing employment to refugee women. Jennie Groff and her husband, Jonathan, doubled down on that cause when they assumed ownership of the business in 2010, even taking the top prize in The Great Social Enterprise Pitch, a local competition for socially responsible businesses.
The Groffs decided to take the company’s mission one step further by becoming a certified Benefit Corporation. The certification, also known as B Corp certification, comes from B Lab, a Philadelphia-area nonprofit that combs through companies’ operations for evidence of socially and environmentally responsible business practices.
The Stroopie Co. is now one of 56 Pennsylvania businesses to boast B Corp certification. The Groffs see the recognition as a formalization of their for-profit company’s commitment to a cause.
The certification, though, exists outside of any legislative framework and carries no direct legal or financial benefits. And business owners that opt to pursue it have to pay fees based on the size of their company and, in many cases, commit dozens of hours to the application and documentation process. They must also adopt enough B Lab-approved procedures — like offering employees paid time off for volunteering or creating written policies for prioritizing local vendors — to receive the requisite 80 of 200 possible points on B Lab’s assessment.
The commitment needed to pass muster with B Lab — on top of the fact that certification carries no promise of financial benefits — might be why The Stroopie Co. is one of only four midstate businesses that can boast a B Lab seal of approval. Other companies have gained certification over the years but were not recertified, another level of scrutiny to which B Corps have to commit every several years.
The expense in time and resources has not dissuaded the Groffs. Nor has it dissuaded a growing number of other business owners, mostly in Lancaster County, from chasing the B Corp label. At least 70 businesses in and around Lancaster have taken an initial assessment this year, with hopes of either becoming fully certified or at least learning some good business practices from the process.
Many feel that adding an additional layer of scrutiny to their practices is simply the right thing to do.
“These businesses we have in our hands are incredible gifts to nurture and use well,” Jennie Groff said. “This is just one more way we can do that.”
Good for business?
Central Pennsylvania’s other three certified B Corps are consulting firms Work Wisdom LLC and coLab Inc., and painting contractor Two Dudes Painting Co. All four companies are based in Lancaster.
Leaders at these businesses said they, like Groff, felt that B Corp certification provided an extra layer of authenticity to social and environmental practices they already had in place.
Two Dudes is the oldest and largest of the midstate’s B Corps, with 53 employees and a history dating back to 1987. Company co-founder Peter Barber started pursuing the B Corp certification around early 2016 before receiving the official approval in September of that year.
The biggest hurdle in the certification proved not to be implementing major policy changes, but rather documenting informal practices and principles that already existed, Barber said. The company, for example, had a general preference for local vendors before starting the certification process, but had no written buy-local strategy. It also tried to save energy where it could, but had never formalized a framework for doing so.
“There’s nobody out there that’s going to tell you their business doesn’t care about the community, they don’t care about their workers. Everybody is going to talk the game that they’re doing that kind of stuff,” Barber said. “How do you create very definitive standards?”
Kate Gallagher, CEO of coLab, and Kedren Crosby, president of Work Wisdom, say they had similar experiences.
Both consulting firms were founded specifically for the purpose of creating positive social impact — coLab through consulting services for nonprofits, and Work Wisdom through consulting services for socially responsible organizations. But putting everything into writing, they said, took time.
Crosby estimates the process took her company about four months from start to finish before it received certification this past March. Gallagher’s firm, which was already legally structured as a benefit corporation at the state level, received its certification this November after several months of trying to find time for the process while juggling all of the other obligations that come with running a business.
That’s not to say they did not have to make any changes. Gallagher, for example, added a money-back guarantee into coLab’s contracts — a big step for a consulting firm that might devote months of services to a single client.
Gallagher, Crosby, Barber and Groff all say the process was worth the effort — and not just for the privilege of putting a B Corp certification logo on their websites.
While Two Dudes cannot attribute any increase in business directly to its B Corp certification, Barber said, the process of taking B Lab’s assessments and learning how to formalize certain business practices likely made the company more efficient.
“Has it gotten us more work? I don’t know,” Barber said. “Has it made us more profitable? It may have.”
B Corp certification also adds a layer of formality to a company’s business practice if it ever needs to bring on new investors or sell to a new owner, Groff said.
On top of that advantage, the label has given Stroopie an avenue through which to share its story with other companies looking to make a positive impact in their communities.
“I kind of have a family of other businesses that are working toward similar things,” Groff said.
Lancaster leads the way
All four of the midstate’s B Corps call Lancaster County home. The Lancaster area, in fact, ranks second in the state for total number of B Corps. Only Philadelphia — which hosts 25 — has more.
The nonprofit ASSETS sits at the hub of much of the county’s B Corp buzz. The Lancaster-based organization, which offers business development programs focused on addressing social disparities, has been educating the businesses with which it works about the certification, encouraging them to at least go through B Lab’s initial impact assessment.
The free assessment is catered to businesses based on factors like size and industry and generally takes between one and three hours to complete, according to B Lab. It gives companies a framework through which they can start thinking about ways to improve their social and environmental impact — even if full certification is not in the cards.
The assessment is also a key tenet of B Lab’s Measure What Matters program, which provides guidelines for organizations like ASSETS that want to help businesses find quantifiable, concrete ways to increase their positive social and environmental impact while increasing profits.
ASSETS hopes to see 10 percent of Lancaster County’s 12,000 to 15,000 businesses take the assessment in the next three to five years, said Craig Dalen, a former B Lab employee who now serves as ASSETS’ director of impact business strategy.
Dalen also hopes to see between 120 and 150 businesses go on to gain full B Corp certification.
It is a lofty goal, but one Dalen feels confident Lancaster County’s businesses will meet. The county already has a strong record of corporate responsibility, he said, as evidenced by companies’ contributions to events like The Extraordinary Give, a countywide effort that raised more than $8 million for local charities in November.
Dalen knows the full certification process can feel daunting, both to small business with few resources to spare and large companies with complicated procedures that might take significant time to change. But he feels confident businesses will rise to the challenge — for the sake of both their communities and their own bottom lines.
B Corp versus benefit corporation
Not all B Lab-certified B Corps are legally structured as benefit corporations, and not all benefit corporations are B Lab-certified B Corps.
Business owners can structure their companies as benefit corporations or benefit LLCs under Pennsylvania law, in much the same way that they can choose to be S corps, C corps, sole proprietorships or any other kind of business.
Legally defined benefit corporations must submit annual reports to shareholders outlining the ways in which they contributed to the public good. These reports are also shared with the state, making them a matter of public record.
The benefit corporation structure is available only at the state level, and only in certain states. Companies registered as benefit corporations in their home states have to register under different business structures — like LLCs or C corps — at the federal level.
B Lab’s B Corp certification, on the other hand, is a label that has no ties to a business’s legal structure. It is similar to the LEED certification for environmentally friendly buildings in that it is connected not to legal requirements but rather the standards of a non-governmental nonprofit.
B Lab strongly encourages its certified B Corps that are not structured as benefit corporations to pursue becoming one in states that offer the option to do so.
Lancaster B Corps
The Stroopie Co.
Description: Cookie maker with an emphasis on hiring refugees
Number of employees: Seven
B Lab-certified: May 2016
Two Dudes Painting Co.
Description: Commercial and residential painting company
Number of employees: 53
B Lab-certified: September 2016
Work Wisdom LLC
Description: Consulting firm with a focus on workplace culture
Number of employees: Zero (Six consultants provide services as independent contractors)
B Lab-certified: March 2017
Description: Consulting firm with a focus on nonprofits
Number of employees: Four
B Lab-certified: November 2017
For more information
Business owners can take B Lab’s free impact assessment test at bimpactassessment.net/assets. Creating an account on the site will also put the test taker in touch with ASSETS, which can answer further questions.
ASSETS is also hosting a series of seminars over the next several months focused on socially responsible business practices. More information is available at assetspa.org.
ASSETS works primarily with companies in Lancaster County but is also able to provide guidance and resources to businesses in other parts of the midstate.