The introduction to the second edition of The B Corp Handbook explores recent development in the B Corp movement, including international growth of the movement, the growing role of investors, increased engagement from multinationals and in public markets, benefit corporation governance, growth of academic initiatives, impact management, creation of “Best For” and “+B” campaigns around the world, and the inclusive economy challenge. Get to know the authors and their views on the B Corp movement. Gain an understanding of why Diversity, Equity, and Inclusion (DEI) is so critical to the “business for good” movement and is integrated throughout the 2nd version of the B Corp Handbook.
Section 1: Overivew
Section 1 provides a brief history of the B Corp movement, a description of what B Corps are and why they are important, an overview of an emergent concept called the B Economy, a discussion about what investors think about B Corps, and an analysis of the challenges of the B Corp model for multinationals and publicly traded companies.
The Search for “What’s Next?” (page 23)
B Lab is a nonprofit organization that serves a global movement of people using business as a force for good. It was founded by AND 1’s cofounders, Jay Coen Gilbert and Bart Houlahan, along with Andrew Kassoy, their longtime friend and former Wall Street private equity investor. Coen Gilbert’s and Houlahan’s experiences at AND 1, and Kassoy’s experience on Wall Street, were central to their decision to start B Lab. The three founders wanted to do the most good for as many people as possible. They discovered there was a need for a comprehensive set of performance and legal requirements and started certifying businesses as B Corporations in 2007.
B Corps: A Quick Overview (page 25)
Certified B Corporations must meet three basic requirements: verified social and environmental performance, legal accountability, and public transparency. B Corp certification evaluates an entire company and its practices (such as worker engagement, community involvement, environmental footprint, governance structure, and customer relationships) rather than looking at just one aspect of a company (such as the building or a product). Today, there is a growing global community of thousands of Certified B Corporations across hundreds of industries. To finalize the B Corp certification process, prospective companies must sign the B Corp Declaration of Interdependence, sign a B Corp Agreement, and pay an annual certification fee. The certification term for B Corps is three years, after which companies must recertify to remain a certified B Corp.
The Emergence of the B Economy (page 28)
The emerging B Economy includes not just the certified 2,700+ B Corps but also companies incorporating as a benefit corporation and the 70,000+ companies using the B Impact Assessment or B Analytics to identify areas for improvement. It also includes companies acquiring B Corps subsidiaries as well as consumers, investors, academics and other stakeholders engaged in the broader “business as a force for good” movement. Nonprofits are not eligible for the certification, but any organization can use the B Impact Assessment to measure, manage and improve their impact.
What Do Investors Think about B Corps? (page 28)
The Handbook explores the effect of becoming a Certified B Corporation and/or a benefit corporation on a company’s ability to raise capital. Increasingly, B Corps are appealing to investors because the companies that produce more stakeholder value also produce better financial returns. B Lab research shows that 120 venture capital firms have invested over $2 billion in Certified B Corporations and benefit corporations, including mainstream venture capitalists.
Does B Corp Work for Multinationals and Publicly Traded Companies? (page 29)
Large companies, including multinationals and publicly traded companies, have many opportunities to take part in the growing B Economy. Some of these pathways include becoming a Certified B Corporation, incorporating as a benefit corporation, helping promote the movement to others, and using the B Impact Assessment and/or B Analytics to encourage key stakeholders to improve their social and environmental performance. Another path to getting involved with the B Economy is to acquire a B Corp subsidiary.
Section 2: Benefits of Becoming a B Corp
The benefits of becoming a Certified B Corp vary depending on a company’s industry, goals and objectives, and where a company is in the life cycle of their business. Companies can attract and retain talent, be distinguished in a crowded market, and associate their brand with some of the most socially and environmentally responsible companies. Through the use of the free-to-use B Impact Assessment (BIA), companies can directly measure the impact that they have on their workers, community, environment, customers, and governance, allowing them to identify their strengths and areas where they can improve performance. Initially, the BIA measured companies on a scale from zero to 200 points, with companies scoring 80 or above qualifying for certification. The ceiling of 200 points was removed in V6 of the BIA, released in January, 2019. The BIA can help companies save time and money by serving as a guide for their CSR reporting requirements.
Being Part of a Global Community of Leaders (page 39)
Many B Corps cite the strength of the global community— and the sense of being part of something bigger than an individual business—that has become the most deeply fulfilling aspect of B Corp certification. While the B Corp movement started in the United States, there are now more B Corps based outside of the United States than inside.
Attracting Talent and Engaging Employees (page 46)
Research shows that millennials are looking for more than work-life balance, which means having enough time and energy to enjoy life outside of work. They also are looking for work–life integration, which means applying themselves to something that they feel passionate about, so that they can fulfill both an economic need and a need for a higher purpose. Becoming a B Corporation can help attract, retain, and engage employees.
Increasing Credibility and Building Trust (page 48)
Consumers increasingly want more than an environmentally friendly product. They want to know what kind of company stands behind a product or service. B Corporation certification can help companies build credibility and trust in their brand because it is an independent and rigorous third-party standard that evaluates every aspect of a business.
Benchmarking and Improving Performance (page 51)
Many B Corps report that one of the biggest benefits of the certification process is the B Impact Assessment, a free tool that measures the social and environmental performance of the entire company. This enables any business to measure the impact its operations have on its workers, community, and the environment; to compare itself to industry peers; and to measurably improve performance over time.
Protecting a Company’s Mission for the Long Term (page 52)
Certified B Corporations amend their governing documents to be more supportive of maintaining their social and environmental mission over time. This expanded legal protection for a company’s mission is particularly relevant in succession planning. By becoming a B Corporation, entrepreneurs can protect their mission by elevating their company’s core social and environmental values to the status of law, meaning that new investors and a new board would be obligated to consider both shareholders and stakeholders when making decisions in the future. This helps ensure that such a company will continue to benefit society and the environment for the long term.
Generating Press and Awareness (page 55)
The B Corporation amplifies the voice of this diverse marketplace through the power of a credible unifying brand that stands for a better way to do business. In addition, using the power of business to solve social and environmental problems is a positive, innovative, and compelling story that has generated, and continues to generate, a high level of media interest.
Section 3: The B Impact Assessment
Section 3 describes the B Impact Assessment (BIA), a comprehensive, free tool generated by B Lab, to assess, compare, and implement improvements that are good for workers, the environment, communities, governance, and customers. This section provides insight, resources, and best practices to help companies strengthen their social and environmental impact, whether or not they are pursuing certification. B Lab has established an independent standards advisory council that designs and updates the BIA on a three year cycle.
How to Use Business as a Force for Good (page 62)
The B Impact Assessment (BIA) is a free, confidential, and easy-to-use online management tool to help businesses assess, compare, and improve their social and environmental performance. This online assessment takes two to three hours to finish. B Lab recommends that the first draft be completed by the CEO or another champion who has a broad perspective on the company’s strategic direction and operations. The assessment is divided into the Impact Areas of Workers, Community, Environment, Governance, and Customers. Initially, the BIA measured companies on a scale from 0 to 200 points, with companies scoring 80 or above qualifying for certification. The ceiling of 200 points was removed in V6 of the BIA, released in January of 2019. The resulting B Impact Report is a one-page summary that shows how the company performed in each section and can help businesses create a plan to improve performance. In each Impact Area, the authors:
- Highlight important ways businesses can affect change
- Explain why these actions are rewarded on the assessment
- Give advice as to how the practice can be implemented
- Integrate diversity, equity, and inclusion (DEI) considerations
Worker Impact (page 68)
There are many aspects of workers to consider. The section highlights how the BIA measures the efforts of employers to support their employees and offers tips, resources, and advice to help companies make improvements.
Community Impact (page 92)
Behaving as a socially and environmentally responsible corporate citizen will benefit the organization by improving their ability to attract and retain talent, generate positive media attention, and increase the goodwill of their customers. Transparency can encourage other companies to follow suit and shows stakeholders that its commitment to multiple social values is authentic and verifiable.
Environmental Impact (page 122)
Addressing and working to improve the impact that a company has on the environment is not only better for the planet, but will also improve a company’s profitability in the long run. Many companies have found that improving their environmental performance helps them to attract top talent, create strong relationships with suppliers, and increase trust and credibility with their customers. Further, the consequences of climate change have historically had a disproportionate impact on indigenous communities, women, the elderly, those with disabilities, and the poor.
Governance Impact (page 136)
Building a business that is good for the environment, good for workers, and good for the community is a challenge in and of itself. Once established, how does a company ensure that the purpose-driven policies and practices remain in place, especially through changes in employees, ownership, and management? One of the great benefits of being a Certified B Corp is having the ability to ingrain the company’s purpose-driven goals into its mission statement and legal DNA.
Customer Impact (page 151)
Excellent customer service and offering quality products not only is a core component of a company’s strategy but is also one of the primary ways for a business to cultivate long-term relationships and create value and positive impact for these stakeholders.
Section 4: The Quick Start Guide
The Handbook provides a Quick Start Guide that is equally ideal for businesses that want to become Certified B Corporations as it is for those that are unsure about pursuing certification but want a straightforward, step-by-step road map to help them measure, compare, and improve their social and environmental impact.
Step 1: Get a Baseline (page 163)
- Understand a company’s current baseline using the Quick Impact Assessment and a first pass at the full BIA.
Step 2: Engage Your Team (page 166)
- Determine who within a company should be involved with the B Corp certification process, and who are the different people that will be able to help answer questions.
- Understand the motivators for each of the company’s potential stakeholders.
Step 3: Create a Plan (page 168)
- Identify short, medium, and long term goals and the steps that the team will need to take to achieve these goals; prioritize the ‘quick wins’ over more involved initiatives.
Step 4: Implement (page 170)
- Conduct the necessary work to achieve the goals set in the plan.
Step 5: Fine Tune (page 171)
- Update the BIA as new/more data becomes available to the team.
Step 6: Celebrate, and Next Steps (page 172)
- Publicize the achievement; engage with the broader B Corp community and seek to continuously improve upon the work already done.