What Is B Corp? Certification Guide and Quick Assessment

In this article

Creating better businesses with B Corp Certification and beyond

B Corp Certification presents a set of guiding principles that support organizations to minimize their impact on the environment and society. With over 6,000 certified B Corps, this has become a globally recognized certification body.

Certified B Corps are part of a global movement that safeguards the environment and supports the well-being of communities. Certification is shown to attract and engage top talent, increase credibility and build trust, slash costs, meet the demands of a consumer majority, and protect a company’s mission in the long term. Hence, certified B Corps often experience bottom-line benefits helping the business thrive.

With this in mind, the Green Business Bureau wanted to help you understand your options for sustainability certification, and with that, learn how to become B Corp Certified. We explain what B Corp Certification is, and how these standards have evolved over the years, before jumping into a quick B Corp impact assessment for you to grade your current sustainability credentials against B Lab standards.

It must be noted, however, that although the B Lab does provide a thorough and respectable sustainability assessment, concerns remain over the effectiveness of this assessment in creating truly sustainable businesses. With this in mind, the Green Business Bureau has developed a more thorough evaluation of a company’s environmental, social, and governance credentials, to build even better businesses. With over 500 initiatives to choose from – compared to B Labs 250 – GBB raises the bar in sustainability certification. This is discussed in more detail at the end of this article.

Use the links below to navigate through this guide:

What is B Corp?

What is B Corp?

A B Corp is a business that’s certified by the non-profit organization, B Lab, and this certification verifies a business to meet the high environmental, social, and governance standards set by the B Corp movement. B Corps undergo a rigorous assessment process and must achieve a minimum score to qualify for certification.

Today, there are over 6,000 certified B Corps, in more than 8 countries and over 150 different industries. These are brands that use business as a force for good, to make a positive difference that supports the environment and communities.

The B Corp movement was adopted under the idea that the most challenging global problems cannot be solved by non-profits and governments alone. Resolutions to global challenges such as climate change, poverty, inequality, biodiversity loss, habitat destruction, resource depletion, racism, and exploitation need the backing of our economic system. A business certified by B Corp will consider every stakeholder – that is, customers, employees, and investors, but also the environment and the local and global communities – when making a business decision. Business success is stringently measured beyond the profit line. After all, if a business cannot be profitable while making a positive impact and causing the least harm to the environmental and social systems, does that business deserve to be operational at all?

City First Bank. B Impact Score: 146.8. City First Bank strives to make a positive difference by supporting the community. The bank’s loans have created hundreds of small businesses (and with that jobs) and have supported house development in the community. City First Bank takes care of the triple bottom line, helping depositors earn a superior return while their money supports neighborhoods in and around the Washington, DC region.

B Corp certification is relevant to any corporate entity that has been operating for more than one year. This includes:

Business-to-business organizations;
Business-to-customer organizations;
Cooperatives;
C or S Corps;
Startups (for companies that haven’t been operational for 12 months, they can sign up to become a pending B Corp);
Local sole proprietors;
Global brands;
Third-party generation family businesses;
Limited liability companies or partnerships<;/li>
Employee-owned companies.

KEY B LAB RESOURCES AND TERMINOLOGY

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When considering B Corp certification, you must understand the tools available and terminology used.

The B Impact Assessment (BIA)

The B Impact Assessment is an online, multiple-choice evaluation tool that assesses a business’s social, environmental, and governance performance. There are 250 weighted questions in this assessment. To pass the BIA, a business must score 80 points or more.

Before you take the B Impact Assessment, you’re required to detail the stage of your business, business size, and industry. This information dictates what questions are put forward in the B Impact Assessment.

The B Economy

The B Economy describes the economic system in which Business is used as a force for good. Businesses within this economy consider the needs of every stakeholder for every business decision – customers, employees, communities, investors, shareholders, and the environment.

The B Corp Agreement (the B Corp Legal framework)

The B Corp Agreement is a term sheet that defines the conditions and expectations of B Corp certification. Detailed in this agreement is the B Corp legal framework that allows companies to protect their mission and ensure the business will continue responsible practices even after changes in leadership and capital.

To make the B Corp legal change, your business must adopt specific wording in your Articles of Association to reflect a commitment to creating material that has a positive impact on society and the environment. Once amended, your company’s Articles will be filed in the Companies House, and serve to protect the business mission by ensuring mission-aligned decisions over time.

Benefit Corporations

These are legal entities structured to prioritize social and environmental goals alongside financial goals. Benefit Corporations must meet certain legal requirements, such as reporting on their social and environmental performance, and are recognized in a growing number of U.S. states.

Benefit Corporations are the product of the B Corp evolution. B Corp-certified businesses across multiple U.S. states and many countries such as Italy and Columbia helped pass new legislation that supports a new type of corporation called the Benefit Corp. Benefit Corporations are legally bound to service the needs of key social and environmental stakeholders.

B Lab Community

This is a network of B Corps, benefit corporations, and other businesses that are committed to social and environmental responsibility. The community provides resources and support for members, including events, webinars, and peer-to-peer learning opportunities.

The B Lab community can communicate and collaborate in the B Hive – an online platform that supports connection, the sharing of knowledge, teamwork, and business-to-business support e.g. through discounts.

B Analytics

B Analytics is a data platform that gives insights and benchmarks social and environmental performance. B Analytics aggregates data from B Corps and other impact-focused organizations to provide comparative analysis and best practices.

B Analytics is important as it allows investors, fund managers, non-profits, and large corporations accelerate market change.

THE BIRTH OF THE B CORP MOVEMENT AND ITS EVOLUTION OVER THE YEARS

B Lab was founded in the United States in 2006 by three friends – Jay Coen Gilbert, Bart Houlahan, and Andrew Cassoy – who shared a vision – to use business as a force for good. By 2007, 82 businesses were certified by B Lab.

The story of B Lab, however, really starts back in 1993 with Jay Coen Gilbert. Gilbert founded the basketball shoe manufacturer, AND1, which became a socially responsible business before the concept was well known. That is, AND1 had onsite yoga classes, great parental leave benefits, an onsite basketball court, and the business gave 5% of profits to charities to promote high-quality urban education and leadership development. AND1 also worked with their oversea factories to ensure the health and safety of workers, professional development, and access to fair wages.

And with this strong social conduct, AND1 thrived. From a Bootstrapped startup in 1993, the organization grew with modest revenues of $70 million by year five, and more than $285 million in revenue by 2001, and was the second for basketball footwear in the market.

However, this success delivered its own challenges. The business was bought by external investors in 1991 at a time when the retail clothing sector was consolidating. This combination of external and internal forces caused a dip in AND1’s sales. After working hard to get the business back on track, Gilbert decided to sell up- the results of which were difficult for Gilbert to watch. AND1s strong social commitment to employees and the community was stripped away.

After this experience, Gilbert was determined to create a lasting impact to help as many people as possible by creating long-term solutions. Gilbert partnered with Houlahan and Cassoy to collaborate on ideas on how such an aim could be realized. And it was here that the B Corp movement was established.

Rather than creating one new company with strong environmental and social values – which would have a limited impact – Gilbert, Houlahan, and Cassoy decided to influence many businesses. And so, the B Lab was established.

“Stress Matters. B Impact Score: 90.3 Stress Matters is a UK-based workplace wellbeing organization that’s focused on making it easy for organizations to look after their team. Stress Matters helps their clients identify the underlying issues causing workplace stress, helps businesses create a strategy to alleviate stress in the workplace, and provides educational programs and training accredited by Mental Health First Aid England and the International Stress Management Association to support a pro-active approach to wellbeing.”

WHERE IS THE B CORP MOVEMENT TODAY?

Since these beginnings, the B Corp movement has come a long way. Let’s take a look at how certification has evolved and expanded over the years.

International growth of the B Corp movement

The B Corp movement has experienced international growth, and today there are more certified organizations operating outside of the United States. Rallying the B Corp movement in these countries are B Corp partners such as: B Lab U.S.; B Lab UK; B Market Builder Hong Kong, and the B Corp China team (to name a few).

Private equity venture capital investors

B Lab has collected publicly available information for more than $2 billion of investment in B Corps and benefit corporations by more than 150 venture capital firms to date, with every major silicon valley venture capital having invested in a certified B Corp and a benefit corporation. This includes Benchmark Capital, Founder Fund, Goldman Sachs, Google Ventures and New Enterprise Associates.

Academia

When B Lab first published the B Corp Certification requirements, there were 10-20 schools that participated. Today, there are more than 1,000 facility members teaching about B Corps, including Harvard, London School of Economics, MIT, Stanford, and Yale – plus other top academic institutions across the globe.

The Global B Corp Academic Community (B Academics) is a worldwide network of educators and researchers who are committed to accelerating the sustainable business movement by studying the global movement of B Corporation certification and benefit corporations. Members of B Academics work together to share best practices and identify opportunities for further research, teaching, and experiential learning.

An overview of B Corp certification

The B Corp certification criteria look at an entire company and its practices, taking a holistic approach, rather than looking at one aspect of a business. This big-picture evaluation is important, as it helps distinguish good businesses from good marketing. Companies that seek B Corp certification must meet three standards:

Verified social and environmental performance: The company must earn a minimum of 80 points or more on the B Impact Assessment.
Legal accountability: Certified B Corps are legally required to consider the impact of decisions on all stakeholders.
Public transparency: Certified B Corps must share their B Impact score publicly on the B Corp website.

Hence, completing the B Impact Assessment is just one step in the certification process.

B Corp assessment

To help you understand more about how to become a certified B Corp, we’ve highlighted the key initiatives within the B Impact Assessment below. Think of this section as your starter B Impact Assessment, to measure where you’re currently operating, and to identify areas for improvement.

The below information has been adapted from The B Corp Handbook: How You Can Use Business as a Force For Good, by Ryan Honeyman and Tiffany Jana. For more information, we recommend you use this resource.

Before we begin, you must understand how the B Impact Assessment is structured. The assessment is organized across five core categories, namely:

For each category, we’ll run through a quick assessment before delving into the why and how for each key initiative.

It must be noted that you don’t have to meet the standards of every initiative to be a good candidate for B Corp certification. Ideally, you’ll want to meet ~70% of the initiatives. Your business may score highly under one category, and poorly under others. In this sense, this quick assessment will help you understand how you can improve your organization’s sustainability performance moving forward.

B CORP ASSESSMENT: EVALUATING A BUSINESS’S IMPACT ON WORKERS

Quick assessment:

Is company ownership shared among your employees?
Does your company pay a living wage to full-time, part-time, and temporary employees and contractors?
Does your company have an open-book management process that allows employees to access all financial and operational data?
Does your company provide healthcare for full-time and part-time employees? Does your company offer an explicit policy for transgender healthcare coverage?
Does your company offer paid caregiver leave?
Does your company give the option for employees to work part-time, with a flexible work schedule and/or remotely where and when appropriate?
Does your company offer a retirement plan, such as a 401K, pension, and/or profit-sharing to all employees? Does your company offer socially responsible investment options in your retirement plan?
Does your company offer financial products and services to help meet the emergency needs of employees? For instance, access to free banking services, low-interest loans, or bi-issuing paychecks off schedule when needed?
Does your company provide free or subsidized professional training for employees?
Does your company have a health and wellness program in place?
Does your company conduct regular anonymous worker satisfaction and engagement surveys?

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WORKER ASSESSMENT: FURTHER INFORMATION

Initiative: Is company ownership shared among your employees?

Why is meeting this initiative important?

A 2021 report by the National Center for Employee Ownership (NCEO) (on behalf of Employee-Owned S Corporations of America ESCA) concluded that employee-owned businesses – defined by employees owning ~30% of business shares – are more productive, grow faster, and are less likely to go out of business than non-employee-owned organizations. Supporting these findings, a 2017 report by the Upjohn Institute concluded that employee-owned organizations were 75% less likely to go out of business.

With employee ownership schemes, employees can benefit from the success of a company, boosting employee engagement at work. Plus, employee ownership schemes are said to increase job security positively impacting employee wellbeing.

How can you implement this initiative at your company?

Employee ownership can be established by:

Giving shares as bonuses.
Establishing a profit-sharing plan.
Allowing employees to buy your company’s stock directly through employee stock ownership plans.

Initiative: Does your company pay a living wage to full-time, part-time, and temporary employees and contractors?

Why is meeting this initiative important?

The minimum wage is not enough to meet the basic needs of employees – to cover housing, energy, food, and childcare costs. Yet, decent pay is more than just a question of ethics, it makes good business sense too.

A report published by Goldman Sachs describes a high correlation across all sectors in cash flow generated relative to payroll per employee. The report concludes that this finding breaks the preconception that operational efficiency can be improved by cutting payroll. Rather, businesses that invest in their workforce will reap exponential benefits.

How can you implement this initiative at your company?

Find out what the living wage is for the region you’re operational in. The wage of your full-time employees would need to support a family and meet the family’s basic needs. You can use MIT’s living wage calculator, the Living Wage for Families Campaign, and the Living Wage Foundation – these are useful and informative resources on this topic. If no living wage is available for your location, partner with businesses in your area to have one calculated. You can also check the U.S. Bureau of Labor Statistics for wage averages.

Initiative: Does your company have an open-book management process that allows employees to access all financial and operational data?

Open-book management is the sharing of detailed financial statements for your company while also teaching employees how to interpret these financial results. Shared information includes cash flow statements, balance sheets, and profit and loss statements.

Why is meeting this initiative important?

An open-book management policy builds trust, which lays the foundation for strong relationships.

“[Open-book management] simply work. I feel like I have all our people running our company rather than just me and my partners.” – Chris McKee of Venturity Financial Partners

Such a policy also helps your employees think like bottom-line business owners. Employees understand how their actions impact profitability, boosting accountability by tieing their daily efforts to your firm’s success.

How can you implement this initiative at your company?

Include business financial training during employee orientation.
Identify key financial and non-financial metrics to report on that are important for your organization’s success. This can include revenue, profit, cash flow, customer satisfaction, employee retention, plus more.
Choose a reporting frequency.
Create clear and concise reports that provide an overview of each metric, including how it is calculated, trends over time, and how each metric impacts the organization’s goals.
Communicate metrics by sharing reports. Hold meetings and training sessions to help employees understand how their work affects the metrics, and how they can contribute to the organization’s success.
Encourage input and feedback, and empower employees to actively choose what to include in their team’s statistics.
Continuously improve – evaluate metrics and reports to ensure they are effective and make adjustments as necessary.

Initiative: Does your company provide healthcare for full-time and part-time employees? Does your company offer an explicit policy for transgender healthcare coverage?

Why is meeting this initiative important?

Access to affordable, quality healthcare keeps employees healthy, making sure they’re able to come to work and meet work demands. With this in mind, it comes as little surprise to learn that health insurance is the most commonly offered benefit, with 58% of businesses offering this. 85% of millennials believe healthcare benefits are “absolutely essential” and “very important“, and 49% of employees will leave their job in the next 12 months over a lack of benefits. Hence, providing healthcare coverage serves to attract and retain top talent.

How can you implement this initiative at your company?

Assess your business needs and determine what type of healthcare plan would be most suitable.
Research healthcare providers and insurance plans – consider cost, quality, and network size factors.
Work with your healthcare provider to design a plan that meets the needs of your employees. This could include selecting a plan type (e.g.HMO, PPO, etc), setting co-pays and deductibles, and determining covered services.
Communicate your plan, train staff, and answer questions.
Monitor and evaluate the plan.

Initiative: Does your company offer paid caregiver leave?

Why is meeting this initiative important?

Caregiver leave is provided to employees who need to take time off to care for a family member or loved one who is ill, injured, or has a disability, or to care for a new child. A study by Human Resource Management (SHRM) and Oxford Economics found that offering paid leave attracts talent (as stated by 58% of surveyed employers), retains talent (as stated by 55% of surveyed employers), and boosts employee engagement (as stated by 60% of surveyed employers).

How can you implement this initiative at your company?

Although the benefits of offering paid leave are well recognized, employers’ most commonly cited reason for not offering paid leave programs was cost, with the cost of a comprehensive national paid leave program lying between $21.5 billion and $43.0 billion annually. It’s on this point that it’s worth noting that becoming a certified B Corp does not mean perfection and meeting every initiative. You must implement the initiatives that you can based on your company’s financial constraints. After all, if there’s no margin, then there’s no mission.

Nevertheless, offering paid caregiver leave will give financial benefits over the long term, and with that in mind, you can follow the steps below to implement this initiative.

Calculate the potential cost of your caregiver policy, and balance this cost with the potential benefits.
Create a protocol to help employees manage their transition to leave – ask employees to name all the projects they’re currently working on.
When the leave taker returns, supervisors should hold meetings to discuss the plan and to deliver routine check-ins. Assign a 50% work schedule to be increased over time.
Draft a formal caregiver leave polciy to give clarity and consistency among staff.

Initiative: Does your company give the option for employees to work part-time, with a flexible work schedule and/or remotely where and when appropriate?

Why is meeting this initiative important?

According to a new study by Remote, the US saw turnover rates at 43.9% in 2022, which is expected to increase. These statistics are concerning, as according to Gallup, a 10% employee turnover rate is optimal. With this in mind, businesses must focus efforts on reducing employee turnover, and offering remote/hybrid and flexible work structures is an effective means of achieving this aim. Coming back to the study by Remote, businesses with hybrid and remote work models have higher employee retention rates.

These higher retention rates come from the positive effects that remote/hybrid work and flexible schedules have on employees. For instance, according to Mental Health America, such an initiative reduces work-related stress by removing the need to commute and reducing distractions during the work day. All in all, a better work-life balance is established.

How can you implement this initiative at your company?

Engage employees in developing solutions that will meet business and personal needs. Ask employees what they want, and listen to their ideas.
Establish clear and concise guidelines for remote work and flexible scheduling.
Provide the necessary tools and technology to support remote work and a flexible schedule.
Communicate the policy and provide information to employees on how to request remote work or flexible working. Train staff accordingly.
Monitor and evaluate the policy to ensure it’s meeting the needs of your employees and your business.

Initiative: Does your company offer a retirement plan, such as a 401K, pension, and/or profit-sharing to all employees? Does your company offer socially responsible investment options in your retirement plan

Why is meeting this initiative important?

Retirement plans allow you to invest now for the financial security of you and your employee’s future. Plus, both business owners and employees will receive significant tax advantages as detailed by the IRS, which are named below:

Employer contributions are tax-deductible;
Assets in the plan grow tax-free;
Tax credits and other benefits are available for starting the plan and can help reduce costs.
Retirement plans can attract and keep talent, reducing new employee training costs.

Thinking about the latter, Yoya Financial reported 60% of American workers are more likely to stay with their employer if the job includes an employer-sponsored retirement plan.

How can you implement this initiative at your company?

Evaluate your options to determine what kind of plan suits your business and employee preferences. You’ll need to consider factors such as cost, administration, employee participation rates, and tax benefits.
Select a plan provider. Consider factors such as fees, investment options, customer service, and compliance support.
Develop a plan document that outlines the terms and conditions of the plan. The document should include information such as employee eligibility, contributions, vesting, and distribution options.
Communicate the details of the plan to employees, making sure employees understand the contribution options and how to make changes to their contributions.
Monitor and review the plan regularly – review employee participation rates, investment performance, fees, and compliance issues. Make the required changes.

Initiative: Does your company offer financial products and services to help meet the emergency needs of employees. For instance, access to free banking services, low interest loans, or bi-issuing pay checks off schedule when needed?

Why is meeting this initiative important?

Creating access to equitable short-term loans and long-term financial planning can help your employees be financially resilient, which is especially important to those who face barriers in accessing traditional financial services. Implementing this practice has been shown to improve employee loyalty and reduce turnover.

For instance, the ice cream ingredient manufacturer, Rhino Foods has partnered with the local credit union to offer the organization’s Income Advance Program. This program guarantees same-day access to $1,000 for emergency and unplanned needs, and the loan is later repaid through weekly payroll deductions. Rhino Foods reports this program to be a major success, reducing employee stress, absenteeism, and boosting team morale.

How can you implement this initiative at your company?

Gather employee information to understand the particular financial needs of your team.
Calculate the potential costs of providing financial services support (be sure to include the potential financial benefits too).
Seek partnerships with local non-profit organizations – financial institutions, government organizations, or other businesses that can help provide beneficial services.
Draft a written policy and communicate that policy to employees.

Initiative: Does your company provide free or subsidized professional training for employees?

Why is meeting this initiative important?

According to a study by Gallup, 87% of millennials rate development opportunities to be important to them in a job. Plus – supporting these findings – LinkedIn found that 76% of Gen Z believe learning is critical to their success.

Professional development opportunities challenge employees to master their roles, and the knowledge and skills employees obtain from this development is showcased in their work benefiting the business.

How can you implement this initiative at your company?

Talk to your employees about the type of training they seek. It could be core skills, life skills, or academic development such as English as a second language or financial literacy.
Make sure training opportunities are accessible to all employees.
Best practice states to multiply the total annual payroll dollar by 1-3% (depending on your company’s size and industry) to establish a training budget.

Initiative: Does your company have a health and wellness program in place?

Why is meeting this initiative important?

Health and wellness programs focus on mental health, fitness, nutrition, stress management, and work-life balance.

Harvard researchers discovered that employee wellness programs can save companies $3.25 for every dollar spent on healthcare costs. In addition, due to the specific employee benefits such packages give – such as social support, proactive avoidance of ill health, and stress management – it comes with little surprise to learn that 62% of respondents strongly agree or agree that employee well-being support and benefits are a top priority when considering their next job.

How can you implement this initiative at your company?

Assess the needs and interests of your employees. Conduct a survey or focus groups to determine what type of health and wellness activities your employees would be interested in. You’ll want to be able to tailor your program to meet their needs and interests.
Develop a budget and decipher what activities and services you can afford. You should consider partnering with local gyms or wellness centers to get discounted rates and services.
Develop a wellness committee, this is your team of employees who are responsible for planning and implementing the program. This committee can help you generate interest and excitement among your employees.
Offer health and wellness education, for instance, you can provide employees with information on healthy eating, exercise, and stress management. This can be done through seminars, workshops, and online resources.
Provide access to fitness facilities (or what your budget will allow).
Offer healthy food and beverage options.
Encourage active breaks to reduce stress and boost productivity.
Track progress and evaluate the program. Monitor participation rates, and assess employee feedback. Use this information to make adjustments and improve the program over time.

Initiative: Does your company conduct regular anonymous worker satisfaction and engagement surveys?

Why is meeting this initiative important?

An employee satisfaction survey identifies what’s important to your employees and the most pertinent areas in need of improvement for human resource and leadership teams.

This way, you can find ways to better engage your team. Engaged employees are 22% more productive at work and 21% more profitable than disengaged employees, according to the Harvard Business Review.

How can you implement this initiative at your company?

Customer satisfaction survey questions to include are:

How meaningful is your work?
How challenging is your work?
In a typical week, how often do you feel stressed at work?
How well are you paid?
How much do your opinions about your work matter to your coworkers?
How often do the tasks assigned to you by your supervisor help you grow professionally?
How many opportunities do you have to get promoted where you work?
How likely are you to look for alternative positions outside of the company?

In addition to these questions, there are a number of practices to implement to obtain the best results, which include:

Immediately follow up on areas of concern. It would be discerning if employees responded to a satisfaction survey to then see no changes implemented.
You want your employees to be as honest as possible. Therefore, allow individuals to keep anonymous when responding to the survey.
Use clear language and avoid jargon.
Keep wording constant among surveys to ensure you’re measuring the same aspects of the company’s culture.

B CORP ASSESSMENT: EVALUATING A BUSINESS’S IMPACT ON THE COMMUNITY

Quick assessment:

Do you, and/or your company have a diverse group of owners, executives, employees, and board members?
Do you fill open positions with women, people of color, LGBTQ, disabled, low-income people, or other excluded populations?
Do you, and/or your company have specific measurable diversity improvement goals that are reviewed by senior executives and/or the board of directors?
Do you and/or your company include in all job postings a statement indicating a commitment to diversity, equity, and inclusion?
Do you, and/or your company conduct pay-equity analysis by gender, race, ethnicity, and other demographic factors, and if necessary implement equal compensation improvement plans or policies?
Do you and/or your company determine the multiple that the highest-paid worker earns compared to the lowest-paid worker?
Do you and/or your company create job opportunities for chronically underemployed populations such as at-risk youth, homeless individuals, or individuals who were formally incarcerated?
Do you and/or your company provide employees with diversity, equity, and inclusion training?
Do you and/or your company have a written community service policy? Do you and/or your company offer incentives for employees to organize service days and volunteer activities, and set goals to increase the % of employees who participate?
Do you and/or your company have a formal commitment to donating a percentage of revenue to charity? Do you and/or your company match charitable contributions made by employees, and/or join a third-party organization that certifies charitable giving, such as 1% for the Planet?
Do you and/or your company purchase from local suppliers, or from suppliers run by women, people of color, or individuals from other underrepresented populations?
Do you and/or your company have a formal written supplier code of conduct that specifically holds the suppliers accountable for social and environmental performance?
Do you and/or your company bank with certified B corporations, credit unions, community development financial institutions, and members of the global Alliance for Banking on Values?
Do you and/or your company disclose on your website the names of your suppliers and their social and environmental performance?
Do you and/or your company work within your industry to develop social and environmental standards?

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COMMUNITY ASSESSMENT: FURTHER INFORMATION

Initiative:

Do you, and/or your company have a diverse group of owners, executives, employees, and board members?
Do you fill open positions with women, people of color, LGBTQ, disabled, low-income people, or other excluded populations?
Do you, and/or your company have specific measurable diversity improvement goals that are reviewed by senior executives and/or the board of directors?
Do you and/or your company include in all job postings a statement indicating a commitment to diversity, equity, and inclusion?

Why is meeting this initiative important?

According to McKinsey’s Women Matter report, in 2017, 17% of corporate-board members and 12% of executive-committee members were women (averages taken from the top 50 listed G-20 companies). This McKinsey report details a solid case for change. For instance, a global survey of 279 companies conducted in 2010 found that those with the greatest proportion of women on their executive committees earned a return on equity 47% higher than those with no female executive members.

This is a specific example that showcases the advantages of having a diverse board. Supporting these findings, further research shows similar benefits apply when working with other diverse groups, such as ethnic minorities, people with disabilities, and LGBTQ. For instance, The G Quotient reported organizations and working units under the leadership of white-collar gay males collectively experienced 35% higher levels of employee engagement, job satisfaction, and workplace morale in addition to reporting greater employer loyalty and individual productivity.

How can you implement this initiative at your company?

Start by affirming and articulating your key commitments to inclusion. You want an inclusive work culture to create an environment that attracts and retains a diverse workforce.
You also want to create a baseline by measuring current diversity and inclusion in your company, which you can easily do by evaluating diversity data and by conducting an inclusion survey.
Create specific and measurable diversity goals to be reviewed by senior executives and the board of directors. Be sure to take into account the diversity of the local population, which you can decipher from census data or local population surveys.
Assign specific diversity goals to each team and evaluate and reward success through annual performance reviews.
Perform an inclusion audit of current recruiting processes, website, and job descriptions to determine whether the processes exclude or ignore underrepresented groups.
Write a statement to show your commitment to diversity, equity, and inclusion. Be careful with the wording used in your job description and make sure this wording doesn’t exclude any individuals.
Create a plan to improve the recruitment processes based on your findings.
Create a committee, along with a diversity manager, who are explicitly responsible for diversity, equity, and inclusion and work with this committee to identify opportunities for promoting team diversity.

Initiative: Do you, and/or your company conduct pay-equity analysis by gender, race, ethnicity, and other demographic factors, and if necessary implement equal compensation improvement plans or policies? Determine the multiple that the highest-paid worker earns compared to the lowest-paid worker.

Why is meeting this initiative important?

As an employer, it’s your responsibility to pay equally across gender, race, sexual orientation, age, socio-economic status, and more. By proactively managing equity, businesses gain access to a broader pool of talent and perspectives and can improve overall engagement and reduce the risk of legal action.

Pay equity is a very relevant and pressing issue that business owners need to address. For instance, in 2022, women earned – on average – 82% of what men earned. This pay inequality hasn’t budged much since 2002 (during whcih time women earned 80% as much as men).

How can you implement this initiative in your business?

To make sure you pay equally across gender, race, sexual orientation, age, and socio-economic status, you must be aware of the common forms of bias that can influence your ability to meet this initiative, these are:

Effective heuristics: This is a pre-judgment of an applicant’s superficial characteristics, such as what clothes they’re wearing, their hair length, or size.
Intuition: These are gut decisions caused by a failure to adequately consider the comparative skill set of candidates.
Affinity bias: This is a tendency to favor others who remind us of ourselves. This bias runs the risk of creating a team who are very similar, limiting diversity.
Confirmation bias: This is a tendency to interpret new evidence as confirmation of existing beliefs.

Once you understand common human bias that can impact your hiring and pay decisions, make sure to:

Develop a compensation rationale. Determine what you want to reward, e.g. tenure, responsibility, or performance.
Develop your job evaluation criteria that are specific to your company and relevant to your industry.
Consider creating an evaluation or compensation committee that has diverse representation.
Objectively structure your pay-setting processes.
Collect job descriptions for every job in the company, including the job title, plus a summary of the tasks, responsibilities, skills, and experience required. Find out what these jobs are worth in the market vs what you pay.
Create a job matrix to compare wages, bonuses, and other benefits across positions, and determine the pay rate for each grade.
Conduct a pay equity analysis – identify any wage, bonus, or benefit gaps based on gender, race, sexual orientation, etc.
Set targets and timelines to create pay equality. Be sure to monitor compensation over time to make sure pay equity is maintained.

Note that in some jurisdictions it’s illegal to ask an applicant about their previous salary. Determine whether it’s legal to ask and be aware doing so could cause bias.

Initiative: Determine the multiple that the highest paid worker earns compared to the lowest paid worker.

Why is meeting this initiative important?

There’s a major chasm between the pay of the average worker and a company’s CEO and top executives. In the U.S., CEOs of the 350 largest companies in America were paid 271 times the annual average salary of the typical worker (according to the Economic Policy Institute for 206 salary numbers).

Exorbitant CEO pay contributes to global income inequality. In a business, such inequality can cause social unrest within your team, and a sense of injustice among those that feel they’re not being fairly compensated for their work.

How can you implement this initiative in your business?

Implement a pay cap for the ratio between the highest and the lowest earners of the company. B Corps typically cap this ratio to be around 5:1 and 10:1. Calculate the current pay gap ratio (exclude the monetary value of company ownership in your calculations).
Engage the relevant decision-makers throughout the process including HR and board members that oversee executive compensation.
Discuss the target multiple and develop a plan and timeline for decreasing the wage gap. Create a policy that links pay increases and bonus structures for top executives with the pay increases for their staff.

Initiative: Do you and/or your company create job opportunities for chronically underemployed populations such as at-risk youth, homeless individuals, or individuals who were formally incarcerated?

Chronically underemployed populations include individuals with a history of incarceration, at-risk youth, and those who are/have been homeless. Such individuals also find it difficult to stay in a job without access to a wide variety of supportive services. Many veterans, refugees, and people with disabilities face similar challenges.

Hiring such individuals gives business benefits, e.g. such individuals bring unique skills and experiences gained from their past experiences to your business, giving a fresh perspective and providing new solutions to problems not previously considered. In addition, hiring individuals who have faced significant challenges in their lives can have a positive impact on the company culture, creating a more inclusive workplace, one that promotes empathy and understanding, creating opportunity for personal growth for both the employee and the employer.

Your business can also access the Work Opportunity Tax Credit (WOTC) – a Federal tax credit available to employers for hiring individuals from certain target groups, who have faced significant barriers to employment.

How can you implement this initiative in your business?

Employment programs for the chronically underemployed take time to build, but the basic steps are:

Reach out to other organizations that have successfully implemented this initiative.
Design, modify, and implement a training program to meet the specific needs of such individuals. There are non-profit organizations out there that can help you do this.

Initiative: Do you and/or your company provide employees with diversity, equity, and inclusion training?

Why is meeting this initiative important?

Diversity, Equity, and Inclusion (DEI) training helps your employees engage thoughtfully and respectively without the fear of offending others. The ROI of DEI training can be difficult to measure, as it involves both tangible and intangible benefits. By increasing awareness of unconscious bias, improving communication skills, and addressing systemic issues of inequality, businesses can create environments where employees feel valued and respected.

How can you implement this initiative in your business?

Hold unconscious bias training to help employees understand how such biases work and how they can negatively affect team members and team interactions.
Make sure you have a thoughtful experienced facilitator, leadership management, and actionable objectives.
Gather feedback after trainings to make future training more effective. Consider also introducing emotional intelligence training, and cross-cultural team building.

Note that training is a continual process.

Initiative: Do you and/or your company have a written community service policy? Do you and/or your company offer incentives for employees to organize service days and volunteer activities, and set goals to increase the % of employees who participate?

Why is meeting this initiative important?

Volunteers provide a lot of support for non-profit organizations across the globe. In the U.S. for instance, it’s estimated that more than 60.7 million people formally volunteered with organizations between September 2020 and 2021. These volunteers contributed $122.9 billion in economic value.

Once more, offering a volunteer program gives business benefits such as enhanced corporate reputation, recruitment, and employee retention, while also helping employees develop skills in leadership and team-building – according to Value Volunteering.

How can you implement this initiative in your business?

Have a conversation with your employees and ask them what volunteer opportunities they’d like to participate in.
Engage employees in discussions about, and for the creation of the program.
Offer paid time off to the volunteer and assign a volunteer coordinator to oversee opportunities.
Match employee skills and experiences with the relevant non-profit.
Many B-Corp certified businesses offer 24hrs or 3 working days for employees to volunteer.

Initiative: Do you and/or your company have a formal commitment to donating a percentage of revenue to charity? Do you and/or your company match charitable contributions made by employees, and/or join a third-party organization that certifies charitable giving, such as 1% for the Planet?

Why is meeting this initiative important?

To formalize your charitable giving program, consider creating a partnership with a charity/charities of your choice in which charitable contributions given by employees are matched. This corporate philanthropy is stated to bolster brand social value, giving organizations a competitive advantage. Plus, there are tax benefits for businesses that donate to a bona fide 501(c) (3) organization – you can use the IRS’s search tool to confirm group registered.

How can you implement this initiative in your business?

Organize a team meeting to discuss a written charitable giving policy, one that aligns with your budget.
Ask your employees and customers where they’re donating already. Choosing a cause your stakeholders care about will get everyone excited to lead to better participation in your campaign.

Initiative: Purchase from local suppliers, or suppliers owned by women, people of color, veterans or ex-offenders, or other underrepresented populations.

Why is meeting this initiative important?

This initiative benefits a wide variety of stakeholders. Local job creation is supported, tax dollars are invested in community projects, there’s a reduced environmental impact from long-distance shipping, and individuals subject to systemic bias are supported.

In terms of your business, utilizing local services gives you greater flexibility to fulfill orders. Local suppliers will be more reactive and better prepared to ramp up production to help you meet demand.

How can you implement this initiative in your business?

Create a preferential supplier policy to favor certain suppliers. This policy should align with social and environmental values and priorities.
Collect information about the ownership of current suppliers through a supplier survey and/or supplier interviews. Do this alongside broader supplier screens – screen for third-party certifications.
Analyze supplier data and develop a plan and timelines to incorporate new suppliers who meet your criteria.
Create internal supplier directory resource that includes information on diversity or ownership metrics.
Create a supplier checklist to be used by employees who engage with suppliers, holding individuals accountable for using the checklist.

Initiative: Do you and/or your company have a formal written supplier code of conduct that specifically holds the suppliers accountable for social and environmental performance?

Why is meeting this initiative important?

A supplier code of conduct will ensure the companies you do business with are accountable to guidelines of performance, safety, and transparency. Supplier codes of conduct are of special importance if your company sources products and services from countries with lax enforcement laws and policies, and poorer labor and human rights laws.

Such codes of conduct will protect your company’s brand image in the event of an incident at the supplier’s site.

How can you implement this initiative in your business?

Assess your company’s supply chain risks. When doing this, you must ask the following questions:

Where do you source your manufactured products from?
Are, and how, are human rights and environmental laws enforced in your country?
Are toxic materials used in manufacturing processes?

You need to ensure the methods being used to produce a given product don’t conflict with the state social and environmental objectives of your company.

Monitoring the supplier code of conduct is achieved by:

Self-audits conducted by the supplier.
Conducting supplier site visits by your internal team.
Conducting site visits by a third party.

Make sure your supplier’s code of conduct details the action to be taken should violations occur.

Initiative: Do you and/or your company bank with certified B corporations, credit unions, community development financial institutions, and members of the global Alliance for Banking on Values

Why is meeting this initiative important?

Where you keep your money dictates how your money is invested. Many local banks and credit unions offer the same array of services as big banks, yet these services will have face-to-face relationships with the local community and customers to understand local needs. Because of this personal knowledge, local financial institutions can offer loans that big banks can’t offer.

In terms of the business benefits, community banks tend to charge lower fees and offer more free accounts. Many don’t have a monthly maintenance fee and keep overdraft costs to a minimum.

How can you implement this initiative in your business?

Ask the following questions to perspective financial institutions, such as:

Do you have any socially or environmentally responsible banking practices?
Are there any industries in which you specialize?
Are there any industries that you avoid?
What sized company do you often finance and serve?
Do you often participate in a small business administration loan program?
Are you a member of the global Alliance on Banking on Values?

Initiative: Do you and/or your company disclose on your website the names of your suppliers and their social and environmental performance?

According to new Harris Poll research commissioned by Google Cloud, a staggering 82% of shoppers want a brand’s values to align with their own. On top of this, consumers are willing to act on this sentiment with three-quarters stating they had parted ways with a brand over a conflict of values.

To meet the preferences of a consumer majority, brands must provide full transparency of operations, and how business processes affect the environment, communities, and social systems. Supplier chain transparency is especially important if a business sources the majority of its products from developing countries where environmental and labor laws vary widely.

How can you implement this initiative in your business?

Do a baseline assessment to determine your supply chain’s overall social and environmental performance.
Set goals to increase supplier chain transparency over time.
Encourage and assist your suppliers in pursuing third-party certification.

Initiative: Do you and/or your company work within your industry to develop social and environmental standards?

Why is meeting this initiative important?

The B impact assessment is designed to acknowledge businesses that advocate entire industry reformation, on top of the internal business improvements made. There’s often a stronger commitment and a higher rate of adoption of environmentally and socially responsible initiatives when such initiatives are led by businesses within a given sector.

With this in mind, there are many ways you can improve your organization’s overall social and environmental performance, including:

Serving a working group to educate peers.
Advocating the adoption of voluntary environmental reporting standards.
Helping to pass legislation that creates incentives for businesses to improve their performance.

How can you implement this initiative in your business?

Research the variable trade associations within your sector. There’s a good chance that there are already social and environmental initiatives established within your industry.
Contact other businesses within your industry to get involved. If there are no existing sustainability initiatives, then start one.
Get involved with existing organizations that are promoting social and environmental responsibility.

B CORP ASSESSMENT: EVALUATING A BUSINESS’S IMPACT ON THE ENVIRONMENT

Quick assessment:

Do you and/or your company monitor, record, and reduce your greenhouse gas emissions?
Do you and/or your company use energy-efficient light systems, e.g. natural light, LEDs, CFLs, occupancy sensors, daylight dimmers, or task lighting?
Is technological office equipment energy efficient? E.g. Energy Star certified, and automated to fall asleep when not in use?
Have you and/or your company upgraded heating and air conditioning systems for efficiency? E.g. Installed a programmable thermostat, timers, occupancy sensors, and double-glazed windows?
Have you and/or your company installed water efficient systems, e.g. low flow toilets, faucets, and showerheads, or harvest rainwater?
Do you and/or your company use low-impact renewable energy, e.g. purchase renewable energy credits, and offset non-renewable energy that you use?
Do you and/or your company provide employees with incentives to use alternative commuting options, and encourage employees to use virtual meeting technology to reduce travel?
Do you and/or your company conduct a life cycle assessment of products?
Do you and/or your company create a reclamation project to recycle or reuse products?
Do you and/or your company have an environmental purchasing policy for office supplies, food, cleaning products, electronics, product input materials, and other items as appropriate?
Do you and/or your company responsibly dispose of hazardous waste, e.g. batteries, paints, and/or electronics?
Do you and/or your company have a written policy requiring inbound or outbound freight or shipping to be transported by the lowest impact methods possible, e.g. avoiding air travel?

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ENVIRONMENT ASSESSMENT: FURTHER INFORMATION

Initiative: Do you and/or your company monitor, record, and reduce your greenhouse gas emissions?

Why is meeting this initiative important?

Business GHG emissions are closely linked to energy use. Hence, monitoring and recording your business’s GHG emissions, to target areas for emission reduction, can also serve to help your business save money by slashing fossil fuel energy demand.

For instance, the Carbon Trust announced that the leather manufacturer – Scottish Leather Group – saved £900,000 annually on energy costs, despite increased production volumes. Such a reduction was achieved through energy conservation measures, and by switching to alternative forms of energy.

How can you implement this initiative in your business?

Summing business emissions is a multi-step process that often involves fairly complex calculations. The Greenhouse Gas Protocol is the most internationally used accounting tool for government and business leaders to understand, quantify, and manage GHG emissions.

You can use this protocol alongside carbon footprint calculating software such as Green Business Bureau’s partner, Aclymate. Such software makes the process of measuring, recording, tracking, and analyzing business emissions easier and faster with much of the process automated. Easily identify activities that have a high carbon footprint to make the appropriate adjustments necessary.

Initiative: Do you and/or your company use low-impact renewable energy, e.g. purchase renewable energy credits, and offset non-renewable energy that you use?

Why is meeting this initiative important?

Not all forms of renewable energy are created equal. For instance, hydro-power does not release GHGs to create energy, but the infrastructure needed – dams – can cause other environmental challenges. For this reason, the B impact assessment rewards companies that choose low-impact, renewable energy sources. Low impact renewable energy sources include:

Wind-generated electricity;
Solar heating or solar-generated electricity, e.g. photovoltaics;
Biomass resources (if harvested and utilized sustainably);
Water velocity (e.g. run-of-river, free stream, tidal and wave turbines);
Geothermal energy.

Utilizing renewable energy sources diversifies your energy supply, reducing risk and dependence on finite fossil fuels.

How can you implement this initiative in your business?

You can install renewable energy technology on site, such as solar panels or geothermal energy systems.
You can contact your local utility provider to access their green power program/switch to a renewable energy provider.
You can buy off-site power purchase agreements or Renewable Energy Certification (RECs). When looking to buy RECs consider variables such as price, percentage of renewable energy, percentage of new or incremental sources, renewable energy mix, and third-party certification and verification.

Initiative: Do you and/or your company provide employees with incentives to use alternative commuting options, and encourage employees to use virtual meeting technology to reduce travel

Why is meeting this initiative important?

Alternative commuting, such as carpooling, vanpooling, or the use of public transport, plus remote/telework will reduce indirect business emissions associated with the employee commute. For instance, the Owl Lab’s and the Global Workplace Analytics report states that remote work takes 600,000 cars off the road each year, and working from home for half the week can reduce GHG emissions by 54 million tons of CO_2e every year.

There are also numerous business benefits to initiatives implemented to reduce business emissions from the employee commute. Benefits include: Team building from carpooling; boosted employee well-being via cycle-to-work schemes; improved community health via utilizing public transportation systems, and reduced staff turnover via offering remote work options.

How can you implement this initiative in your business?

Engage your employees in the discussion about alternative commuting. The key is to keep trying new ideas while asking for employee feedback and adapting your strategy accordingly. Ask the following questions to engage your employees in this initiative:

Will subsidies or financial incentives for alternative forms of commuting be provided?
Will non-financial incentives such as prizes and awards be offered?
Is there a need to construct new facilities, for instance, a shower room for those who commute on a bike?
Can you work with existing regional transit services such as ride matching or a guaranteed ride home program, or is there a need to coordinate those internally?
How much staff time would be required to administer the programs you have in mind?
Are employment levels at your company expected to change in the next few years?
Are there clusters of employees with common commute characteristics such as home location, and arrival and departure times? This information will help you support employee ride-share schemes.
Which alternative commuting options are employees willing to try? You can conduct an employee survey to find out.

Initiative: Do you and/or your company conduct a life cycle assessment of products?

Why is meeting this initiative important?

A life cycle assessment (LCA) helps a company see the complete picture of the impact a product has on the environment, this includes looking at the environmental impact of raw material acquisition, product manufacturing processes, transport, product packaging, product usage, and product disposal. The aim of a product LCA is to reduce the environmental footprint of the given product, eliminate waste, reduce costs, support marketing claims, and improve brand image.

LCAs offer great insights for business innovation and give a scientific foundation to improve production processes and seek alternative – more advanced – materials, and identify and cut wasteful operations.

How can you implement this initiative in your business?

LCAs are complex, requiring in-depth processes, technical expertise, and significant time commitment. It may be in your best interest to hire a consultant. Consultant costs will depend on the nature of the assessment, the availability of existing data, and the number of products you require LCSs for.

Initiative: Do you and/or your company have a reclamation project to recycle or reuse products?

Why is meeting this initiative important?

Accepting the return of products for reuse, recycling, or responsible disposal supports a circular economy, reducing pollution and waste, plus energy and material use by shortening the value chain. Business compliance is also ensured as you meet mandatory recycling laws, electronic waste regulations, and hazardous waste disposal legalities. In addition, diverting waste away from trash lowers hauling costs and overall business waste management costs.

How can you implement this initiative in your business?

Research existing waste management, reuse, recycling, and reclamation programs in your area.
Identify the products and materials to be reclaimed, reused, or recycled.
Determine the feasibility of reclamation, reuse, and recycling by assessing the condition of products and materials.
Develop a collection plan. This could involve setting up collection points, and schedules, and determining the transportation logistics.
Establish a processing plan, this can involve sorting, cleaning, and preparing the products for reuse or recycling.
Identify potential partners who can assist in the reclamation, reuse, and recycling projects, such as local recycling facilities.
Set up a monitoring and evaluation system to track the volume of reclaimed, reused, or recycled products and materials, the cost of the project, and the environmental impact.
Communicate projects to stakeholders, gather feedback, and continuously improve.

Initaitive: Do you and/or your company have an environmental purchasing policy for office supplies, food, cleaning products, electronics, product input materials, and other items as appropriate?

Why is meeting this initiative important?

An environmental purchasing policy encourages staff to use environmental responsibility as a factor in their purchasing decisions. Such a policy will act as a guide for staff to assess how goods are manufactured, used, and disposed of in an environmentally responsible way.

By supporting sustainable procurement, an environmental purchasing policy will boost resource and operational efficiency, can improve the health and safety of your employees, boost innovation, mitigate risk, improve brand image, and increase business profitability. To learn more about these benefits, read: What Is A Green Procurement Policy?

How can you implement this initiative in your business?

Your policy should:

Give preference to items with higher recycled content (when costs are similar);
Specify items that can be recycled and reused;
Consider energy usage and costs of operating equipment before making a purchase;
Favor suppliers committed to environmental improvement;
Consider the life-cycle costs and environmental impact of your purchases.

If you decide to create a new policy, start with an overview of your company’s goals and purchasing objectives. Next, consider the language used to address the value of third-party certification for vendors. You want to favor vendors that meet robust social and environmental standards. Prioritize working with vendors who are certified by a third-party such as B Corp, the Green Business Bureau, Certified Organic, Energy Star, Fair Trade, Green Seal, and Food Alliance.

Initaitvie: Do you and/or your company responsibly dispose of hazardous waste, e.g. batteries, paints, and/or electronics?

Why is meeting this initiative important?

The improper disposal of hazardous waste can harm the health of employees, local residents, and the environment. For example, hazardous waste can contaminate soil and water supplies and pollute the air. On an economic level, hazardous waste decreases property value, and can expose your business to fines and lawsuits.

How can you implement this initiative in your business?

Try to prevent the use of hazardous waste during production in the first place.
Check to see if your city or county offers hazardous waste collection. The collection will make waste disposal easier and ensure the business follows regulations.
Proper disposal of hazardous waste depends on the type of waste in question. Research your local waste management authority to identify the types of waste that are accepted in your area.

Initiative: Do you and/or your company have a written policy requiring inbound or outbound freight or shipping to be transported by the lowest impact methods possible, e.g. avoiding air travel?

Why is meeting this initiative important?

New federal data from the U.S Energy and Information Administration (EIA) shows the U.S. transportation sectors are the largest source of carbon pollution than any other economic sector, accounting for 27% of total GHG emissions in 2020, with 1.6 million metric tons of CO_2e exuded. Transportation is crucial to business, connecting vendors and suppliers, so addressing transport sustainability is a complex challenge.

Yet, simple changes can make a meaningful impact. For instance, with 36% of heavy-duty trucks on the road running empty, optimizing the packing of goods will reduce delivery demand and the associated GHG emissions, lower fuel consumption and costs, and reduce fleet maintenance and contracting costs.

How can you implement this initiative in your business?

Start by formalizing your transportation policy. State in your policy that your business is looking to reduce emissions from the shipment and distribution of both inbound and outbound freight. To reduce such emissions, your policy can look to:

Use more sustainable modes of transportation – e.g. shipping and rail are more environmentally friendly transportation methods relative to air travel.
Consolidate shipments to reduce the number of trips needed to transport goods, with the aim of saving fuel and reducing emissions.
Optimize routing to reduce the distance traveled and fuel consumption.
Consider using alternative greener fuels, or contracting with vendors that use alternative fuels. Examples include electricity or biodiesel.
Monitor and optimize fuel consumption to reduce emissions and save money.

B CORP ASSESSMENT: EVALUATING A BUSINESS’S IMPACT ON GOVERNANCE

Quick assessment:

Do you and/or your company integrate a commitment to social and environmental responsibility into your written corporate mission statement?
Do you and/or your company train employees on your social and/or environmental mission?
Do you and/or your company evaluate employees and management on their performance in regard to your company’s social and/or environmental mission? Do you and/or your company tie social and environmental performance to bonuses and other rewards?
Do you and/or your company solicit feedback from your external stakeholders, customers, community members, suppliers, or non-profit organizations about your company’s social and environmental performance?
Do you and/or your company maintain a board of directors, advisory board, or other governing board that includes women, people of color, LGBTQ individuals, and other underrepresented individuals?
Do you and/or your company ensure your board reviews your company’s social and environmental performance on an annual basis, producing an external annual report detailing your mission-related performance?
Have you and/or your company legally institutionalized your mission in your corporate structure – for instance, by inserting stakeholder consideration into your governing documents, or by incorporating as a benefit corporation?

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GOVERNANCE ASSESSMENT: FURTHER INFORMATION

Initiative: Do you and/or your company integrate a commitment to social and environmental responsibility into your written corporate mission statement?

Why is meeting this initiative important?

Your organization’s vision, mission, and values are the foundation of your business. You need to start with an explicit commitment to social and environmental responsibility to help your organization stay purposefully driven especially as your team, ownership, and management evolves.

A clear vision, mission, and values achieves internal alignment, making sure everyone is working toward a single, unified goal.

How can you implement this initiative in your business?

You can learn more about how to devise a clear and effective mission statement, and values, by reading: How to Create the Perfect Green Mission Statement. For ease, however, we’ve summarized the key steps below:

Ask yourself what you want to become. Describe what your company will look like in 5 years’ time. This is your vision.
Ask yourself what kind of business you are in. Give a clear and concise description of your organization’s overall purpose. This will enable large groups of individuals to work in a unified direction towards a common cause. A good mission statement is challenging yet achievable.
Ask yourself “What do we stand for?” – this ties the vision and the mission together to give organizational values. The decision-making filter is given for how the business will conduct its activities while carrying out its mission and vision.

Initiative: Do you and/or your company train employees on your social and/or environmental mission?

Why is meeting this initiative important?

Providing formal training can motivate and engage your employees by connecting them to the purpose behind your corporate objectives. Training will give your employees the knowledge and experience needed to carry out their job, while also understanding how their work benefits the company’s wider, purposeful goals.

How can you implement this initiative in your business?

Explain your business’s social and environmental goals to new hires. Embed these goals into your employee onboarding processes and handbook.
Create a training plan that communicates the importance of your organization’s vision, mission, and values, and how these relate to the wider goals of your business.
Give a company-wide presentation that describes how your business’s work can help solve key social and environmental challenges.

Initiative: Do you and/or your company evaluate employees and management on their performance in regard to your company’s social and/or environmental mission? Do you and/or your company tie social and environmental performance to bonuses and other rewards?

Why is meeting this initiative important?

98% of corporate transformation programs that declare sustainability as a top priority fail due to a lack of impetus. Team engagement to your organization’s vision, mission, and values is crucial to maintain momentum. Acknowledging your team’s commitment to your cause by evaluating performance using social and environmental metrics embeds your organization’s purpose into the core of the business – you’re encouraging your team to rally and drive sustainable change.

How can you implement this initiative in your business?

Converse with your employees about their performance reviews. Explain to them why you’re including specific social and environmental goals, and how this aligns with your company’s values, explaining the purpose behind the proposed changes, and allowing your employees to have a say in the process.
Use the B impact assessment to generate employee goals, e.g. turning off lights in rooms that aren’t in use, cycling to work, and choosing more sustainable food options at lunch.

Initaitive: Do you and/or your company solicit feedback from your external stakeholders, customers, community members, suppliers, or non-profit organizations about your company’s social and environmental performance?

Why is meeting this initiative important?

A formal, structured program to solicit feedback from key stakeholders means your business can access views and opinions that lie outside the company walls. From this, you can tailor business development and sustainability change according to feedback.

How can you implement this initiative in your business?

Ask stakeholders who engage with your business regulary what their thoughts are regarding your company’s social and environmental performance. For instance, you can create an online survey and push it live on your website. Start with your top suppliers and loyal customers. Use the feedback given to refine business operations.

Initiative: Do you and/or your company maintain a board of directors, advisory board, or other governing board that includes women, people of color, LGBTQ individuals, and other underrepresented individuals?

Why is meeting this initiative important?

We’ve already witnessed the benefits of filling positions with women, people of color, LGBTQ, disabled, and low-income people under the community assessment. Here we’re specifically looking at diversity on the board, yet the same benefits apply. For instance, studies have shown that companies within the Fortune 500 that have the highest level of gender diversity on the board experienced a 42% greater return on sales and a 52% return on equity compared to peers.

Diversity within your governing body will bring a wide range of expertise, perspectives, and values adding an additional dimension to decision-making.

How can you implement this initiative in your business?

Consider the strengths and weaknesses of the current leadership, the future needs of the organization, and key stakeholder groups.
Establish a plan and a goal for diversifying the board. Make sure to avoid tokenism (including just one member from a historically underrepresented group).
You want to attract a diverse group of candidates, and therefore job descriptions need to use inclusive language. Focus on skills and efforts rather than on pedigree and education, networks, and other backgrounds that may unintentionally limit you to a homogenous pool of candidates.
Interview more than one underrepresented candidate for a position.

Initiative: Do you and/or your company ensure your board reviews your company’s social and environmental performance on an annual basis, producing an external annual report detailing your mission-related performance?

Why is meeting this initiative important?

Producing an annual report is one of the many ways you can share your company’s progress toward your mission. The process of creating this report can help your organization uncover social and environmental risks, inefficiencies, and opportunities that would have otherwise gone unnoticed. Transparency and accountability are supported, and you gain a system that can better track your company’s performance over time.

How can you implement this initiative in your business?

Make sure you have clear descriptions of your mission-related activities.
Identify the positive and negative effects of your company’s operations on society and the environment.
Prepare quantifiable targets and results related to your organization’s mission. For instance, metric tons of GHG emissions reduced.
Report with consistent variables of measurement so comparisons can be made between each financial year.
Solicit feedback from stakeholders to determine what information to include in the report and what information is important to them.
Obtain third-party validation of the contents of your report.

Initiative: Have you and/or your company legally institutionalized your mission in your corporate structure – for instance, by inserting stakeholder consideration into your governing documents, or by incorporating as a benefit corporation?

Why is meeting this initiative important?

You need to protect your company’s mission for the long term. To do this, you must embed your company’s core social and environmental values in your corporate governing documents – this is the legal DNA of your business. Doing so elivates your values to the status of law, meaning your company will be able to maintain its mission even if there are changes in management and ownership. This means, all the hard work a business puts in to meet the organization’s strong social and environmental commitments is not wasted when business ownership changes.

How can you implement this initiative in your business?

The process of institutionalizing stakeholder interests into an organization’s governing documents is dependent on business location (the state your company is operational in), and the legal structure of the organization.

Businesses can legally institutionalize their corporate mission into their corporate structure by incorporating it into their articles of incorporation, bylaws, and corporate policies. This ensures the company’s commitment to its mission is legally binding and is reflected in the day-to-day operations of the organization.

B CORP ASSESSMENT: EVALUATING A BUSINESS’S IMPACT ON CUSTOMERS

Quick assessment:

Do you and/or your company cover your product or service with a written warranty and/or client protection policy?
Do you and/or your company have third-party certification verifying the quality of your product or service, which may include process certification such as ISO 19000, or industry-specific quality accreditations?
Do you and/or your company ensure significant suppliers are subject to regular quality insurance reviews and/or audits?
Do you and/or your company have a tracking system in place to manage quality insurance issues?
Do you and/or your company have a publicly known mechanism through which customers can ask questions or file complaints? Do you and/or your company measure customer satisfaction via a net promoter score or other methodology? Do you and/or your company share customer feedback publicly?
Do you and/or your company create specific increase targets for customer satisfaction?
Do you and/or your company have a formal program to incorporate customer testing and feedback into product or service design?
Do you and/or your company measure, manage, and reduce the potential negative outcomes your product or service may unintentionally create for customers?
Do you and/or your company have a formal policy on data privacy? Do you and/or your company make sure all customers are aware of any data your company collects, the time that the data is preserved, how it is used, and whether it is shared with other public or private entities?

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CUSTOMER ASSESSMENT: FURTHER INFORMATION

Initiative: Do you and/or your company cover your product or service with a written warranty and/or client protection policy?

Why is meeting this initiative important?

When customers buy products and services, they want to be sure they’re making the best decision. Customers want to know that what they’re spending their money on will last, and if it doesn’t meet their expectations, they can reach out to the company for support.

81% of customers say a positive warranty claim makes them more likely to purchase from the given company again. By aligning your business offering to meet your customer’s needs, introducing a written warranty or a client protection policy leads to greater customer retention.

How can you implement this initiative in your business?

Identify the products and services that require a warranty or client protection policy. High-cost and high-risk products or/and services should be the priority.
Determine the scope of the warranty or protection policy – that is, the length, what’s covered, and what actions the customer should take if they need to use the warranty or policy.
Write the warranty or client protection policy in clear and concise language.
Communicate the policy to your customers. You can include the policy or warranty in your marketing materials, on product packaging, and on your website.
Train your staff on the warranty and policy.
Monitor and evaluate the warranty and policy regularly.

Initiative: Do you and/or your company ensure significant suppliers are subject to regular quality insurance reviews and/or audits?

Why is meeting this initiative important?

Studies have shown the cost of poor quality averages anywhere from 15-40% of sales. This illustrates the importance of effective quality management throughout your entire value chain, including your suppliers.

Supplier quality issues will have a substantial impact on your bottom line and the experience customers have doing business with your brand. To address supplier quality issues you need a collaborative approach to supplier quality management.

How can you implement this initiative in your business?

Research by McKinsey and Company examined 40 recent quality incidents across 8 different industry sectors and identified 3 root causes for poor quality:

A lack of collaboration in the design phase;
The lack of a robust quality system or the right key performance indicators;
A lack of capabilities in manufacturing.

McKinsey pointed out that these issues could have been avoided with a better understanding of supplier knowledge, quality assurance, and manufacturing capabilities. With this in mind, the best way to ensure quality is to seek out third-party certified suppliers.

Initaitive: Do you and/or your company have a publicly known mechanism through which customers can ask questions or file complaints? Do you and/or your company measure customer satisfaction via a net promoter score or other methodology? Do you and/or your company share customer feedback publicly?

Why is meeting this initiative important?

According to data collected by Invesp, 90% of customers read an online review before making a purchasing decision, and 88% of these customers trust these reviews as if they were a personnel recommendation.

Customer feedback helps business leaders understand what their customers like and dislike about your product or service, informing innovation and product/service improvement. Customer feedback also makes your customers feel important, involved, and valued. With this in mind, 85% of small and medium-sized enterprises state online customer feedback has been beneficial to their business.

How can you implement this initiative in your business?

Create a publicly-facing online review page, and register your company with sites like Yelp, Google, and Facebook. Add links to your online review page on your website.
Use a Net Promoter Score (NPS) survey to measure customer satisfaction and loyalty (via one question: How likely are you to recommend our company to a friend or colleague?). An NPS survey helps you understand whether people are promoting your business or not. There’s a significant positive correlation between business revenue and high NPS scores.

Initiative: Do you and/or your company have a formal program to incorporate customer testing and feedback into product or service design?

Why is meeting this initiative important?

Incorporating customer opinions in the initial design, testing, and rollout phases of a given product or service will ensure designs more closely align with the needs of your customer. This, in turn, will boost customer satisfaction, and therefore retention and sales.

How can you implement this initiative in your business?

Adopt a lean approach to product/service design where experimentation is championed over elaborate planning, and customer feedback is prioritized over intuition.
Condcut market research. Gather information on your target market, their needs, and their preferences. This could be via surveys, focus groups, and/or interviews.
Analyze customer feedback to identify common themes, where your customers are experiencing problems, and their unmet needs.
Develop prototypes based on the feedback you have gathered.
Test prototypes with customers, obtain their feedback and refine your design.
Test again with a larger group of customers to ensure it meets their needs and expectations before launching the product/service.

Initiative: Do you and/or your company measure, manage, and reduce the potential negative outcomes your product or service may unintentionally create for customers?

Why is meeting this initiative important?

You need to consider the second-order effects your product or service has on society and the environment. The B impact assessment rewards companies whose products and services benefit the environment and society as a whole. It would be contradictory for an organization, whose core offering harmed a given stakeholder group, to seek B Corp certification. Such a contradiction would damage a brand’s image and discredit any good intentions.

How can you implement this initiative in your business?

Answer the following questions below to identify the unintended consequences associated with your brand.

What are the probable negative outcomes of the new product or service you’re consuming?
What are the probable consequences of those outcomes?
What can you do to minimize the risks of those unintended practices?
What can you do to ensure that historically disadvantaged groups are not negatively impacted by your product or service?
Who do you need to involve in early-on discussions to ensure a diverse group of stakeholders can give you thoughts, feedback, and advice on your plans?

Initiative: Do you and/or your company have a formal company available policy on data privacy? Do you and/or your company make sure all customers are aware of any data your company collects, the time that the data is preserved, how it is used, and whether it is shared with other public or private entities?

Why is meeting this initiative important?

Data breaches are estimated to cost $4.25 million per incident on average. Hence, consumer information must be protected for the benefit of your brand and your bottom line.

How can you implement this initiative in your business?

To ensure data security, consider the following questions:

What personal customer information does your business have?
Do you have more private data than you need?
Is sensitive customer data properly secured?
Have you properly disposed of customer data that’s no longer needed?
Do you have a data security response plan in place?

A quick start guide to obtaining B Corp certification

Having run through the above impact assessments on community, workers, environment, governance, and customers, your next step is to get certified.

It must be noted that to obtain B Corp certification, you’re not striving for perfection, rather your aim is to continuously improve. With this in mind, we’ve detailed 7 steps below to support you on your journey toward B Corp certification.

Step #1 – Use the B impact assessment to establish a quick baseline of your company’s overall social and environmental performance: You can use the assessment in this article to create a rough B impact report for your company. You can then move onto the full B Impact Assessment and receive a baseline B Impact Score. An overall B Impact score between 40-60 is average for organizations that are just starting out.
Step #2 – Engage your team to identify coworkers who are motivated by your sustainability goals: During this stage, you get the chance to involve as many individuals as possible in your cause to use business as a force for good. This step is about driving internal momentum to achieve your sustainability goals. Your employees can help you update your B Impact Report with more information as your organization progresses along your sustainability journey. Set up meetings with key internal stakeholders – include the CEO, CFO, Sustainability Director, Marketing Director, Building Manager, Product Design, Sourcing, and Supply Chain Managers, as theses are the key decision makers in your business. Explain the objectives and benefits of your proposed changes, what you’re trying to achieve, what success will look like, and how projects and initiatives will benefit the company. Share your B Corp Assessment results and set clear next steps.
Step #3 – Create a plan by working with your core project team to set a target B Impact Score and to create an action plan with short, medium, and long-term goals: Create an action plan with individuals assigned to take the lead on each given initiative. Prioritize easy practices that don’t require a lot of work first, before moving on to the larger-effort initiatives. Delegate responsibility accordingly, e.g. Your HR manager can take the reins on key worker initiatives, while your CEO can look at environmental data on suppliers.
Step #4 – Implement initiatives in your action plan: It’s time to start increasing your B Impact Score. Create policies and procedures to formalize initiatives and changes.
Step #5 – Fine tune sustainable development by keeping track of improvements made using the B Impact Assessment to obtain an updated score: Use the B Impact Assessment to recalculate and refine your B Impact Score. Depending on the measures you have implemented, your score may have improved since your initial assessment. Now is a good time to reconnect with key stakeholders within your company to update them on your progress, and have a conversation about further improvements to be made. It’s here that you can have a discussion about whether to get certified. If your current B Impact Assessment results are higher than 80 points, submit your assessment for review.
Step #6 – Submit your B Impact Assessment for review: Once submitted, a member of the B Lab staff will be notified and will schedule a review. You’ll be asked to upload supporting documentation for 6-10 randomly selected questions. The goal of this review stage is to give you a better understanding of the intent of each initiative, and an idea of what it will take to implement a given practice. Note that anyone in your team can complete this assessment. Most companies’ B Impact Scores will drop during this review stage, so don’t be disheartened if yours does. If you drop below 80 points, go back to step #3.
Step #7 – Celebrate and make your B Certification official: By this time you have made significant progress on improving the social and environmental performance of your business. It’s important you take the time to recognize your achievements and congratulate your team. Publicize your accomplishments and certification status. Use your business marketing channels to do this. To make your B Corp Certification official, the B Lab Staff will send an electronic version of the B Corps terms and conditions, and the B Corp declaration of interdependence to sign. B Lab will then ask you to pay the applicable B Corp Certification fee to complete the certification process.

Do B Corps represent true business sustainability?

The current definition of sustainability in the Oxford English Dictionary is: “The property of being environmentally sustainable; the degree to which a process or enterprise is able to be maintained or continued while avoiding the long-term depletion of natural resources.” – Oxford, How sustainable is sustainability?.

This “original” dictionary definition suggests a focus on protecting the environment and preserving scarce natural resources. Yet, this term has evolved in the business context to go well beyond this original definition and often includes social responsibility and governance responsibility. Despite the evolution of the terms exact meaning, ultimately sustainability means taking only what you need and leaving systems capable of continued existence.

With this in mind, do certified B Corps meet this objective?

Let’s take a look at one of the top-performing brands on the B Impact Assessment – Patagonia (B Impact Score: 151.4). Patagonia is considered the gold standard for business sustainability. However, as Paul Hawkin – environmentalist, entrepreneur, author, and activist – notes in his book the Economy of Commerce, if every business operated as Patagonia does, we’d still be experiencing similar environmental issues as we are today (albeit to a lesser extent). With this view, although completing the B Impact Assessment isn’t about perfection, the overall aim behind B Lab is to create long-term prosperity and economic, social, and environmental health. Yet, even those corporations scoring highly on the B Impact Assessment are not able to meet this aim. And with only 250 initiatives to choose from, this comes as little surprise – business sustainability is more complex than 250 initiatives.

At the Green Business Bureau, we wanted to acknowledge this issue with the belief that more can be done, with the aim of creating truly sustainable businesses. We’ve looked at popular certification tools such as the B Impact Assessment, ISO 14000, and LEED to devise over 500 action-oriented and industry-specific initiatives across environment, social, and governance themes. Our aim is to raise the bar on sustainability certification by providing a more thorough assessment that’s more affordable (so as to not price out smaller businesses) and gives an actionable roadmap to guide the user on how to complete each initiative.

For more information on the Green Business Bureau, and how to get started, book a demo with someone from our member success team.

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Sustainability certification, whether that’s through B Lab, the Green Business Bureau, or another provider, is not only an investment into your business, but it’s an investment into our future. The aim of certification is to create a responsible business, one that causes minimal harm to the environment and society, and leaves these systems capable of continued existence. In terms of this aim, we’re not there yet, but at the Green Business Bureau, we believe that with proper guidance, continual improvement, and more thorough assessment criteria we can create an economy that works with nature and people for the good health of all.

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