Gaining B Corp status is a strenuous process but an incredibly valuable one for companies that want to prove their commitment to good governance, and their role in wider society, argues Thom Groot, co-founder of The Electric Car Scheme.
Over the past few decades, businesses with a purpose that goes beyond satisfying their shareholders have become significantly more prevalent as employees opt for companies that not only treat them well but treat society and the environment responsibly.
The arrival of the B Corp certification – provided by B Lab – is a way of signalling to the world that a business has prioritised purpose and responsibility. Words are much easier than actions however, which is why achieving certification is so hard to achieve.
Certified B Corps are companies that have been verified to meet high standards of social and environmental performance, transparency, and accountability and my company, The Electric Car Scheme, has just gone through this process.
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The B Impact Assessment evaluates a company’s practices and outputs across five categories: governance, workers, community, the environment, and customers.
Achieving B Corp status took The Electric Car Scheme more than 18 months including planning, auditing and certification. It was a process that challenged us as a business in unexpected ways but has left us stronger for it.
Chief among the challenges of achieving the status is the amount of time and resources it uses up.
Application, the first step, is broadly what one would expect, but it is an incredibly rigorous process, one that will ask the business questions that it may never even consider. This adds to the time it takes, as you go away, discuss it with your co-founder or other colleagues, and then create a policy that answers the original question. We went through this process a number of times before the application was finally complete, paid out an application fee, and sent it off for review.
In parallel is an even more critical step that requires a legal change to the articles of association of your business. This legally changes the aims of your business to formally incorporate the values of a B Corp.
The application process forces the business to put its money where its mouth is and enforces a degree of structure that they might not be used to”
It is at this step that you will need to involve your shareholders – changing the articles of association requires the permission of each of your shareholders. This is not often an issue, but there is certainly no guarantee that all of them will approve this change. Outside of convincing them that it is a good idea, there is a lot of legal work to be done to get agreement from everyone and change your business’s mission with Companies House, which can be costly too.
The review before certification is achieved is particularly challenging. This took us a total of nine months from start to finish. During the review and certification period, the company is tested to see if the application details are accurate and whether anything has changed since the application. This ensures companies are not just paying lip service to the policies they say they have in place. It forces the business to put its money where its mouth is and enforces a degree of structure that it might not be used to, especially as a growing startup or scale-up.
Progress
So far, I have painted a picture of a long, gruelling process, full of costs that will fundamentally change how you run your business. But without pain, there is no gain. The process encouraged our business to consider a series of issues and opportunities that we had not yet prioritised. This helped us progress what we offer our employees, how we take into account broader society and stakeholders, as well as our impact on the environment. This led us to improve a number of aspects of our business in the process.
We’re now part of a global community of businesses that meet high standards of social and environmental impact. There are more than 8,000 B Corp-accredited businesses in the world at the moment and about 1,500 in the UK. But the numbers are growing.
This figure represents under half a per cent of all businesses in the UK, meaning those with the determination can count themselves among a small group of businesses that are leading a global movement for an inclusive, equitable, and regenerative economy.
Retention
There is good evidence that B Corps have a lower rate of attrition of employees, at about 10% compared to the small and medium-sized enterprise average of nearly 20%. It is easy to see that employee retention is key to the success of any business, especially one looking to grow or expand its reach.
This holds up in the data too, the average headcount growth for a B Corp is just under 10% a year – versus 0% for other SMEs.
Winning new clients is also an area of potential differentiation. In a hyper-competitive world, the last stage of a procurement process is often a choice between two companies doing very similar things coming down to the smallest differences either in personal relationships or, increasingly, sustainability credentials.
Who would you pick? The one who says they do the right thing? Or the one that has something to back up their claim?
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