There are times when being a small business can give you the competitive advantage. Well aware of this fact is Andrew Kassoy, co-founder of B Lab, the nonprofit behind the B Corp movement. Many B Corps are small and medium-sized enterprises (SMEs) and arguably all create value for both the business and society. So which B Corps are creating shared value—and what makes them so successful at it? We posed Kassoy a few questions to better understand this aspect of B Corp certification.
To go deeper on this topic, register to listen to a webinar recording of Business Unusual: How B Corps Create Shared Value, which featured Kassoy and other experts from B Lab and the Shared Value Initiative.
Why are SMEs primed to create shared value?
SMEs are more agile and can quickly adapt and incorporate new practices, whereas larger organizations often struggle to make meaningful change at scale. For a small or medium-sized enterprise, it is also easier to get a full picture of their footprint: in the case of a large company with an extensive supply chain, it is hard to establish if their sourcing practices are sustainable every step of the way, down to their last contractor. (It is not impossible, however: Cabot Creamery, Patagonia, and Etsy are all good examples of large companies that are successfully creating shared value by measuring what matters.) Companies are also likely to succeed at using business as a force for good if they start measuring and managing their impact when they are just forming, plan around their findings, and then continue to track environmental, social, and governance metrics as they grow. SMEs also have the unique opportunity to engage their entire team in impact awareness and communicate their mission and goals throughout the organization, creating a culture of ownership and accountability amongst employees.
What’s the quick definition of a B Corp? Can you give us an example of one that’s creating measureable social and business value, or shared value?
A B Corp is a for-profit company that meets higher standards of social and environmental performance, legal accountability, and transparency. B Corps create shared value for all stakeholders through their business model and operations. A good example of a B Corp that is creating measurable shared value is Greyston Bakery, which supplies all of the brownies for Ben & Jerry’s ice cream (also a B Corp). They have an open hiring policy, which supports the local community by giving employment opportunities to underserved individuals; they employ a profit-sharing model to give their employees greater ownership of their work; they operate in a LEED certified facility; and they have cemented their values into their organizational charter as a legal benefit corporation in the state of New York. This is just one example in a community of nearly 1,200 companies who are using business as a force for good through the B Corp movement.
When it comes to outcomes, you often talk about “measuring what matters.” How does a B Corp measure its success differently?
B Corps measure what matters through the B Impact Assessment, a dynamic impact measurement tool created by B Lab. This rigorous assessment is based on the highest standards of social, environmental, and governance practices, and offers a clear perspective on the overall impact generated by the entire company, not just their bottom line financial performance. Companies can measure whether their workers are paid more than a living wage or if they source materials from low-income populations; if they are energy-efficient, provide workforce development programs for their workers, or are legally accountable to their stated mission. B Corps can also benchmark their performance against other companies, learn about best practices in their industry, and gain insight on ways to improve their impact.
How are B Corps performing relative to other companies? What contributes to their competitive advantage?
B Corps have a competitive advantage over traditional businesses in their ability to attract and retain top talent, to differentiate themselves in a saturated market, and to protect the integrity of their brand’s commitment to mission (think Plum Organics, a B Corp and subsidiary of the large, traditional conglomerate Campbell’s Soup Company). B Corps’ focus on long term profit across all aspects of their business versus a short term focus on strictly financial success results in robust, lasting organizations: On average, B Corps were 65% more likely to survive the recession than other traditional businesses. And, while there is little data available on how B Corps compare to traditional companies from a financial standpoint, some practices such as energy efficiency and high worker retention translate into direct financial gains, which ultimately make companies more financially sustainable in the long run. Another competitive advantage to being a B Corp is the ability to attract like-minded investors through the B Analytics platform, which can allow a company to scale without having to sacrifice its mission.
The webinar Business Unusual: How B-Corporations Create Shared Value has already taken place—but you can still register to access the recording, in which Kassoy and other experts discussed concrete examples of SMEs creating shared value, as well as the tools they use to manage both social impact and financial returns.