B Corporations: The business model with a conscience

For small and medium businesses, putting social and environmental responsibility at the forefront of your business model could be seen to take away from other aspects of the business that are crucial to their success and growth. However, by obtaining B Corp status, many companies have seen that traditional business objects work in tandem with their passion for improving the world in which they operate.

According to research from B Lab, average growth for UK B Corp entities was 14%. This is further backed by research published in October 2020 from Gwent University, which also suggests that short-term turnover growth as a result of gaining B Corp status is 22% on average.

Turnover growth can be largely linked to the growing popularity of sustainability. After all, reportedly 66% of consumers are said to be willing to pay more for socially responsible goods and services.

It’s clear then that social responsibility, especially sustainability, gives your products a competitive edge that, coupled with the growing discourse on environmental issues, can make your brand more attractive and, therefore, more successful.

This attractive brand isn’t just noticed by the consumer. It has a knock-on effect on the investor too. There is an ever-growing community of investors who are looking to join companies that fit in with their ethos of sustainability. That is why most mainstream investment platforms are now offering socially and environmentally sustainable funds.

For those B Corps that are SMEs, this can help break down barriers to obtaining funding from external investors, enabling them to double down on the growth seen from having a socially responsible brand.

Therefore, with a better capital backing, and impressive financial results and forecasts, a B Corp will likely be a better candidate for obtaining bank funding, providing more opportunities to make those key investments and grow the business.

However, the benefits of becoming a B Corp aren’t solely on the balance sheet. The status can attract (and retain) the right people, providing businesses with a larger pool of skills and experience to help grow the business. This is evidenced by the Gwent University study which states that as a result of achieving B Corp status yearly employee growth is 13% on average.

Corporate responsibility is clearly playing a larger role in influencing where people want to work. Finn Tribe who works for B People, a recruitment agency specialising in recruiting for B Corps, states

‘The recruitment benefits for B Corps are largely threefold:

                The employee is likely to be engaged with your overall ethos and branding

                The employee benefits that B Corps provide are attractive in their own right and

                The transparency, openness and autonomy of B Corps enables the individual to make a difference’.

It’s no secret that great people are attracted to great businesses, but B Corps take that additional step by aligning a great business with greater employee benefits and engagement, making them far more attractive to potential new recruits.

Although there are clear benefits, becoming a B Corp shouldn’t be seen as a free ride to success. Business owners who want to become a B Corp need to make sure they’re ready and willing to meet the requirements.

Achieving the certification is not just about ticking a few boxes. B Lab’s completion guide for SME’s quotes the process as being ‘rigorous’, which they state is what gives the accreditation its value. They go as far to say that most companies don’t achieve their accreditation on their first try.

Broadly, there are three key steps in obtaining certification:

1. Completion of the B Impact Assessment (BIA) – a tool designed to measure your business’s social and environmental impacts. The key areas assessed are Governance, Workers, Community, Environment and Customers. To progress from this step, your company must reach a verified score of 80/200

2. Your business must then meet the B Corp legal requirements relating to your business structure

3. Once finalising and submitting your application you will be invited to a rigorous virtual review call to discuss and assess your application and documentation.

Upon certification, your business will have B Corp status for three years. In addition to this, there is an annual fee which starts from £500 per year and is scaled up based on turnover.

The key thing to remember in becoming a B Corp, is that it isn’t just another strategy – You’re actually joining a community of business owners who believe that they can help solve the many social and environmental problems we face today by using their business. Yes, there are indirect benefits in becoming a B Corp, but these should be looked at as a bonus to the real reward of becoming socially responsible. Before taking the plunge, you need to assess whether B Corp status fits in with your company’s ethos and, crucially, you need to ask yourself: If signing up doesn’t bring you the benefits listed above, would you still be willing try and make a difference? Only then can the benefits of becoming a B Corp become unlocked.

If you would like further information regarding B Corp and accreditation contact ashley.harvey@om.uk or click here.