Purpose-driven business may prove to be more resilient than traditional businesses, including in times of crisis and economic downturns, like we are currently experiencing. Consumers reward companies that align with their values—according to Forrester Research in 2018, seven in 10 millennials and 52% of all online U.S. adults “consider company values when making a purchase.” Additionally, employees are gravitating toward businesses where they feel they can make a difference. In 2018, the Harvard Business Review found that nine out of 10 people would be willing to earn less in order to work a purposeful job. And consumers are looking for companies really out to make a difference—rewarding those that do and punishing , often publicly, those that are greenwashing, bluffing, or otherwise missing the mark.
As the economy has floundered and the world braces for a sustained economic recession—effects of the coronavirus outbreak—some business analysts believe there hasn’t been a better time for companies to pull the lever and make a meaningful switch to a purpose-driven approach. But where to begin?
A key conclusion uncovered by my research for Better Business is that being accountable to companies’ stakeholders has many spillover benefits. In particular, I have heard scores of times that using the B Impact Assessment (BIA), a free assessment tool provided by nonprofit B Lab, to measure impact across the environment, community, workers, customers and governance not only helps companies review, assess, and make meaningful changes to improve its impact on its stakeholders, but also has a significantly positive effect on company financial performance.
The following excerpt from an in-depth report on the Benefits of the B Impact Assessment takes a look not only at the benefits of corporate accountability, but also how having those impacts certified has even further benefits. The BIA online tool is used by more than 100,000 businesses around the world to measure and manage stakeholder impact. And additional accountability and improvements are seen by companies that meet high social and environmental standards and choose to become Certified B Corporations. These companies are standing up as global leaders for other businesses to follow in addressing the challenges we all face—and in building businesses that are more resilient through economic ups and downs.
A Brief Introduction to the B Impact Assessment
The first version of BIA was created on an Excel spreadsheet by B Lab founders in 2006, synthesizing the best practices in socially responsible business from Ben Cohen and Mal Warwick’s Values-Driven Business: How to Change the World, Make Money, and Have Fun, Betsy Power’s work with Natural Capital Institute, and the Global Reporting Initiative (GRI) reporting guidelines. A group of 19 companies worked through the assessment and became the first B Corps, certified in June 2007.
Fast-forward to today, and an entire global standards review trust is in charge of maintaining and regularly updating the BIA. More than 3,000 of them are Certified B Corps, having scored a minimum verified score of 80 points on the assessment. Recertification is required every three years, which means B Corps are always updating their BIA scores using the most recently released version of BIA.
But, a company doesn’t have to be, or even be interested in becoming, a B Corp to take advantage of what the BIA has to offer.
The Benefits of Using the B Impact Assessment
1) A Platform to Compare and Learn
The BIA online platform not only allows participants to compare their impact with their peers or companies in other sectors, but also provides them a place to learn about best practices. It offers customized solutions for companies to improve their impact and learn how to incorporate purpose meaningfully. Knowing how to authentically make a difference is key to finding the best potential talent, ongoing engagement with customers, and positive relationships with the media.
2) A Tool for Continuous Improvement and Investing for Impact
A company can use the BIA to evaluate whether it has increased its impact or outcomes relative to its size. Its evolving standards help companies engage in continuous improvement on their impact and stay true to their social missions when the business grows or changes. For investors, it provides an alternative method to evaluate and drive impact through their investments. For many traditional businesses, it also becomes a useful tool to drive impact deeper in supply chain management and help their suppliers improve.
Further Benefits When a Company Becomes a Certified B CorpCompanies that choose to use the BIA to pursue B Corp certification see even more unique benefits. On top of the previously mentioned benefits, companies that achieve B Corp certification can expect the following advantages.
3) Attracting the Best Talent and Driving Impacts Internally
B Corp certification provides a signal to potential job seekers that a company is committed to its social mission and its employees. When a new employee enters a B Corp and is immediately encouraged to participate in the company’s mission and uphold the company’s values, that person becomes invested in the company’s continued success. This helps to cultivate a positive workplace environment and reduce employee turnovers.
4) Networking and Partnerships for Larger Impact
Becoming a member of the B Corp community helps business owners and their employees reach like-minded companies through networking events. For small and medium companies, this network helps them share ideas and solve challenges together in the community.
If you’re interested in learning more about the BIA and B Corps, the report on the Benefits of the B Impact Assessment provides additional company reviews and insights.