B Lab exists to support the cultural change happening around business: How can we create social change with business? And how can we operate sustainably, from sourcing to selling?
In this episode, we talk with B Lab executives Laura and Amanda to find out:
- What is the mission and vision of B Lab?
- Can you give us a quick background of B Lab and why you got involved?
- How does the ecosystem work?
- What stage of business would you recommend to take the assessment?
- Why should people measure their impact? What are the benefits?
- Can you share more about B Analytics?
- What kind of companies are signing up to use this tool?
- Can you share with us how you integrated the Global Goals with B Lab?
- How can we get involved?
Tune in to discover how you can use the Impact Assessment as a guide for your own business growth, and how you can use the B Lab Analytics to inform your investments.
What is the mission and vision of B Lab?
“B Lab is a nonprofit. We’ve been around for about 12 years, and our mission from the beginning has been to serve people using business as a force for good.
What we see our organization contributing is infrastructure primarily to make the cultural shifts that are happening in the nature of business become long-term changes. Also, we are recognizing companies that exemplify what this redefined for social environmental good looks like, which are called certified B corporations.”
Can you give us a quick background of B Lab and why you got involved?
“It must have been 13 years ago! It started with three friends from college who had all gone into the private sector. One of them was more on the investment side of things in private equity and the other two as entrepreneurs. They were growing a company in the apparel industry and sensing that there was something deeply flawed in business.”
“As they tried to run their business with a social conciousness, environmental purpose, and logic, they found barriers. They identified two main flaws in the system. One was legal – a legal definition of maximizing return for shareholders in the short term. The second was a general question: what is a good decision from the social and environmental perspective as you’re running a business? That was the beginning of it all.”
Laura: “I’m Colombian, so I started out as the executive director of the Labs to partner in Colombia. That was about five years ago. As of two years ago, I’ve been based in New York with Amanda working primarily on newer initiatives. We’re trying to sta ahead of the game and moving the market forward. What about you, Amanda?”
Amanda: “I’ve been with B Lab for about four years now. I came to this work after having spent some time in the federal government, really thinking and working on policy and federal initiatives that we’re about promoting economic development.”
“I think one of the things that was lacking for me was the pace in which the government was able to move around supporting sustainable business.”
“But the pace in the private sector was responding much more quickly. So, there I was after about three and a half years in Washington, deciding to leave because I really wanted to be on the cutting edge. I have seen B labs push the conversation forward and provide real solutions for businesses, for investors and stakeholders (not just shareholders), and redefining what the success of a business can look like. I’ve also seen B Lab being progressive about how we spread that change and make it actionable for all businesses.”
How does the ecosystem work?
Amanda: “When we think about the role that the Lab plays in this work, we see ourselves as one actor in this broader ecosystem of people using business as a force for good. We can take no credit for being the only actors in and thinking about the role of business and how it is changing and how it’s evolving.”
How it Works:
- Identify Leaders “Where we see our work really playing out, as Laura said, within the identification of business leaders that have put in best practices around their social environmental management.
- Systematize Best Practices and Get Certified Companies have to go through a process to become a certified B Corp to systemetize those best practices. The first step is actually taking an assessment that assesses those policies and practices in place in that business. For example:
- Are you producing a certified organic product?
- Are you involved in fair trade
- How are you treating your workers?
- What’s your governance structure?
- How are you engaged with their community?
- Change the Legal Structure to a Public Benefit Corporation: Then we create a legal structure that allows companies to account for those shareholders, or excuse me, their stakeholders, not just their shareholders. And as they’re growing their business, as they’re making real business decisions in thinking about how they as a business can grow in the long term.”
Check out this video to see what it means to be a Certified B Corporation
Can you share the origin of how you developed the assessment?
“The impact assessment has always been the cornerstone of our work around impact measurement, and a first point of entry for a lot of our companies. The first version of it was on an excel sheet. It was like an MVP, but it was about discovering those aspects of the business that we can measure and specifically asking, “how do we identify metrics that are objective and observable that a company can see where they are as an organization?”
At bImpactAssessment.net you can take the assessment. It’s a cloud-based, totally free tool that a company can register for, and as the buusiness goes through that assessment, we ask questions organized around specific stakeholder groups for a company.”
What stage of business would you recommend to take the assessment?
“We got asked that question a lot about five years ago, so we started this new category of B groups, which is called pending B Corp. The pending B Corp group gives entrepreneurs clarity from the beginning: they take it as a learning experience and it’s only a year after they’ve been in business that they actually have to go through the verification process that the B Corp does go through. So they do have a year from the moment that they decide, ‘okay, I want to be a pending B Corp. I want in a year’s time to really understand what the B Impact Assessment calls for. I want to achieve that minimum threshold within a year.’ Then, they have that time to build the elements that they may be missing.
So, my general answer about the business stage is… as early as possible! There’s no cost involved, it’s a login. And no one needs to know what your score is.”
“We are hoping that companies use the impact assessment as a tool for their development and growth. That way, they can build a sustainable company from the beginning.”
How many companies have taken the assessment?
Great question. So we have 55,000 companies globally that have registered and started the B impact assessment.
I think that’s because there’s a broader consciousness happening in the business community. We’re now at over 2,700 certified B Corps globally, and there’s been companies that are leading the way for others: “Hey, if that company can do it, I can do it.” Or, “I really believe in that company. I want to be just like them in the business I’m building.” So we’re seeing that community as a whole movement, which is exciting.
Why should people measure their impact?
First and foremost it’s important to have visibility onto those aspects of your business that are not just about financial performance.
Laura: I think there’s an interesting opportunity here for companies to distinguish themselves in a marketplace to say, “This is how I’m doing compared to other companies.” That’s really important to us. I think people are demanding it. Customers are demanding it, investors are demanding it, employees are demanding it. And being able to respond to that demand is a critical and central part of a business being successful is being responsive.”
Are there any benefits to doing this?
Amanda: “I think employee engagement is one of the first things that we hear from companies; that either they’ve gone through it and now they’re seeing it as a mechanism through which to engage their employees. Some of it are doing the assessment as a response to their employees, to Laura’s point, as their workforce may be demanding it and wondering, “Are we amongst the leaders that are doing this?”
The political part of it in tracking your progress over time is important in the same way that you would track your balance sheet over time and your profit and loss statement. And, the certification process built in that consistent review.
For me, Patagonia is a great example of this. They have been a leader in sustainability long before B-Corp. Since getting certified, they’ve used the assessment and certification to improve their company and practices.”
Can you share more about B Analytics?
“The data in it is by individual companies going in and filling out the B Impact Assessment. Then, B Analytics is a business intelligence tool that lets stakeholders actually engage with that data and understand it in a more in-depth way.”
“I think one of the things that we’ve seen is that there are a host of other stakeholders that want to be engaged in helping that business grow. Often it’s investors. Often it is supply chain managers. Understanding and having visibility into these nonfinancial performance metrics of a company can add value. We’ve had about 150 subscribers since we launched the platform, and it is about helping companies understand where they are today, then use that data to make better decisions and improve their impact over time.”
What kind of companies sign up to use this tool?
It’s a variety. I’d say investors are about half of our community and some of them are venture capitalists, some of them are sort of traditional private equity firms and some of them are debt funds actually that have engaged and invested in providing debt instruments to growing companies.
We also have non-investors who are using the platform. We have supply chain managers who have said “it’s really important to understand our impact, but we want visibility into our supply chain as well because we know that a lot of the value that we’re providing more broadly in the ecosystem is actually coming through our supply chain.” So they may be engaging with the companies that they source from in order to measure and manage their impact.
We also have business networks and local economic development organizations that are using the analytics tool to support sustainable business development in their communities.
Can you share with us how you integrated the Global Goals with B Lab?
“It fits perfectly into this conversation because we’ll be beta testing in November and then launching in January, 2020. It will essentially be a module of the B Impact Assessment and a module of the analytics that bring the Sustainable Development Goals.
We really listened to many of the companies that use the B Impact Assessment, then so many of the partners that use the analytics and they’ve been saying to us for years that the SDG framework is incredibly helpful.
Anyone who knows the Sustainable Development Goals understands just how tangible they make humanity-wide challenges, but they were developed for countries and by countries.
What can we do to get involved?
I would encourage folks to be the change, which is what our newsletter and our content shows you how to do. Our content highlights the good work of the community and the companies that we have the privilege of working with and serving, and also the broader community of change agents that are driving a different system of capitalism.
So if you need some inspiration, if you’re looking for a mid-day, pick me up, check out Be the Change. It gives you an opportunity to sign up for our newsletter. That would be the best place to get updates on this new integration and the SDG work that we’re doing and to stay up to date on all things B Corp.