Feb 27, 2022 |
Written by Craig Hill, VP, Client & Treasury Manager
For the past five years, I’ve served as the B Local PDX Certifications Chair. B Locals are independent nonprofits that help companies align their values with their business practices to become certified B Corporations, or B Corps. During my time on the B Local PDX board, I have had hundreds of conversations about what it means to be a B Corp, but one of my favorites is: Why? Why should a company become a B Corp? What’s the value in putting in the work to get certified?
I love this question because, in my mind, there isn’t just one reason to consider certifying but rather many reasons, any of which would still be enough to drive certification.
In 2020 alone, the Federal Reserve estimated that over 800,000 businesses nationwide failed compared to a standard forecast of around 600,000 closures. Meaning about 12.5% of all companies in operation failed in 2020. That number doesn’t include many self-employed folks, independent contractors, or sole proprietors, so the total number was far larger. Vice President Harris stated in June 2021 that the failure rate was closer to 33% of small businesses.
Meanwhile, B Corps in Oregon, for example, fared far different. In 2020, six Oregon B Corps shut down their operations, and 15 new B Corps in Oregon certified in the same year, a net growth of 9 companies. That is around six failures for 135 companies or a fail rate of around 4.5%.
Oregon B Corps were something along the lines of four to eight times more resilient than an average company when it comes to staying in business during COVID. While other industries were contracting, B Corp numbers grew in our community. Not only that, B Lab (the nonprofit responsible for developing the B Corp standards and overseeing certifications) has never had more companies seeking to certify in its queue. B Lab reports that more companies have been added year-over-year since certification began, including each of the past two years during COVID.
A lot of airtime and press has been given to the very real “Great Resignation,” with workers leaving their positions at unprecedented rates. For companies that want and need to compete for excellent employees, how can they best attract talent? Pay equity, work-life balance, and flexibility certainly move the needle, but values alignment is increasingly relevant to the conversation and part of a growing trend over the past decade. Many B Corps are reporting comparatively high retention rates and strong recruitment. A recent survey found that B Corps were 17% more likely to have employees that believed in their company’s commitment to social responsibility and 12% more likely for employees to believe they can make a positive impact working for that company.
Why does that matter? Employee engagement is highly correlated to employee retention.
According to a Forrester Research Group study, consumers increasingly align their values with their purchases. In that survey, nearly 70% of Millennials actively considered the values of the companies they purchase from. Over half of them would change vendors to better align with their values, even if the cost is greater. Millennials and Gen Z officially make up over 50% of all employees and consumers and are projected to make up over 75% of the working and consumer markets by 2030. This data is part of a trend line—from 2015 to 2018, the importance of values grew in every single demographic polled, with the highest rise coming from respondents over the age of 65.
As consumers migrate toward values-driven and responsible corporations, B Corp is increasingly the certification of broadest acceptance with big names like Patagonia, Allbirds, Tillamook, and Ben & Jerry’s leading the way with consumer awareness. B Corp certification is powerful because it is not industry-specific nor limited just to worker happiness or environmental responsibility, but all those things.
Back to the foundational question: why should we become a B Corp? The real question in my mind is not “why?” but rather “why not? Why wouldn’t we become a B Corp?”
Increasingly, large sections of society believe the new purpose of business lies with a business having a purpose. Having a purpose beyond serving only shareholders, where stakeholder inclusion is at the heart of the business model. Where companies will compete to be not just “best in the world” but also “best for the world,” and as a result, our society and planet will enjoy a more shared and durable prosperity for all. Consumers, employees, and CEOs are rapidly evolving to expect more from business, and companies have a major role to play in our sustainable and inclusive future.
The problems we face will not ebb without everyone acting, and these problems require a marked global culture shift to harness the power of business to help address our planet’s greatest challenges. The B Corp framework—centered on data and consistent improvement to increase impact—is well-suited to help usher in a new era of stakeholder-centric capitalism, where businesses succeed by treating their employees excellently while delivering ethical and sustainable products and services.
We at Beneficial State Bank are proud to be part of the nearly 5,000 certified B Corporations globally. We encourage others to join the movement to use Business as a Force for Good. Want to get involved? Assess your company’s impact and eligibility for B Corp certification or align your banking with your values by banking with a B Corp bank like Beneficial State Bank.
Read next: “Structured Against Structured Racism: How to tell when anti-racism is at your organization’s core” by Francis Janes, Beneficial State Foundation’s Industry Relations and Partnerships Director