Editor’s Note: This post is part of the on-going collaboration between S&S and GreenBuzz to promote increased dialogue between sustainability practitioners, academic experts, and the general public. GreenBuzz chapters in different cities coordinate on-the-ground events for a word-of-mouth driven community of professionals engaged in sustainability, bringing sustainability leaders together to connect with each other and to discuss specific sustainability topics. S&S will publish excerpts, summaries, and discussions generated by these events in order to facilitate on-going debate and make the information presented at these events available to a world-wide audience.
The perception and execution of corporate social responsibility (CSR) has transformed over the past decade. Consumers have become more aware of green-washing, while corporations have also become more conscious of the business value of integrating social and environmental sustainability into their value chains. The concept of “shared value” is increasingly manifest in corporation’s development and management of their relationships with suppliers, consumers and other stakeholders. Yet, the translation of social impact to business and monetary value is not often easy nor direct. Tools are needed to ease this translation.
Among others, the publication of a sustainability report has increasingly become a norm among big multi-national companies, including H&M and Coca-Cola. Unlike the annual reports, which only cover economic and financial performance, sustainability reports go beyond the dollar signs and share information covering environmental, social and governance (ESG indicators) performance with shareholders. Sustainability reports offer a lot of detailed information and insight into the intersection of social or environmental impact and the core business. However, people are busy and may not have the patience to go through every page, let alone conduct an in-depth materiality assessment.
B Corps: connecting the dots
Because of these time constraints, B Corps can play an important role in conveying information to consumers. Through a scoring and certification system, B Corps enable easy identification of well-performing companies.
B Corps are evaluated using an assessment that connects the dots between ESG best-practices and good business in a simple and time-efficient manner. The assessment consists of a long list of questions that “measures what matters”, evaluating companies on five fronts: environment, workers, customers, community and governance. Companies that score above 80 would be eligible to become a certified B Corp, and the status is subject to review every two years.
Through this free assessment, companies not only know how well they are performing as compared to other players in their field, but more importantly, also go through a detailed reflection process that enables improvement in the future. As the office manager of Fairphone indicated, B Assessment is particularly helpful in providing guidance to companies on “how to keep doing better”: the questions and answer options are often structured in a gradation manner that offers companies insights into how they could improve in a particular area.
While B Corp enables companies to evaluate their operations and practices in a comprehensive and rigorous manner, it is by no means a perfect tool, nor are certified B Corps perfect. Instead of striving for the idea of “perfection”, which is a rather static concept and implies no room for improvement, “B Corp is more about the [reflecting] process, and to become more aware of the exact impact of your business.”
How is B Corp doing in Germany?
While B Corp has developed into a movement that celebrates “using business as a force for good”, and has gained much momentum, particularly in North and Latin America, it has only been present in Germany for about a year. There are currently 12 certified B Corps in Germany, all located in Berlin, with most of them being small-medium size firms. However, the concept of B Corp remains foreign to most German companies. As such, German companies often raise concerns regarding its credibility as a certification system.
As for consumers, very few are familiar with this certification system. In fact, more than half of the audience of the recent Sustainability Drinks Berlin event #15, held November 5th, indicated that they have never heard of B Corp before. Yet, at the same event, Daria Koreniushkina from Fairphone presented that fact that the majority of Fairphones have been sold in the German market, with Berlin being the city with the highest possession rate, suggesting that Germans could be one of the most-sustainability-conscious consumers in the world. So, what kind of benchmark or eco-labels have Germans referred to when making consumption decisions?
In Germany, there are quite a variety of labels giving information on ecological or social aspects of products, such as Bio-Spiegel (organic farming products) and UTZ certified . However, a number of them are mere “eco-labels”, discounting social aspects or aspects of quality and few offers coverage on sustainability as comprehensive as B Corp. There is also home-grown reporting standard such as the Social Reporting Standard that derived from corporate accounting principles, but is rarely used by consumers. Therefore, consumers often refer to word-of-mouth, or purchase from brands that are particularly strong at communicating their impact story.
Ecosia, for instance, the search engine that plants tress and the first B Corp in Germany, complements its B Assessment by creating a very easy-to-understand but compelling theory of change, (i.e. their impact story) that engages potential supporters.
Their regular data updates certainly adds to the transparency and credibility of their work as well.
While B Corp is an effective indicator to both consumers and investors of good businesses in terms of economic, social and environmental performances, it does not claim to be “the perfect tool”, nor that a certified B Corp is perfect. The process of going through B Assessment is often time-consuming, and getting certified could also impose a burden on staff providing necessary documentation. But at its core the B Corp movement is about realizing the value of impact assessment and reporting. The goal is to inform consumers and corporations about gaps and potential improvements in performance, and ultimately enable better consumption and business decisions.
Featured image courtesy of Wikimedia Commons.