Why Be A B Corp: Social Responsibility That's Measurable

This article is a reprint of Wise Bread's contribution to OPEN Forum from American Express -- where small business owners can get advice from experts and share tips with each other.

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Lots of businesses claim they're easy on the environment, or socially progressive. But how do customers know your claims are true?

The answer for some 280 mostly small-to-medium sized businesses is to become a B Corporation. A three-year-old project of nonprofit B Lab, the B (for "beneficial") Corp program evaluates corporate-responsibility claims through a lengthy Impact Assessment questionnaire. To qualify, applicant businesses must score at least 80 out of 200 possible points. To keep participants honest, B Corp conducts random audits of 10 percent of members annually, to ensure their claims are accurate.

Sally Thornton found the B Corp program a great way to differentiate her niche professional staffing company, Flexperience in Burlingame, California. Shortly after founding her company in 2006, she heard about B Corp through other Bay Area businesses. She says the paperwork took perhaps 20 hours to complete. The questions asked cover a broad swath of social-responsibility topics, including recycling, telecommuting options, and hiring practices. She says:

It allows you to say, "Independent people say we are genuine, and it's not greenwashing." A lot of companies care about these issues — they care if you're a woman-owned business. I found telling people we're a B Corporation just resonates with them. We are not like everybody else.

Among the qualifiers that got Flexperience into the program are its business model of encouraging companies to use home-based workers, which saves gasoline and carbon emissions. The Flexperience team of a dozen or so also operates entirely virtually, saving the energy that would be needed to power a headquarters office.

Thornton can vouch for the fact that B Corp does its audits, as Flexperience has already been tapped for an audit.

"They definitely ensure everyone's doing what they've said," she reports.

The Benefits of Being B

Besides using the B Corp seal to market your own business, being a B Corp has other benefits, Thornton says. B Corp markets its program, benefiting participants by raising awareness of what B Corp means. Banding together through B Corp gives progressive companies a strong collective voice for discussing social issues with local and national legislators.

B Corp also offers in-person and virtual networking opportunities, allowing companies to meet and exchange ideas. Companies can more easily discover new ways to express their social values, as well as finding possible clients or vendors. Thornton says the community she's gained through B Corp is one of its prime advantages. She says:

When I learn more about what the other companies do, I'm going to choose to support what they're doing, and they'll choose working with us over competitors.

There are financial advantages to becoming a B Corp as well. The organization obtains member discounts on products and services, and also helps connect members to investors who are seeking socially responsible firms.

B Corp services vice president Chrissy Houlahan reports the program has found broad appeal among its target audience of privately held U.S. companies. There are B Corps in 50 different industries and 30 U.S. states, though many of the companies are clustered in the Bay Area.

Participation fees are charged on a sliding scale, based on company revenue. Businesses with less than $2 million in revenue pay $500 annually, while businesses with over $100 million in sales pay $25,000. As your company grows, your fee would rise.

Parent B Labs was founded by entrepreneurs Jay Coen Gilbert, Bart Houlahan, and venture investor Andrew Kassoy. The trio have a lofty goal for B Corps — to see them grow to over 5 percent of U.S. gross domestic product, roughly the size of today's nonprofit sector.

"Individuals and communities will have greater economic opportunity, society will have moved closer to achieving a positive environmental footprint, more people will be employed in great places to work, and we will have built more local living economies in the U.S. and across the world," the company says.

Some B Corp materials are available free to the public. B Corp has created a series of resource guides in collaboration with Columbia Business School's Research Initiative on Social Entrepreneurship. The guides cover best practices in corporate governance, hiring, supplier relations, environmental issues, and community service. For those interested in exploring socially responsible business practice, this is a good starting point.

This is a guest post by Carol Tice.