“It is increasingly clear that the way forward on our journey towards 2030 needs to use the power of business as leverage to grow a stable, sustainable global economy and society.” Marga Hoeck, author of The Trillion Dollar Shift
“Profit isn’t a purpose it’s a result. To have purpose means the things we do are of real value to others.” Simon Sinek
The last decade has seen a fundamental shift in business and its role in society. In major economies, businesses contribute 72% of global GDP. Apple’s market cap alone, is $2.4 trillion, significantly larger than Russia’s GDP of $1.7 trillion. In fact, if Apple were a country, it would be the equivalent 8th largest in the world - provided that market cap was equivalent to GDP. In parallel to this corporate supersizing, we’ve witnessed the growth of the ‘business for good’ movement, a network of companies who believe that firms should and must make a positive social and environmental contribution, not simply an economic one. The pursuit of profit alone has come to be seen by many as irresponsible at best, and damaging to people and planet at worst. A Deloitte study found that 87% of business leaders now believe that companies perform better over time if their purpose goes beyond profit. EY research backs this up, showing that 89% percent of executives find that a strong sense of collective purpose drives employee satisfaction, with 80% agreeing it also helps increase customer loyalty.
The Rise of the B Corp
At the forefront of the business for good movement is B Corp, a verified certification standard that meets high social and environmental performance, transparency and accountability. B Corps are assessed on factors from employee benefits and charitable giving, to supply chain practices and input materials. The collective vision is for an inclusive, equitable, regenerative economy for all people and our shared planet. What’s not to love? What began in 2006 in the United States by three friends who shared a vision to make better business, has grown into a global movement with over 6,300 B Corps in 89 countries, employing over 530,000 people across 159 industries. And the influence of B Corp goes well beyond fully certified organisations with almost 200,000 companies using B Corp impact measurement tools, representing over 42 million workers and some $1.8 trillion in annual revenue.
The UK alone boasts 1,100 certified and pending B corps, generating over £12bn in revenues, employing over 52,000 employees with household names well represented from the Body Shop and Patagonia, to Clipper Tea, Alpro, Ben & Jerry’s and WeTransfer. Although the Futuretivity brand is less than a year old (a key criteria for certification) we have already started our B Corp journey – we wanted to act with purpose from the start. The B Corp standard process allows that following one full year of trading, new companies can apply for B Corp Pending status – a great way to start as you mean to go on.
Research shows that UK voters and consumers want business to do better. 76% of the public want businesses to be legally responsible for protecting the environment and having a positive social impact, whilst the majority favour brands that do good in the world.
In response to this demand, B Corp UK are campaigning for the Better Business Act (BBA) - a simple legislative solution that by amending Section 172 of the Companies Act can use existing legal principles to empower directors to consider all stakeholders. BBA would ensure all UK businesses are legally responsible for benefiting workers, customers, communities and the environment. To achieve this, B Lab UK engaged legislators and government, before the BBA launch in Parliament in April 2021. By requiring companies to advance the interests of society and the planet alongside those of shareholders, the BBA will unleash their full potential to meet the world’s most pressing challenges. This in turn, will make the U.K. the first country to require companies to put considerations about profit on an equal footing with social and environmental. The BBA is set to transform the way we do business, so that all UK businesses regardless of size takes ownership of its impact, and why Futuretivity is a proud supporter of the Act.
In January this year, I was invited to join UK B Corp’s Equitable Growth Advisory Group to help grow the B Corp community in a purposeful, inclusive way to reflect the diversity of UK society. To support this work, I’ve been collecting evidence and insights into B Corp businesses and the benefits of going B.
7 Benefits of Becoming a B Corp
1. B Corps are More Profitable: Purpose pays - companies with a higher purpose are more profitable than those who just consider the bottom line, have greater market share gains and grow three times faster on average than their competitors. (Deloitte). Certified B Corps tend to outperform their competitors, seeing an impressive turnover growth of 26% between 2017 & 2020, compared to a national average of 5%. What’s more, B Corps have higher expectations about future growth, with an 86% net positive expectation that turnover will increase in the next year vs 25% for all SMEs. A survey conducted by LinkedIn found that 58% of businesses who had embedded brand values within their business plan experienced an annual growth of over 10% compared to those that did not.
2. Customers are Demanding B Corp Values: Increasingly, people want to buy from companies that share their values. One study found that 73% of consumers believe that companies should have a legal responsibility to people and planet alongside maximising profits. 63% of those who purchased from a B Corp, did so intentionally, seeking out the certification before deciding to buy. Even those unfamiliar with the B Corp brand, a majority (66%) reported interest in purchasing B Corp products after learning about the certification. The B Corp standard is also seen as a mechanism to expand and extend the customer base. Non-profits, government agencies, and other organizations increasingly want to partner with companies that have certified. A Gallup study shows that businesses hold more consumer trust (68%) than the government, police, church, or other public institutions. B Corps therefore have the opportunity to leverage this trust with consumers – who actively seek out more sustainable and socially responsible products and brands. Conscious consumers are also less influenced by price and convenience, and more influenced by brand reputation and business practices. People are voting through their wallets too, with 64% of adults in the U.S. and 69% in Canada believing that they can impact social or political change with each purchase. Companies with purpose also demonstrate a positive brand advantage with consumers being 2.5 times more loyal to businesses and brands that embed their values throughout their supply chain.
3. B Corps Bring Investment: Increasingly, investors seek out companies focused on providing long-term, economic, social and environmental value. Strong ESG credentials are now often a requirement for consideration. The EY 2021 Global Private Equity Survey found that 68% of private equity firms take ESG into account when making investment decisions. B Corps have also been more successful at securing equity finance with 70% of B Corps securing all, or more, of the required amount, versus, 56% of the wider SME population. The pandemic served to reinforce the importance of social and environmental risks, putting them firmly at the top of the boardroom agenda. This has propelled the shift from a sole focus on profit and a narrow understanding of shareholder value, to a broader, more inclusive understanding of the interplay between economic, social and environmental factors, making B Corps particularly attractive investments. Research shows that 44% of B Corps seeking investment found that their certification helped to attract their investor, with certification signalling that you mean business when it comes to ESG. The B Corp stamp is now considered one of the most powerful ways to communicate that your business is adhering to the highest levels of environmental and social performance. Firms who perform well on ESG are considered less risky, better positioned for the long-term and prepared for uncertainty, which in an uncertain world matters. This preparedness negates the need to retrofit further down the line.
4. B Corps are More Innovative: B Corp achievement demonstrates a company’s willingness to do business differently. These businesses show an aptitude for innovation across their value chain for the benefit of people and planet, and consequently pioneer new products or inventive business models. This is born out in the fact that 43% of B Corps have applied for, or received, R&D tax credits in the past 3 years, compared to 6% of the wider SME population. Companies who demonstrate greater innovation are more resilient and better able to deal with uncertainty.
5. B Corps are More Collaborative: In today’s business landscape, having a collaborative advantage is seen as key to success. Being well networked and connected externally and internally is key to surviving and withstanding shocks, from pandemics to climate change. Collaborative organizations have been found to increase team performance by 37% Teamwork and workplace collaboration efforts have also been shown to increase company sales by 27%, with a company’s collaboration index delivering higher revenues and improving customer satisfaction ratings by 41%. A Frost and Sullivan study also showed that collaboration improves product quality by 34% and product development by 30%. The statistics speak for themselves: companies that promote collaboration at work have five times better performance rates than those that do not, and businesses that promote collaborative working environments are five times more likely to be high performers than those with fewer employee collaboration initiatives. In addition, collaboration leads to greater employee engagement and wellbeing. A Stanford study reported that employees working in a collaborative setting are 50% more effective at completing tasks than in a siloed one and employees are, on average, 17% more satisfied with their job when they engage in collaboration at work.
6. B Corps Attract and Retain More Talent: ‘The Great Resignation’ and an employee focus on meaningful work should be a wake-up call for businesses to look beyond rigid work schedules and cookie cutter approaches. Organisations wanting to retain talent now need to demonstrate that they value their employees, not only in terms of wages, working conditions and career progression, but by uniting behind a purpose beyond profit. Employees want to work for companies they know are committed to doing good in the world. Between 2018 and 2021, B Corps saw an average employee headcount growth of 14% compared to the national average of 1%. Indeed, B Corps have higher expectations that their headcount will continue to grow, with a 70% net positive expectation of growth compared to 16% for all SMEs. In the last year, B Corps reported an average staff attrition median rate of 8% in compared to a range of 16-20% for the wider UK business population. Research shows that purpose-led businesses can also increase employee retention by 36%, by strengthening company culture, with companies that promote collaboration and communication at work being linked to reducing employee turnover rates by 50%. The majority of employees want to work at businesses that not just provide these benefits but actively support social issues such as providing a living wage and engaging in fair business practices. After learning about the B Corp certification, nearly half of adults said the certification would make them more likely to accept a job offer from a B Corp.
7. B Corps are More Diverse, Inclusive and Sustainable: Diversity and inclusivity are key characteristics of B Corps, with 84% of B Corps leadership teams include at least one woman, compared to 55% for the average SME; the average gender pay gap is 4% for B Corps, compared to 15% for the average UK business. Increasingly, diversity, equity and inclusion (DE&I) are major factors in employee recruitment, engagement and retention with job seekers saying that in addition to seeking a competitive salary, benefits, and job security, they are looking to work for firms that engage in fair business practices, have a diverse and inclusive workforce, embed diversity and inclusion in their company values, and engage in environmentally responsible business practices.
B Corps have been shown to have stronger environmental and social governance (ESG), are more likely to hit net-zero or other ESG targets. The evidence for this is clear. In 2021, B Corps offset 2.1 million tons of carbon, they consistently demonstrate that they are 4.5 times more likely to use 100% renewable energy and are 7.3 times more likely to be carbon-neutral. ~In addition, B Corps have more robust governance processes with 74% having a formal business plan, compared to 41% of the wider SME population; 84% have processes in place to ensure formal tracking of business performance, compared to 52% of all SMEs. B Corps inevitably show that higher importance is placed on civic and community engagement with 93% of B Corps working to enhance civic and community engagement versus 50% of the wider SME population.
To B or not to B?
"We are the first generation of leaders that can't say we didn't know - we are also the last generation that is able to make a change." Douglas Lamont, CEO, Tony's Chocolonely
So the evidence speaks for itself, not only do we as business owners, entrepreneurs, innovators, leaders and human beings have a duty to contribute to a more equitable world, the fact is that businesses can only thrive and survive if communities and the planet prospers. So if you can B why wouldn’t you?
Futuretivity delivers climate positivity with vibrant, socially impactful commercial power. We recognise that the how-to of sustainability can be overwhelming, so we partner with businesses to empower them with actionable roadmaps, skills for the future and meaningful connections to succeed. Being a conscious business needn’t cost the earth nor cost your business.
For more inspiration and insights on sustainability for business go to futuretivity.com/resources If you are a company that needs help with sustainability in your business book a call with Futuretivity now and get sustainability delivered.