Being a B Corp: Why It Matters
Certification Process Strengthens Stakeholder Mindset and Encourages Constant Impact Improvement
In 2017, I led Arowana and our subsidiary, VivoPower, through our initial B Impact Assessment (BIA). Fifteen months later, we successfully certified both companies. After our initial certification, I have been asked by many about the usefulness of undertaking the BIA and why it matters.
Being a Certified B Corporation (B Corp) shows the world what your company stands for.
No longer is a company’s sole focus on profits for the benefit of shareholders enough — our people and planet expect more. A B Corp balances profit and purpose by achieving the highest standards of social and environmental performance, transparency, and accountability.
As a B Corp, we are continuously striving to improve our business practices to benefit all our stakeholders. This not only includes our employees, customers, and shareholders, but encompasses the larger community in which we operate and the environment as well. This conscious effort on our part enables our various businesses to positively impact society and contribute toward addressing the current environmental challenges that affect us all.
The B Corp Certification process is not a pledge that you can simply sign up to—it is a serious, ongoing commitment. Any business that has chosen to go through the B Corp Certification process is required to dedicate resources and time. The BIA is a rigorous and thorough assessment, and those companies that have attained certification should be proud of their commitment to strive for the triple bottom line.
Both Arowana and VivoPower received B Corp Certification in 2018, but the journey does not end once certification is achieved — rather, it is the beginning of an awareness and continuous cycle of improvement.
As B Lab highlights, there are 200 points available in the BIA, and most companies that take the BIA score between 40 and 100 points. No business is perfect, and if we thought we were, there would be no room to grow. Achieving B Corp Certification, considered by many to be the highest sustainability certification, is only the first step in the right direction. The BIA provides a platform that is the catalyst for a thought-provoking process, focussing on the key factors of growing your business as a “force for good,” via its people, processes, and systems checklist.
The BIA covers the five key areas of governance, workers, community, environment, and customers. The process reviews the practices an organisation has or needs to incorporate to achieve certification. In some respects, it is easier to undergo the BIA as you set the foundation for starting a business. But it is also important for larger organisations that want to avoid groupthink to go through the process, as the review can determine where a company’s culture may have been diluted from attrition or an expanding workforce, for instance. Conducting a BIA provides an opportunity to review any potential culture drift that may have occurred.
I presented the importance of our B Corp Certification to the Arowana group and discussed each of the five areas that were assessed under the BIA. Here are some of the key takeaways.
Governance
Governance is critical for an organisation’s risk management, and the BIA starts with the company’s mission statement as its first question.
Having a clear mission statement is important to culturally align the company’s purpose. As Larry Fink, the CEO and Chairman of the world’s largest asset management group, stated: “Without a sense of purpose, no company, either public or private, can achieve its full potential.” This sense of purpose provides employees with a code that guides their conduct within the construct of an organisation’s goals and helps avoid the potential culture drift.
Arowana’s core purpose and mission is to grow people, companies, and value with a long-term commitment to building strong, sustainable businesses that will have a positive impact on economies, industries, and the people they employ.
Additionally, we obtained shareholder approval to embed our B Corp Purpose and Stakeholder clause into the company constitution.
Workers
The transformation of a business can only happen through its people. We have a mantra at Arowana: For our businesses to grow, our people must grow. Hence, we include lifelong learning as an intrinsic part of our core values and invest in the development of our team. The BIA looks at what a company does to contribute to its employees’ financial, professional, physical, and social well-being. Once again, this brings attention to the core of any business: its people.
Our responsibility needs to go beyond our company and extend to our suppliers and contractors to ensure that they too have appropriate policies and protocols to ensure their employees are not exploited. Arowana insists that any supplier we do business with must abide by our supplier code of conduct and the local laws.
Community
The third impact area looks at what we can do to contribute to the economic and social well-being of the communities in which we operate. In this area, I focus on the benefits of diversity and inclusion, because community is not just about inclusivity, it is about perspective and how this can drive economic impact.
As Simon Sinek highlights, “Each of us has blinders. We can only see things from our own perspective. But when we come together with a common cause or a shared vision, our view broadens, and we can see and recognise things that we never could’ve seen on our own. That’s why the best companies are diverse: they have diverse thinking.”
McKinsey’s 2019 Diversity & Inclusion report indicates that companies in the top quartile for racial and ethnic diversity are 37% more likely to have financial returns above their respective national industry medians.
Boston Consulting’s research likewise shows that companies with diverse workforces and inclusive workplaces were far less affected by the global financial crisis. From 2007 to 2009, the S&P 500 index declined by more than 35% during the crisis while the stocks of inclusive companies increased by 14%.
Environment
The environmental review holds businesses accountable for measuring, monitoring, and setting reduction targets for the resources used and the amount of waste created. Importantly, we need to understand our greenhouse gas (GhG) emissions and find solutions to reduce them.
The chart below shows where our GhG emissions come from. To be clear, everything we do, use, or consume produces emissions.
Building this awareness into the team enables continuous improvement into our practices and challenges legacy processes. Providing this kind of information creates opportunities for our team to become more efficient and productive whilst reducing our carbon footprint.
The pandemic-led migration to working virtually from home is a clear example of how we can change the way we work. Workers who can work from home no longer have to endure the stress of commuting and combating traffic, allowing them to be more productive and allowing time for exercise, family, or other activities. With virtual meetings now very much the norm, we can hold meetings globally without air travel increasing our carbon footprint. Although temporary, the pandemic lockdowns saw global CO2 emissions fall by 5.4% in 2020.
If we are continuously working to improve our practices to reduce our carbon footprint, we need to be conscious of our business activities and to find ways to reduce, reuse, refurbish, repair, and recycle. We also need to ensure that our suppliers are held to the same standards and that they too must be conscious about the environmental impact of their supply chain and so on. Holding our suppliers just as accountable as we are creates exponential impact.
Customers
This section of the BIA considers the environmental or social impact that your product or service offers; reviews the outcomes; reviews for third-party verification on the quality or warranties associated; how you are working to improve the product or service; how we manage the product lifecycle to reduce its impact on the environment; and if our product or service helps a particularly underrepresented community or helps those in low socio-economic areas.
Who are our customers?
If we look at demographic trends, millennials are the largest generation in history. Born between 1980 and 2000, they are the generation that has directly felt the consequences of the global financial crisis. University graduates were left with substantial amounts of student loans but a shortfall of jobs to repay them, driving them to become self-starters or activists against corporates that only focus on profits without concern for the bigger picture.
By 2025, millennials will account for 75% of the workforce. As digital natives, they have become smart consumers who require more information to review the products and services they buy. These are our customers, and they are looking for brands that can help them make a difference in the world!
The Arowana group is committed to keeping its B Corp status and will continue to undertake B Corp recertification and certification processes for its businesses. VivoPower was successfully recertified late last year, and we are now certifying our education group, EdventureCo, for the first time. As an investor and operator of a variety of businesses, we have the advantage of using the BIA framework to help our businesses sustainably transform.
Nothing worthwhile has ever been achieved without discomfort. There will always be growing pains and challenges, and it is during these moments when having a purpose far greater than profit can provide the will to overcome these challenges. There is nothing more satisfying than solving complex problems to achieve a purpose that will have a positive impact on the world. This personal satisfaction exceeds any financial incentive that one may receive as part of the job.
B The Change gathers and shares the voices from within the movement of people using business as a force for good and the community of Certified B Corporations. The opinions expressed do not necessarily reflect those of the nonprofit B Lab.
