B-Corp: simple certification or a real management tool?

Written by Adèle Boinnot, on 09 April 2018

In 2014, Kirsten, founder and CEO of Raven + Lily, is preparing to raise funds from investors to accelerate the growth of her company and is seeking a way to protect its social purpose. How can she ensure that the pursuit of profitability does not overshadow the social missions of the company while integrating new investors?

Raven + Lily's purpose is to help employ marginalized women (for example, due to their social or health situation) by providing them with a safe working environment to ensure fair and sustainable incomes, access to health services and education, and thus a real chance to break the cycle of poverty, for themselves and their families.

Raven + Lily's Fair Trade certification ensures compliance with certain practices in their commercial exchanges but has no impact on the governance of the company: it does not ensure its transparency or social responsibility from a legal standpoint. However, it is essential for Kirsten to hold her future investors accountable for respecting and pursuing this purpose, as well as her employees. She also needs to find a way to prove this responsibility to her customers and partners...

The goal is not just to be profitable, but to make a profit with a positive impact - Kirsten Dickerson, founder of Raven + Lily

After extensive research, she discovers the B Corporation certification (with a B for Benefit). Provided by the non-profit organization B Lab, it is an international certification that evaluates the social, environmental impact, transparency, and legal accountability of certified companies. Even better, the Benefit Corporation status is legally recognized in certain states of the United States, including Delaware since 2013. This allows the company's purpose to be included in its legal statutes, holding all investors accountable for respecting it. This is exactly what she's looking for.

However, this three-step certification process is very difficult to obtain. It starts with responding to a very comprehensive questionnaire (called the B Impact Assessment) and providing a plethora of documentation and supporting evidence. The application is then evaluated by the B Lab organization, which does not hesitate to contact applicants to clarify all their practices. To be certified, a score of over 80/200 points is required for all categories of evaluation (which is not easy). And it starts over every two years... and yes, being a company good for the world is not without its challenges.

The requirements associated with each category increase with the size of the company, following tiers. This is what gave Raven + Lily a hard time, as the first time they obtained certification, they were 8 and their scores were excellent. But two years later, they are 12, so they move to the next tier without fundamentally changing their operations or employee benefits (such as offering a more comprehensive retirement or health insurance plan, which is very important in the United States, for example). Raven + Lily thus receives a much lower score in its second certification. Despite the setback, this hasn't discouraged them; on the contrary, it pushes them to be more demanding with themselves and to seek solutions to achieve a better score in their next evaluation.

Today, their purpose is not just a nice phrase displayed on their website to look good; it is fully integrated into the goals of all stakeholders in the company (employment contracts, partner contracts, and investment contracts). In practice, no employee or investor could make a decision contrary to Raven + Lily's purpose (in the name of profit or any other objective) without facing legal consequences.

In addition to recognition of its CSR policy, B Corporation certification allows the company to set a framework with clear expectations for every aspect of its mission. It thus guides employees' behavior and the decisions they make every day, whether it's the materials used in their designs, the partners they choose to produce them, or their distribution partners and the orders they accept.

Raven + Lily's employees say they are very proud of this certification. For them, it's a form of recognition for their daily efforts to be a company that's good for the world.

Fortunately, they are not alone: the community of B Corp certified companies, not all of which have legal status, is there to allow them to exchange practices and find solutions together.