The Impact of Becoming a B Corporation

The Impact of Becoming a B Corporation

In March, it will be 10 years since Azavea became a certified B Corporation, and we are now undergoing our fourth recertification process. I thought this might be a good time to reflect on why we sought to become a B Corporation in the first place and what effects it has had over time.

Why did we become a B Corporation?

I became aware of the B Corporation concept in the Spring of 2009 through our involvement with the Sustainable Business Network of Greater Philadelphia (SBN). B Labs, the organization that certifies, promotes, and supports B Corporations, is based in the Philadelphia region and many of the original B Corporations are based here. SBN supported B Labs at that time by requiring new SBN members to undergo the B Corp assessment process. I’m a rule-follower so I went through the assessment and submitted it for evaluation. Lo and behold, we had a high enough score to become a certified B Corp. However, I decided not to do so. The benefits were not clear to me, and, at the time, the annual fee was a percentage of our revenue, which felt a bit like paying a tithe, and the Church of Social Impact was not yet an institution that I knew well enough to make that commitment.

Unrelated to the B Corp certification question, over the previous three years, we had been embroiled in a trademark dispute. The dispute had reached the federal court system, and, as a small company, we realized that we were going to have to capitulate – we felt confident we would win, but we couldn’t afford the attorney fees required to pursue the case to its conclusion. So we threw in the towel and changed our name.

Azavea's B Impact Report

By that time, we had already been in business for almost 10 years. We’d always been a mission-driven company, but I came to the conclusion that we had never really done a good job of telling that story to others. In an effort to make lemonade out of sour trademark lemons, we took our impending name change (lemons) as an opportunity to more publicly celebrate our mission (lemonade). Suddenly, the value of the B Corporation certification became much clearer. When we rolled out a new name in March 2010, we also made the announcement that we were becoming a B Corporation, making the name Azavea synonymous with geospatial technology for good.

Being the change we seek

When we first went through the certification process, our practices and policies exceeded the requirements for becoming a certified B Corporation. Nonetheless, I found the process of going through the assessment incredibly informative; because the assessment asked new questions about how we operated the business, it really helped highlight areas in which we could do more. Over the past 10 years and three re-certifications, the process has pushed us to consider new policies and practices that would increase our impact, and we’ve implemented changes in a number of areas.

The impact of becoming a certified B Corporation
Source: B Lab

In particular, the certification process has inspired a number of policy changes related to environmental and community impact. For example, we now track greenhouse emissions and our energy usage. We developed policies for general environmental practices, hazardous waste disposal, local supplier preferences, and environmental considerations for business travel. When we moved to a new office four years ago, we began composting, changed our electricity supplier to one that had more renewables, expanded our bicycle parking, and selected electrical fixtures that would reduce our usage.

We have also increased investment in our employees. We implemented an employee engagement survey. We expanded our paid parental leave policy. More recently, I’ve been researching ways to extend ownership of the company to our employees.

Finally, we have transformed our marketing and branding to put our mission front-and-center. While I can’t point to a client that has hired us solely because we are a B Corporation, the effect has been transformative to our recruiting efforts. In addition, we began an annual evaluation of how much revenue is generated by mission-related activities, and we created an internal decision framework for what sort of projects we would take on and which ones we would reject. And, though we were already giving away part of our profits to charity, we formalized our giving into a charitable contributions program.

Benefits we experience as a certified B Corporation

As I mentioned above, becoming a B Corporation changed who applied for our open positions. Our interviews usually include a mix of components but one common element is an interview focused on culture and values. One question we ask at both the application stage and in this interview is “Why are you interested in Azavea?” As soon as we re-launched our website in 2010, putting our mission and B Corp status at the center of our brand, the responses to this question changed significantly. We began attracting a far higher proportion of people who were interested in the mission and purpose of our work. Over time, this has had a significant impact on who we hire and retain. Today, pride in our mission, our B Corp certification, and the work we do are strong motivators for most of my colleagues.

This mission-focused branding is expressed across all of our activities. We include the B Corp certification and our mission in every talk we give, every presentation we share, and every proposal we write. It is part of the organization’s identity, and it shapes how we talk about ourselves. We could do that without the B Corporation certification, but, like Fair Trade certification or LEED certification for buildings, the B Corp status is a useful shorthand or symbol of that commitment. Along with the branding comes an increased sense of accountability, membership in a broader mission-driven community, and recognition from customers and partners, particularly as recognition of the B Corp certification has become more widespread.

Finally, there have been some financial benefits. We didn’t sign up for financial reasons, but we have received discounts on various subscriptions and services (such as our former Salesforce subscription). Additionally, we received a $4,000 per year Sustainable Business Tax Credit in Philadelphia.

Challenges we faced going through the certification process

The certification process is not without its challenges. It takes a great deal of time and care to answer all of the questions satisfactorily. Some questions require a fair amount of documentation and research to be able to answer and be able to defend our response. Some of our responses are carried over from one assessment to the next, but many are not, which means we need to refer back to previous years.

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In addition, it’s difficult to track progress from year to year. B Lab changes the certification questions on an ongoing basis and builds their scoring methodology on the distinct set of questions and weights for the active version of the Assessment. The current assessment, version 6, was released in January 2019, and that’s the one we are using for our 2020 recertification, but three years from now, when we do our next recertification, we expect that version 7+ will be the active version. That means that we might implement a change in our organization in order to respond to a particular set of questions, but those questions might not show up on the next assessment, or may have their weight or categories change.

On the one hand, I appreciate that B Labs is gradually raising the bar over time and adjusting elements of the assessment as they learn more. On the other hand, this leaves on an ongoing sense that the goalposts are changing every couple of years, and it is difficult to measure our progress or compare ourselves to other companies over time. 

This is compounded by the fact that B Labs uses a somewhat different assessment for different types and sizes of companies. For example, questions about supply chain and energy conservation might be more impactful for a manufacturing firm, while a technology services firm, like Azavea, might have greater weight on employment policies. I can’t say for sure how these vary as we’ve only ever answered the service firm questions, but I know that the assessment profile varies for different types of firms (Azavea’s profile is “Professional and Technical Services, 50-250 employees”). This variation makes a lot of sense, but it also makes a comparison between firms more difficult.

Should your organization become a B Corporation?

I don’t think becoming a certified B Corporation is the right move for every company. For instance, if you are a startup with a mission, you might think you need to start off as a B Corp. However, I believe that when you are starting out, your primary responsibility is to see if you have a viable business – can you generate revenue and be profitable? Your main question for the first few years needs to be “can I survive”? Writing your employee handbook and offering a generous benefits package are unlikely to be the most important priorities. You’ll get to those as your business becomes viable.

If you’re an established organization, this path still may not be right for you. I encourage entrepreneurs to make sure they have good reasons for going through this intensive assessment and making substantial commitments. If your company is simply looking to brand itself as more “green”, this may not be the answer.

We are proud to be a part of the B Corp community
Source: B Lab

Nonetheless, I encourage every company to consider going through the assessment process. More than 50,000 companies have done an assessment, so you will be in good company. It was eye-opening for me and generated lots of ideas for how we might operate differently. When you take the assessment, make sure you think of it more as a source of ideas and less as a judgment on how you run your business. There are a lot of factors considered and you will not score well on them all. I believe that regardless of your intentions, the assessment can be a great roadmap to improving your organization over time.

Once you are certified, be sure to take advantage of the community. Seek out (or even host) B Local events, attend a B Corp Champions Retreat, or participate in the B Corp Leadership Development conference. By participating in this network, you will learn best practices from your peers and contribute to the overall awareness and impact of B Corps in your community.

B Corporations’ impact on society

B Corporations represent a tiny percentage of corporations and revenue in our economy today, and I don’t think every company will someday be a B Corporation. But their impact goes beyond that. I see B Corporations as leaders and trailblazers. By simply existing and practicing what they preach, B Corporations raise a key question for all of us to consider: What role do corporations play in society? B Corporations are living proof that companies can strive to make an impact in areas beyond mere profit. And in the past few years, many corporations have begun to consider if their role might be shifting.

In 2018, Larry Fink, the investment manager at Blackrock Hedgefund who oversees $6 trillion, declared that companies could no longer solely measure financial growth but must also consider how they are benefiting the communities in which they operate and consider how they are making “a positive contribution to society”.

Later that year, Senator Elizabeth Warren introduced a bill in the Senate called the Accountable Capitalism Act. This bill would redesign how the federal government defines corporations, and require that large companies create a “general public benefit” with regards to their shareholders, employees, and the environment.

In August of 2019, the Business Roundtable updated their previously bland statement on Corporate Social Responsibility, which still largely held the principle of shareholder primacy, to a much bolder position of a commitment to all shareholders. 181 Fortune 500 CEOs signed the statement and committed to investing in employees, dealing ethically with suppliers, supporting the communities in which they work.

let's get to work ad from b corp

These statements, from liberal politicians to wealthy investors and corporate CEOs, suggest a shift in the collective understanding of the purpose of business. B Labs, once a prophet in the desert, is now having its ambitious vision taken on by some of the largest businesses in the world. This is a big deal. In response to the Business Roundtable statement, B Labs took out a full-page ad in the NYT and invited these CEO’s to “get to work”. All signs point to many corporations reorienting their activities towards a broader societal purpose. I am deeply proud to be a part of this cultural sea change, and I want to do all I can to encourage others to join in as well.  Let’s get to work!

Resources

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