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Business Trends: Business Power

Firms with social, environmental missions seek special B Corp. certification

By Joanne Friedrick
February 05, 2012

CleanFish is one, and so is Bamboo Sushi. And there are hundreds of other companies around the United States and Canada that have achieved Benefit Corporation status.

A certified B Corp. uses the power of business to solve social and environmental problems. Using a set of metrics developed by B Corp.’s founders, companies are measured on their social and environmental performance. Companies must attain a minimum of 80 total points out of 200 across categories of accountability, employees, consumers, community and environment to be considered for B Corp. status.

Hardik Savalia, an associate with B Lab, which works with companies that are pursuing a B Corp. designation, says the assessment itself can take 60 to 90 minutes to complete. Even if a company scores well, its claims need to be verified, which is where Savalia and his associates come in. “We want to verify the information,” he says, which can take several hours to a few weeks, depending on the size of the company. The cost of the process is based on the number of employees.

The first 81 B Corp.’s became certified in 2007. Since then, says Katie Kerr, who handles communications for B Lab, which is based in Berwyn, Pa., and has offices in New York and San Francisco, the total has grown to 503 in 2011 “and there are always companies in the pipeline.” The certified companies represent $2.5 billion in revenues and cover 60 industries, including seafood.  

CleanFish, a supplier of sustainable seafood based in San Francisco, became a B Corp. in December 2008 and earned 86 percent of the total points available in the accountability category, which measures company governance and accountability and transparency both internally and with suppliers. In the community section, which evaluates a company’s impact on the local community through such areas as diversity, charitable giving and local ownership, CleanFish received just 32 percent of the points available. 

Companies seeking B Corp. status are usually ones that are “fundamentally designed to do this,” says Savalia, having already set forth on a mission of sustainability or environmental or social stewardship. Bamboo Sushi, a restaurant in Portland, Ore., which was certified in March 2010, is the first certified-sustainable sushi restaurant. The company scored highest in the accountability section, but also received 69 percent of the available points in the environment category, in part because the restaurant is constructed of green building materials.

Not all companies that are trying to achieve B Corp. status receive the minimum point total on the first try,
says Savalia. But he and others will work with companies to find areas where the business can improve if it has a commitment.

Another key part of receiving the B Corp. designation is signing an agreement to legally change the corporate bylaws so the focus is on stakeholders, rather than shareholders. 

“Typically corporations are shareholder oriented,” says Savalia, “so they are required to make the change to include stakeholders” and to conduct business with a focus on people and place, not just profits.

Making that legal change, says Savalia, means that the mission is carried on and that companies are held accountable. A B Corp. goes through a recertification process every two years, he says. 

Having to change the bylaws is probably the major sticking point for companies, says Savalia. Most are willing to put certain policies into place, but having it part of the legal mission can be difficult.

Tim O’Shea, chairman and co-founder of CleanFish, says the structure of a traditional corporation poses some fundamental issues if the company wants to do more than focus solely on the financial returns.

“B Lab opens up the structural considerations,” he says, and allows a company to really look at how business is being done and what they want to do. Even companies with good intentions, he says, can be limited by the legal parameters of conventional bylaws.

Kerr says the benefits of being a B Corp. include the ability to prove, through third-party certification, that a company is doing what it claims to be doing. Due to skepticism about environmental and social claims by companies, becoming a B Corp. is considered a trustworthy label, says Kerr.

The status also serves as a benchmark for companies to push themselves to do better, she says, and provides connections with like-minded businesses. 

The benefits for CleanFish so far have been largely internal, helping those who run the company understand what they are trying to achieve. But O’Shea is also looking to take that message to those with whom he works, including seafood brokers, chefs and ultimately consumers. 

“CleanFish has been swimming upstream on several different fronts and this is just one of them,” he says. “And we feel comfortable doing this because it helps define who we are.”

It also serves as a reminder, he says, that a company must “walk your talk.”

 

Contributing Editor Joanne Friedrick lives in Portland, Maine 

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