Let’s say you think your company is a force for good in the world. Not only are you employing people and making a profit (in most years), but you’re conscious of the needs of your community and your impact on Mother Earth. Now, you want to let the world know about your good deeds. But anybody can claim to be doing good things. How do you prove it? If you’re selling coffee, there’s the Fair Trade label. There are organic and locally sourced options, if those are your sweet spots. There’s ISO certification to ensure products and services are safe and of good quality. But all those labels are rather narrow. Where do you turn for authentication if you’re taking a holistic, company-wide, all-stakeholder approach to corporate social licence? How do those stakeholders – and the public – ensure that you’re not just CSR-washing? You can scan the entire landscape, and find just one possibility for third-party verification of your good work. Pennsylvania-based B Labs has a process that attempts to establish that companies meet standards of transparency, accountability, sustainability and performance. It’s called B Corp certification. “Our vision at B Labs is to create a more shared and durable prosperity,” says Joyce Sou, the director of B Lab Canada. “We understand that profitability is necessary for sustainability, but it’s not the only thing that matters. How do we redefine what success looks like? How do we think about our businesses in the context of our communities and the environment?” The path to B Corp certification begins with a free online assessment. It includes about 170 questions focusing on four areas of business: governance, treatment of employees, environmental impact and community impact. If you score at least 80 out of 200, you have what it takes to become certified. If you score less, there are online resources you can use to improve. While the initial assessment is free, if you do certify and want to use the B Corp logo in your branding and marketing, there is a fee. It’s based on annual revenue, with a minimum of US$1,000 if your revenues are less than $2 million. B Labs says it does a few things to ensure companies are on the up and up. First, there is a phone interview with a B Labs standards officer, who will probe for inconsistencies. Then there is documentation. If you say you have a supply chain policy that requires a certain level of social and environmental performance, you have to upload it. Financial statements are another source of evidence. If you say the multiple between your highest paid employee and your lowest paid employee is, say, five, then payroll documentation can back that up. And B Labs does run a complaints department. If a person has an issue with the way a B Corp company is running its business, they can request a report from a B Labs advisory committee. This happened, in a very public way, to Etsy in 2015. Brooklyn-based Etsy is an online platform for people to sell their handmade goods. A little over a year ago, the public company created a subsidiary in Ireland to handle sales from European customers. Several media outlets suggested it was a tax-dodging scheme, and Americans for Tax Fairness asked B Labs to investigate. Sou says they did. “It came out on the other side saying they Etsy didn’t do anything wrong,” she says. “It had to do with normal operations as opposed to being a tax shelter.” Nonetheless, the Etsy story stands as a caution to any company considering B Corp certification, particularly large, public companies. It is an example of the “good company, good target” phenomenon, in which companies that embrace social justice strategies just might be raked over the coals for it, unlike their competitors who stay in the shadows. The name comes from a 2012 paper by researchers at Northwestern University, who found that CSR does not immunize a company from becoming a target of activists. “On the one hand, making prosocial claims and building a positive reputation may deter activists from taking actions because it creates goodwill for the firm,” wrote the authors. “On the other hand, a firm’s past prosocial claims and positive reputation may attract activists who seek a high-profile target to generate attention for their issue.” Still, some 2,000 global companies have been certified, with 175 of those in Canada and 14 in Alberta. Sou says more important then the destination is the journey people and companies are on to do the right thing. “The purpose of certification is to lead the way and keep pushing,” she says.
The Pros and Cons of Becoming CSR-Approved
Takeaway: Having a third party verify your good work may sound like a good idea, but there is downside. Just ask Etsy.