Many start-up founders and their teams are looking for advice on how to move forward on an ESG strategy. ESG stands for environmental, social and governance and defines how leaders measure their place in the world and their community, as well as how they build, define and run their business.
What does an ESG strategy have to cover?
As a broad framework, ESG covers everything from what the company is doing to minimise its environmental impact and carbon footprint, to how well it is run and what it does for its employees. It includes a huge array of issues, from diversity and inclusion to a net zero policy, from how it treats customers to due diligence done on suppliers. It can be almost too much for some founders to take in. It's so overwhelming it's hard to know where to start.
Having got a sense of the scale of the issues ESG covers, it's still possible a company may consider taking the bespoke route to measuring and monitoring its performance across all these elements. There are plenty of consultants who offer this service. But it's expensive, time-consuming and seems redundant, especially when there are already several existing frameworks in operation.
This is where B Corp certification and the associated B Impact Assessment (BIA) come into their own. At a recent digital discussion session for Helm members, Paul Lewis and Amy Bourbeau, co-founders of consultancy Seismic, explained the value of using existing frameworks such as science-based targets and the B Labs BIA
As Bourbeau explains: “Our mission is helping businesses prosper by becoming a force for good. We want to help move business from shareholder-oriented thinking, focused on maximising profits, to for-everybody, stakeholder-driven decision making, planning and prioritising. We want business to recognise that people and planet matter as much as profit.”
Lewis adds that it can be difficult to know exactly where to start. “How do you even find out what you don't know? How to prioritise what what you’re going to work on? It helps to have frameworks to give you that plan and structure, so that you know what to ask. It’s helpful to know that you're using something recognised and that other companies are also using, so you can benchmark and be part of a community.”
One of the best examples of this kind of framework is B Corp. As Bourbeau say, “B Corp is the best framework for ESG. It is broad, rigorous and well recognised. And it’s used all around the world. It's a great place to start on your journey.”
You don’t need to certify, but it helps
WIth Seismic, Lewis and Bourbeau have taken over 80 companies through the BIA, not all of them on the way to B Corp certification. “You can also use it as a management tool,” says Bourbeau. “While there are just over 5,000 companies certified as B Corp, there are over 200,000 companies around the world globally using the BIA as an assessment framework, who don't plan on certifying.”
Where it is used as a certification, it allows a company to prove externally that you've met this standard, which can be interesting to stakeholders, including potential customers, employees and investors. But it also helps to keep you accountable. “It's a great way of communicating to stakeholders about who you are and what you're doing, and it show you are genuinely meeting these great standards,” says Bourbeau.
For Lewis - himself a Helm member - another major attraction of B Corp is that it’s a community, like Helm, where you can learn, share and collaborate. “The nice thing is even if you're in different industries and are different size businesses, you have something you share. It's an open, warm and collaborative community. Business needs to be about all stakeholders, not just shareholders. And this is part of trying to make that shift.”
What is the B Impact Assessment?
The BIA is the tool that sits at the heart of the B Corp certification process. But it is also a framework and tool for improvement that non-certifying companies can use. Importantly, it is available to download for free and is a very comprehensive tool. It covers five pillars:
When completing the BIA you are scored out of 40 for each pillar, giving a maximum of 200 points. To certify you have to score a minimum of 80. And all companies have to re-certify every three years.
“The BIA looks at various elements within each of these, from diversity and inclusion, internally and into your supply chain, to how you run your office or how your product impact on the customers you sell to. It's useful because even companies who consider themselves pretty progressive and sustainable can do the assessment and find questions they hadn't thought to ask before, or things they hadn’t thought to measure. It's a great way to do that kind of self measurement in a really comprehensive way.”
As well as being comprehensive, it is also adaptive. A global giant with 30,000 employees and complex supply chains is going to be different to a start-up with 30 people and a handful of suppliers and clients.
For Bourbeau, this adaptability is crucial to getting more firms to use the BIA, “It’s tailored to you, based on size and sector. There's a misconception that B Corp is for product-based, B2C brands. That's because those are the brands you hear about, like Ben & Jerry’s, Innocent or Patagonia. But two thirds of firms using the BIA are service-based companies or B2B. It's for everybody.
“And the assessment is constantly being updated and it’s independently governed. This means it keeps up with the standards and norms as they change. As it keeps evolving, it holds you to account and helps you continuously improve.”
If this makes it a little harder to complete, Bourbeau sees that as a positive. “It's not meant to be easy. You're not meant to sail through and get a great score straightaway. It is designed to push you and press you and inspire you to do more. The average score for companies when they start the assessment is 50 points. And it's about improving from there.”
But why should I bother?
Lewis and Bourbeau have the natural zeal of the converted, but they are not immune to the fact that for many founders busy running their successful business - especially in a difficult current climate - there is enough of a challenge in the everyday already without adding the pressure of doing the BIA.
But a key point is that it’s not just good for people and planet, it is also good for business and offers the chance to boost profit as well. “B Corp certification in particular, is great for fuelling growth,” says Bourbeau. “Both from a headcount point of view, but also there are statistics to show it supports revenue growth. We see B corps growing at a higher rate than the national average across the UK. And there are similar numbers around the world.
“It also helps companies to be more resilient through times of crisis, whether that’s recessions or pandemics or all of the things we've dealt with recently,” adds Lewis.
Talent of all ages is moving towards purpose-driven companies
Perhaps most notably, at a time when recruitment and retention of people is harder than ever, it’s a great way to attract talent. “In recent research 70% of B Corps who are recruiting said candidates mentioned B Corp and wanted to join them because they're a B Corp,” says Bourbeau.
And it’s a multi-generational trend. “While we see Millennials and Generation Z wanting to work for purpose-driven companies, we also know that older generations are shifting from working in traditional, non-purpose-focused businesses and also want to doing something that means something. They want to work for a company that cares and is making an effort.”
Investors are also following the B Corp trend
Lewis says that he has also seen more money flowing towards companies able to explain their business model more clearly in terms of ESG. “We do a lot of work with investors and they are increasingly focusing on investing in purpose-driven companies. We take their portfolios and help them to be more purpose-driven, help them to use the B Corp framework or to certify. This is becoming the norm. If you're thinking of attracting investment, it's a great way to help that process. It is also a way to signal to the right kind of investors that there is a value match here.”
And Lewis cites the example of one private equity firm which as well as embarking on its own B Corp certification is shortly going to mandate that all companies in their portfolio will have to become B Corp certified over a period of time.
Put simply, Lewis says B Corp is a great shortcut for people outside an organisation to understanding that there is a certain level of ESG and impact within that business.