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Corporate social responsibility. The phrase, often called CSR, gives companies, their employees and customers the warm fuzzies about their place in the business community and society. But what does it mean to the bottom line, and at what cost?
So-called CSR comes in many forms, one being the Certified B Corp., a for-profit company certified by the nonprofit B Lab to meet standards for social and environmental performance, accountability and transparency. B Lab notes it has certified more than 2,173 companies in 50-plus countries and 130 industries. Nielsen's “The Sustainability Imperative” report in 2015 found that 66% of respondents in a global poll were willing to pay more for sustainably produced goods; 56% said a company's commitment to social values was an important consideration in buying their products.
So far, only five Maine companies have B Corp certification: Maine Works, Wicked Joe, ReVision Energy, Atayne and Coffee By Design.
For small companies, the application can seem like an obstacle: It is time-consuming, detailed and requires paperwork to substantiate claims of personnel, business ethics and other metrics. It also costs a certain percentage of revenue, with an annual fee and recertification every two years.
“It's a lot of work,” admits Bob Garver, who with his wife, Carmen, owns Wicked Joe organic coffees in Topsham and the Bard Coffee shop in Portland. They were among the Mainebiz 2017 Business Leaders of the Year. “We started and walked away for a while because we didn't have time to do it all. We filled out something and then they sent another 100 questions.”
He adds: “It was expensive and hard but we're really glad we did it. It was a bit of a gut check on how we are doing.” He says, as his company goes forward, it will interact more with other Certified B Corps.
Part of the evaluation by Wayne, Pa.-based B Lab involves the applicant's sustainability and treatment of the environment. It also considers how the company treats its employees and vendors and how it behaves in the community.
Unlike traditional corporations, Certified B Corps are legally required to consider the impact of their decisions on stakeholders, including workers, suppliers, community, consumers and the environment. If they take on investors or decide to sell the company, those other entities also must agree to the B Corp standards to keep in good standing.
There is a similar type of corporation but with less stringent requirements known as the benefit corporation. It is available in 30 U.S. states and the District of Columbia. An effort in Maine led by Maine House Majority Leader Rep. Erin Herbig, D-Belfast, to get benefit corporations approved in Maine was vetoed by Gov. Paul LePage in 2015.
Key differences between B Corps and benefit corporations are B Corps cost more, with fees from $500 to $50,000 annually, based on revenues, while benefit corporations only pay state filing fees of $70 to $200. A B Corp with revenue up to $149,999 pays $500 annually while one with revenue of $750 million to just under $1 billion pays $50,000.
The B Corp also has more oversight and focuses broadly on a company while benefit corporations self-report their operations and generally focus on a more limited set of corporate responsibilities.
Garver says he's not sure enough consumers and other businesses are aware of B Corps yet for the status to make a difference in getting more business, but “it was an opportunity for us to find out if we were doing as well as we thought we were doing. We think it's a tool to make us better.”
Wicked Joe scored a total of 108 in the five categories B Lab scores: environment, workers, customers, community and governance. B Lab requires a score of 80 for eligibility. Wicked has been a B Corp since June 2016. Performance clothes maker Atayne of Brunswick scored 142 and became a B Corp in March 2009. Coffee By Design scored 87 and was certified in July 2016. MaineWorks, a Portland temp staffing agency that employs convicted felons and recovering drug addicts, scored 114 and was certified in December 2013. And ReVision Energy of Portland scored 94 when it was certified in July 2015.
“Before we opened Coffee By Design I used my degree in landscape architecture to work on projects focused on wetland creation, planned community development, reforestation and stream restoration,” Alan Spear, co-owner and co-founder of Coffee By Design, said when the company got its certification. “Those core interests have been used here at Coffee By Design as well, in particular with regard to our impact on the environment. Becoming a Certified B Corporation is in line with our company ethics.”
Co-founder Mary Allen Lindemann, just back from a trip to Burundi, told Mainebiz that certification was a very rigorous process, and it should be. It took the company about a year to get through the application process.
“It has incredible meaning. We got a really strong baseline of where we are and where we can improve,” she says. The application included providing business confirmation from the company's farmers.
She said coffee bags now indicate they are fair trade, B Corp and organic certified. The bags are “starting to look like a race car with the number of stickers they have.”
All of that can confuse consumers, which is where Coffee By Design figures it can help, holding B Corp information sessions and talking with University of Maine professors and trying to have them enlist students to do internships at B Corps or do their thesis on them. Lindemann says while B Corps still aren't well known, especially in Maine, that's about to change as B Lab has more than 10,000 applications in process.
“It has value and is in its early stages,” she says of B Corps.
Margo Walsh, founder of MaineWorks and one of the Mainebiz 2014 Women to Watch, likens the B Corp certification to a “Good Housekeeping Seal of Approval.”
“It verifies your corporate credibility, and that you're involved in a progressive, creative community of other B Corps,” she says. “B Corps can be an answer to society's problems. They say we do what we say we do and it's enduring.”
ReVision Energy says it's seen two main benefits from being a B Corp. One is that its employees like the designation and it helps the company retain them and attract high-caliber employees. It has 165 now and expects to have 200 by year end, and has not had trouble attracting people, says Phil Coupe.
Second, Coupe says, “The more we educate our customers about B Corps, the more it helps us deepen ties to existing customers and attract new companies.”
“It also helps in your being known as a good corporate citizen,” he says, saying the application took ReVision eight to 12 weeks of intensive work.
Adds co-founder Fortunat Mueller: “We saw it as a way to measure ourselves against our peers and best practices and look at how to make our business better and treat people better. And we've found it a valuable part of recruiting new employees.”