Finding Business Leadership in Impact
Delving Into Data to Discover How B Corps Advance Climate Stewardship and JEDI
By Joachim Krapels and Michele Bradley — Insights team, B Lab Global
Without example, direction, or guidance it can be hard to know where to go. Amid the mix of global crises we currently face it is likely many of us, businesses included, feel a sense of urgency to act coupled with a lack of knowledge as to how. Where do we begin? What issues to prioritize? What examples exist to avoid reinventing the wheel?
Among the many great lines in Alice’s Adventures in Wonderland, this problem calls to mind when Alice asks:
“Would you tell me, please, which way I ought to go from here?” with little direction from the Cheshire Cat.
Unlike Alice, we do have quite some direction as to where and how companies can manage and improve their impact. To start addressing some of these questions we delve into the data on B Corps — companies that are verified and certified to meet high standards of social and environmental performance, transparency, and accountability. Understanding what they do well, but also how they are collectively challenged, can provide insightful guidance.
Measuring Impact on Climate Stewardship and JEDI
As the Insights team at B Lab Global, we have access to an incredible database of sustainable business behavior, ranging from environment, to workers, governance, and more. Our data comes from the use of the B Impact Assessment, an online tool to measure company performance across a wide range of impact areas. Beyond data on B Corps we can also analyze the environmental and social impact of 200,000 other businesses who have used our tools.
To get to our findings, we start by creating a peer group to B Corps consisting of non-B Corps that are similar in size, industry, and geography. Then, we do not just look at where B Impact Assessment scores are high, but rather investigate where the largest differences appear between the groups. The latter may tell us something about the potential for real leadership, as it may signal where some companies, in this case B Corps, are more ahead of comparable peers. In this article, we will look at two areas of urgent importance: climate and environmental stewardship; and justice, equity, diversity, and inclusion (JEDI).
Existing academic research shows that for business practices related to environmental performance, it can be hard to move beyond the constraints of a particular sector. In manufacturing, for example, it is not so easy to simply and quickly outperform the wider sector. Fortunately, the data also show that these are areas where B Corps are able to lead the way and where they are able to move beyond what comparable non-B Corp peers are doing. Our data on performance in climate and environmental stewardship shows that B Corps are doing better than non-B Corps in three main areas:
- Environmental management: This covers practices to help manage the environmental footprint of a business and its products
- Land and life: This covers business practices such as waste management, pesticide use, etc.
- Air and climate: This covers business practices and impacts related to Greenhouse Gas (GHG) emissions, energy efficiency and energy savings.
More tangibly, we find that B Corps are:
- 2.3 times more likely to use freight or other lower impact transport options (avoiding air transport) to distribute products in comparison to ordinary businesses (65% of B Corps)
- 1.5 times more likely to have their products use recycled/used/composted input materials in comparison to ordinary businesses (40% of B Corps)
- 3.6 times more likely to screen suppliers to reduce the greenhouse gas emissions produced through the supply chain in comparison to ordinary business (30% of B Corps)
JEDI is another area in which making progress can be challenging for businesses but where the leadership of B Corps can give guidance for future steps. When we talk about JEDI, we’re looking at how organizations are working to:
- Dismantle barriers to resources and opportunities. (Justice)
- Create and uphold policies and processes that create a fair, safe, and just working environment. (Equity)
- Acknowledge, support, and encourage various lived experiences in the workplace, including age, race ethnicity, gender identity, sexual orientation, physical or mental ability, neurocognition, and others. (Diversity)
- Ensure all voices are included in the conversation. (Inclusion)
The B Corps in our sample score higher compared to the non-B Corps, and using the B Corp data, we can again highlight what such leadership looks like in practice:
- 1.8 times more likely to have conducted a pay equity analysis by gender, race/ethnicity, or other demographic factors, and if necessary, implemented equal compensation improvement plans or policies than ordinary businesses (36% of B Corps)
- 4.7 times more likely to have Supplier Diversity Policies or Programs that give preferences to suppliers with ownership from underrepresented populations than ordinary businesses (35% of B Corps)
The climate and JEDI findings both show that there is no shortage of options to improve business performance for impact. Some of the actions are internal to the organization (such as a pay equity analysis, or switching to renewables), while others focus externally on the supply or distribution chain. When implemented well, these are all meaningful and measurable steps that collectively amount to a transformation of a business.
A Sense of Direction for an Impactful Path
Taking the exploration one step further, what is interesting for both areas is that these are not the areas where B Corps score most of their points for B Corp Certification. In fact, there is quite some room to grow for B Corps too. These are nonetheless the areas where B Corps perform better than their non-B Corp peers from our data.
Finding leadership, therefore, is not just about finding high scores. It is also about finding those areas where there appears to be room to grow, and where, despite a challenging context, progress is being made.
The short explanation for this demonstrated leadership is that it is required for B Corp Certification. As such, it is partly a given that B Corps will exhibit leadership, hence our interest not just in high scores but in comparative explorations. The longer explanation is more complex, yet also more interesting.
Why is it that certain companies decide to become impact leaders? How do they restructure their business? Today we are not in a position to fully answer these questions, but a growing literature on B Corps gives some insights. It turns out that motivations to certify run along a spectrum from intrinsic motivation to generate positive social and environmental impact, to more pragmatic motivations around branding and customers.
What also emerges from the literature is that B Corp Certification does not leave businesses untouched. Most will have to reorganize their work, revisit their purpose, or restructure their operations to meet the requirements. A second insight on finding leadership is therefore, that it is never static. It is an evolving process of finding new and different ways of organizing, and of being a business.
Through our data we can get a sense of direction for such an impactful path. That’s more than can be said of the options Alice faced.
B The Change gathers and shares the voices from within the movement of people using business as a force for good and the community of Certified B Corporations. The opinions expressed do not necessarily reflect those of the nonprofit B Lab.
