Making the Global B Corp Movement Bloom in Korea and Beyond

B Lab Korea, one of nine regional offices of B Corporation outside the United States, launched in 2019. (Image courtesy of B Lab Korea)

B Corp, the well-known brand and certification granted to socially responsible businesses, has moved into the spotlight as more and more companies consider how they might restructure their operations to create a more-sustainable business ecosystem. Today, B Lab, the brand’s nonprofit evaluation entity, has certified more than 4,000 companies (including large, global companies) across 77 countries as B Corps, and is working hard to build a community of entrepreneurs that improves through mutual encouragement, cooperation, and information sharing. It sees a need to develop a standard and model of management practice under the new business environment of the 21st century, and to systemize cooperation for global expansion.

Amid these developments, the number of companies obtaining B Corp certification is gradually on the rise in South Korea. Seventeen Korean companies have been certified as B Corps to date, starting with a forest-building social venture Tree Planet in 2013. One or two companies have obtained B Corp certification each year since then, and seven companies have been newly certified in the past three years. But while this implies increasing interest among Korean companies, the movement within South Korea remains disappointingly trivial both compared to the global trend and in light of the region’s strong interest in sustainability and environmental, social, and corporate governance (ESG).

To draw more Korean companies into the movement, business leaders and the B Corp system itself must overcome four main limiting factors. These include a lack of awareness of its benefits, weak correlation between certification and financial integrity, ambiguity around the role of B Lab Korea (the Korean partner institution of B Lab), and insufficient attention to cultural differences and local contexts. Here’s a closer look at each of these limitations, as well as ideas for how the field might move beyond them.

Raising Awareness About the B Corp Movement

In South Korea, most Certified B Corps are relatively small social enterprises or acceleration/investment institutions unfamiliar to the general public. One example is Dot, which produces assistive devices for the visually and hearing impaired. Even though it recently won the 2021 Extreme Tech Challenge with its cutting-edge enabling technology, it’s still a small company with fewer than 50 employees and limited visibility. Another promising Korean B Corp, Todo Works, offers an Internet of things-based mobility solution for the disabled with fewer than 30 employees. Leading social enterprise accelerators and impact investors like Impact Square, Mysc, and D3 have only around 20-40 employees, and even Crevisse Partners, which has around 80 employees, is tiny compared to mainstream Korean companies such as Samsung, LG, and Hyundai Motors. In our interview with Taeeun Jeong, B Lab Korea’s senior manager, she pointed to this as a reason for the country’s lack of awareness about B Corps and their benefits.

The Korean B Corp Dot manufactures a kiosk with a tactile display, way-finding 3D map, sign language, audio function, and auto-height adjustment function to help people with visual and hearing impairments find transportation and other types of information with ease.

The ultimate reason most companies seek to acquire the certification is to highlight their sustainable practices, and gain public interest and support. But even companies aware of this potential are reluctant to invest in acquiring the certification knowing there isn’t sufficient context for recognition. Korean consumers aren’t familiar with B Corps, which means they can’t empathize with B Corp values. And while Tree Planet and Dot say they’ve received support from abroad because of their B Corp certification, this benefit isn’t well recognized among most Korean companies, which mainly target local consumers. Without strong reference points, it’s especially hard to induce the participation of big companies and mid-sized firms.

Making B Corp certification more desirable, and thus spurring greater corporate commitment to social and environmental impact, requires more real success stories. For this to happen, raising awareness among consumers—particularly the MZ generation, which seeks to make values-driven purchases—is imperative and requires active promotion of the certification. Finding ways to attract large, Korean conglomerates—especially in the cosmetic, fashion, and food industries—to the movement and leveraging their MZ consumer bases to spread the word would draw the attention of other big companies and boost greater general awareness among the Korean public.

Improving Measurement of Financial and Social Integrity

The second limiting factor is B Lab’s B Impact Assessment (BIA), which deduces non-financial information related to a company’s sustainability by assessing its business model and management practices—according to governance, workers, customers, community, and environment—rather than its financial performance. This implies that conventional indicators of financial health (such as profitability, marketability, and growth potential) are of less importance in the B Corp certification process, and this weak correlation between certification and financial integrity is one of the obstacles to the expansion of the movement. In fact, critics have pointed to several cases where the financial sustainability of Korean B Corps was severely in doubt. If a firm can’t pay for salaries, interest, and taxes on time, it can hardly make a social impact in a sustainable way.

Meanwhile, BIA mostly measures the company’s social impact at an output level—for example, according to new hires, employment rates for people with disadvantages, ratios of female managers to male ones, energy reduction rates, donation amounts, or community service hours—instead of at an outcome or impact level. And while output-level measurement is useful for monitoring, it doesn’t sufficiently indicate whether the company is changing people’s lives in a meaningful way.

Another issue is that the BIA’s five evaluation domains don’t have individual minimal requirements, so the system can’t prevent imbalance between them. For instance, if an eco-friendly company’s employers abuse their power in franchise agencies but the enterprise scores very high in the environmental field, it may still be able to pass the BIA and qualify for certification. What’s more, there’s little post-certification management. Several B Corp-certified Korean companies have run into controversies regarding corporate ethics. Yet B Lab has failed to hold those companies truly accountable by investigating them and taking appropriate actions—for example, official warnings and/or retractions of certification. This has made it challenging to gain the trust of Korean people who are interested in the B Corp movement.

BIA must begin to more seriously consider social impact at an outcome or impact level, and let independent tertiary institutions investigate or verify results during the recertification process. Since it would be difficult for B Lab headquarters to oversee the operations and impact of certified B corps outside the United States, local partner institutions need to play a role in monitoring them, reporting back, and helping resolve issues that arise.

Empowering Local Partners

The third limiting factor relates to the ambiguity of B Lab Korea’s (and other local B Lab’s) strategy and role, resource constraints, and lack of capability—an issue connected to the seemingly lacking global strategy. For example, B Lab Korea, founded in January 2019, has engaged in activities such as hosting conferences and workshops to encourage companies to pursue socio-environmental achievements, but the fact that the movement has yet to spread significantly leaves its future in question. This is especially true given its lack of resources and capabilities; its small size and budget make it hard to envision growth toward a meaningful and sustainable impact.

Another problematic aspect of global strategy is that B Corp makes all certification decisions in the United States. It’s virtually impossible for US headquarters to oversee all of the post-certification management and community formation for B Corp-certified companies in other countries. Neglecting quality management of B Corp certifications can be particularly detrimental, as there is a high risk of companies using it for motives far from its original purpose, such as impact washing. Countries outside the United States are especially susceptible, as they have comparatively weaker surveillance. Yet local offices lack the power to manage certification, and they won’t gain the power they need without an appropriate division of roles and delegation of resources.

To solve the first issue, B Lab Korea may need to put in the effort to build its own business model and value proposition as a nonprofit startup in order to secure resources and capabilities. At the same time, US headquarters and local/country offices must heighten the efficiency of the B Corp certification process while properly managing the quality of B Corp certifications. This requires that offices work together to do due diligence for certification, make decisions regarding certification, analyze certification results and write reports, conduct consultations based on data, execute post-certification management for certified companies, build communities between certified companies, and advertise or host events for the spread of the B Corp movement. It also means co-developing a global-scale strategy to spread the movement worldwide, starting with redefining the roles and responsibilities of local/regional partners.

Accounting for Cultural Differences and Local Context

The fourth factor involves important differences across cultures and contexts. One of the most noteworthy characteristics of Korean culture, for example, is its obsession with speed, or ppalli-ppalli (“faster and faster”) culture. This culture is prevalent in the everyday lives of Korean people, and some experts have attributed the rapid growth of the Korean economy to it. By contrast, B Lab’s certification process is long and complicated. Certified Korean companies report that it takes more than a year, and potential applicants see this as costly and painful.

The ability for local/country partners to identify local/country-specific blind spots and adapt standardized processes accordingly can help overcome these challenges. Empowering B Lab Korea to play a role in shaping the certification process by placing more focus on human resources, for example, would make application more appealing to Korean companies. It’s also imperative that local partners in Korea and other countries encourage executive management teams to consider B Corp certification by establishing their own planning, execution, feedback, and reward systems.

Other Considerations

If the B Corp movement is about “transforming the global economy to benefit all people, communities, and the planet,” then, as noted earlier, the participation of big companies is important. Jinseok Seo, who has headed corporate social responsibility at SK Group for more than 15 years, believes that for-profit firms must actively renew their mindset, evaluate their social values, and establish sustainable purpose as their ultimate goal. At a recent conference co-hosted by Hanyang University and B Lab Korea, he emphasized that businesses should view B Corp as a way to improve internal issues and sustainability, rather than good marketing, and consider the full range of impact they have on society, rather than cherry-picking practices to advertise to the public. 

An additional consideration is how to open the floor for social discussions regarding the purposes of companies and the direction of their goals. Collaboration with academia offers a way forward. For example, the current and future chairmen of the Korean Academic Society of Business Administration, which consists of around 13,000 business management scholars and practitioners, recently came together to emphasize the importance of stakeholder capitalism and a new relationship between companies and society. Encouraging professors and researchers who teach management and lead social discussions can contribute to shifting the purpose of companies from “maximization of shareholder value” to “the pursuit of stakeholder happiness,” which can have significant social influence.

Making B Corp more than a certification process and securing its position in society as a legitimate movement that spreads positive influence worldwide will require effort, sacrifice, and cooperation from many people and many institutions in many different regions. Those involved need to emphasize the spirit of “glocalization”—the idea of “think global, act local”—to empower local partners and adapt to local cultures and contexts. What we’ve observed in Korea’s case may not apply to all other countries, but our insights shed light on the importance of collective action in spreading the movement globally. The time is right for B Lab and its local partners to review current policies and procedures, think deeply about future strategy, and build up systems that address local challenges and achieve a global agenda—systems that “make business a force for good” not just in a few countries, but around the world.

Read more stories by Hyun Shin, Yumin Jo & Daum Lee.