Certified B Corporations are held to the highest environmental and social impact standards. Among seemingly endless ways for companies to label themselves as “green,” the B Corp distinction is a data-backed certification that requires companies to pass a rigorous assessment and legally commit to including environmental and social metrics to measure success.
“Becoming a B Corp is about using business as a force for good,” Flock Freight CEO Oren Zaslansky told FreightWaves.
Why become a B Corp?
“Investors are really getting behind it,” Andy Fyfe, growth catalyst at B Lab, told FreightWaves. He said B Lab has seen more B Corps with initial public offerings in the last nine months than in the last 15 years since B Lab was founded in 2006, and they are proving successful.
B Lab was founded to make it easier for companies to protect and improve their impacts on people and the planet. Getting B certified can give suppliers, customers and investors more confidence that a company meets high standards across several key indicators.
“It’s impossible for a company to [pass the assessment] just by excelling in one area. They have to have a pretty healthy balance across all those different impact areas,” Fyfe said. This means companies need to have good governance and support workers, communities, the environment and customers to get certified.
KeHE is getting an increasing number of questions from customers about its sustainability practices, and some retailers want KeHE to report to the Carbon Disclosure Project, Laura McCord, executive director of sustainability and corporate responsibility at KeHE, told FreightWaves.
KeHE and Flock Freight among more than 3,500 B Corps worldwide
KeHE is a national natural specialty food distributor that became B certified in 2015. The environmental sector was where KeHE scored the lowest on the B Impact Assessment (BIA), with 8.9 out of the total 83.9 points KeHE received, so it’s the “biggest area of opportunity,” McCord said. She also noted there are questions regarding scope 3 emissions that ask about what significant suppliers are doing and how they are tracking metrics. KeHE has more than 6,000 vendors but won’t start asking suppliers those questions until it has its “own house in order,” McCord said.
KeHE received 48 out of the 83.9 points in the “workers” impact area, largely for being an employee-owned company. McCord said this “makes every decision that you make personal.” She said having a personal stake in KeHE motivates her to provide the best possible customer and supplier experience to help the Naperville, Illinois-based company succeed.
Shared truckload service provider Flock Freight became B certified in 2020. Zaslansky said the process took about four months for Flock Freight to complete the process and get a score of 80.1, just 0.1 points above the required 80 to become a B Corp. Flock Freight was built to increase efficiency and reduce greenhouse gas emissions in the freight industry. The Solana Beach, California-based company went carbon neutral in February by purchasing carbon offsets from Carbonfund.org.
(Photo: B Lab)
1. Companies have to complete the BIA and score at least 80 out of 200 possible points. Despite that seemingly low 40% passing grade, Fyfe said, “it’s really, really, really, really difficult to get to 80 points. … We want companies to continue to see a lot of room for improvement no matter how well they think they’re doing.”
The average score for traditional businesses that take the BIA is 50.9, and the median score for B Corps is just above the required 80 points at 81.5.
2. Once companies pass the BIA, they amend their legal governing documents. The amendments require their board of directors to balance profit and purpose, considering customer, employee, community and environmental impacts in addition to profits as they make decisions.
“It doesn’t compromise them being able to make money. It just widens the aperture on what they’re allowed to consider in the boardroom,” Fyfe said.
3. The final step is the verification process. Companies must meet transparency requirements and review their BIA with a B Lab standards analyst. Once verified, companies retake the BIA every three years to stay certified. B Lab also randomly chooses 10% of B Corps to do on-site reviews, ensuring websites are transparent and accurate.
Considerations for supply chain and freight companies
According to Fyfe, there are about 70 variations of the BIA depending on the industry, size and operations of a company, but most companies in freight would fall in the “service industry with a lot of environmental footprint” category. Because such a large portion of the business relies on heavy energy use, he said this category gives carbon emissions a heavier weight, which can make it more difficult to pass.
But that doesn’t mean it’s impossible. Flock Freight, KeHE, Who Gives a Crap, The Grove Collaborative and Crystal Creek Logistics are just a few examples of freight, delivery and logistics companies that are B Corps.
“The more freight companies (and just companies in general) that we see get certified the better. We would love to see other freight companies follow in our footsteps by committing to building businesses that positively impact the planet and its people,” Zaslansky said.
Documentation challenges and fees
Zaslansky said the most difficult section to pass was the community section because Flock Freight was still in startup mode when it applied, so it didn’t have many community programs in place yet. He said the company also had to backtrack when looking for the necessary documentation to back up events, programs, goals and impacts.
McCord said the most challenging and time-consuming part of the process was “just capturing the information” and knowing who to contact to get the necessary data. She said this could be easier for small businesses that don’t have as many locations, departments and managers to get information from.
The BIA is free for any company to fill out as a reference, but there is a $150 fee for submitting it. Fyfe said B Corps pay an annual fee depending on their revenue; small businesses could pay $500 to $1,000 per year. He said there is a 40% off equity discount for black-, indigenous- and women-owned companies.
(Photo: B Lab)
Advice for companies applying
Zaslansky recommended companies take the BIA without submitting it first to see where they’re at and what documentation and initiatives they might need in order to be approved. He said it’s important to start gathering proof of corporate social responsibility (CSR) through photos, calendar invites and documents as soon as a company decides it wants to pursue getting B Corp certified.
“Don’t rush it. If you score low on the BIA, use it to influence new CSR programs within your organization. Once you get these programs up and running, you can update your application,” Zaslansky said. McCord said the BIA questions can be used as a guideline to see where opportunities to improve lie, even if you don’t submit the assessment.
She said it is a difficult assessment to pass, so companies should make sure it fits their ethos and make sure they have plans to use it as a “force for good” to progress the company.
“It has to be authentic to who you are,” McCord said. “People will see through it if it’s not really important to you.”