20 Sep 2019
Why business leaders are measuring success beyond profits
Today’s businesses are more mindful of their responsibilities to employees, the environment and the communities in which they work. And visionary leaders are going beyond superficial statements to measure their responsibilities against consistent and transparent criteria.
“Any company making grandiose statements about their sustainability credentials or social relevance without proper backing will be exposed,” says Chris Turner, executive director of B Lab UK.
The nonprofit organisation behind the growing B Corp movement has, since 2007, granted any company that passes its stringent assessment criteria a legal certification to say it values people, planet and profit equally.
“Our model goes beyond a simple statement of intent and holds companies to account,” Turner says.
The B Corp initiative is part of a wider conversation around measuring company performance beyond profit. Our new research, a survey of 102 UK business leaders, found two-thirds recognise that purpose is a key topic in the business world, and more than half (60%) disagree with the argument that having purpose is a passing trend.
Yet these good intentions can sometimes be a mission statement and nothing more, which is why B Lab has committed to making B Corp status a legal certification – essentially formalising purpose.
Going beneath the surface
Those who wish to become a Certified B Corporation must take the B Impact Assessment, answering questions to determine in which areas they’re thriving – or not. Based on their responses, they’re scored against 5 areas: Governance, Workers, Community, Environment and Customers, as well as an all-important overall B Impact Assessment Score that determines whether they certify.
“It’s a very powerful tool to assess the entirety of the business, to assess whether positive values are reflected in all their operations,” says Turner.
B Corp certification enshrines triple bottom line reporting – an equal focus on social and environmental concerns along with profits – in the governance of the business.
There’s a more balanced take on success, one that includes people and planet. But I think we’re also very much acknowledging that growing businesses that behave in this way benefit all of us.
To date, there are more than 2,900 certified B Corps spanning 150 industries and 64 countries. Notable examples in the UK include Rebel Kitchen, Bridges Fund Management and Qbic Hotels.Once a fringe movement, B Lab and the B Corp certification system are now common parlance in conversations about the role of business in society. They represent a departure from paper-thin commitments to ‘ethical’, ‘sustainable’ or ‘purpose-driven’ business, ensuring a mission or purpose can be measured against consistent and transparent criteria.
“We know that businesses are responsible for a lot of damage to the environment and to the societies in which they operate. But we want to ensure that we are creating a new model within which businesses protect all stakeholders. If we can prove that this stakeholder approach – as opposed to the shareholder approach – can not only protect people and the environment but also grow a business, then we can ultimately encourage its adoption in the mainstream.”
Follow the leaders
For many businesses, becoming a B Corp is a considerable undertaking, and one that ultimately comes down to leadership.
Turner concedes that entrepreneurs and small businesses are arguably more likely to consider their impact on the environment and society at large.
“I think what’s telling is that we’re seeing big businesses enter the fray. Many of them are only now adopting a stakeholder approach and know they’re about to embark on a very significant piece of work to align themselves with these values. The role that inspiring, long-term, visionary leadership plays in embedding these values, both literally and culturally, is essential.”
In order to align a company with the B Corp certification and make the necessary operational changes, businesses need buy-in from senior leaders. To make the legal changes, for example, a business might require shareholder approval, and the structure of the B Corp certification requires that people on every rung of the ladder commit.
“There are a lot of leaders who know it’s the right thing to do, who see the impact on the people and environment around them and pursue constant improvements,” says Turner.
“But the more strategic, visionary leaders who care passionately about these issues see it as a way of securing the long-term future of their business.”
Turner points to First Minister of Scotland Nicola Sturgeon’s idea of using well-being metrics rather than GDP to gauge an economy’s success; New Zealand’s “well-being budget” is another example of prioritising citizen happiness.
It’s a unique perspective, says Turner. One that suggests there’s no reason businesses can’t grow, and do so in the right way.