Why B Corp status can help businesses recover from Covid-19

The advantages of becoming B Corp certified are a trending topic of late, with more and more companies becoming interested in responsible business practices

This was certainly true before the pandemic. Back in 2018, research showed that B Corp businesses were growing 28 times faster than the national economic growth rate at the time. The certification attracted new employees and new customers, and the UK B Corp community became one of the fastest growing in the world.

That’s something that continued into 2020, when the UK boasted almost twice as many certified B Corps as it had in 2018. But the events of the past twenty months have been a significant stress test for economies the world over. So how are companies with the relatively new B Corp model faring?

How are B Corps doing during Covid-19?

Pretty good.

Half as many B Corps have had to implement the furlough scheme than the national average – and 55% of those surveyed believed that being a B Corp had contributed to this resilience. A sizable number have even managed to continue pushing large projects related to their responsible objectives.

In June 2021, B Corp gathered its entire international community for a sustainability summit, which resulted in the launch of the Interdependence Coalition. This is a new lobbying group spread across Europe, set on further spreading B Corp practices across the continent and beyond.

What’s also new are the dedicated online B Corp shopping aisles, which retailers are beginning to introduce. Waitrose added theirs in 2019, and since then Boots and Ocado have followed suit. The advent of this represents a major step forward for B Corp and should open up speculation about similar measures being enacted in physical stores.

As of September 2021, there are now 443 B Corps in the UK. They cover over 48 industries, and produce a combined revenue of more than £4.3 billion. Big-name companies have continued to join over the past year, with the Jamie Oliver Group being a recent notable example.

The question must be asked, then, why are B Corps doing well, while everyone else struggles?

Why are B Corps doing better?

There are a lot of reasons why companies with a B Corp certification could be doing better – though the movement is too young for popular consensus.

An extensive study, published in September of last year and using data from between 2012 and 2018, effectively concluded that attaining the certification ‘positively impacts the turnover growth rates’ of a company.

The authors provided three hypotheses for why this may be.

First, they suggested that the ‘stakeholder’ structure of B Corps ensures more responsible business management than the more short-term reward style of shareholder companies. The different policies on internal income gaps between workers and executives, and approaches towards layoffs, are the key demonstrations of these alternate styles.

Because shareholder companies ‘routinely perform practices overtly geared towards shareholder value maximization’, choices can more easily, and more often be made to maximise profits at the expense of employees. As a result, the stakeholder model provides greater stability, and may ensure a steady rate of growth.

The second reason that the authors found was a popular disillusionment with the larger corporations. This is due both to the negative perception of shareholder-oriented practices, and the increasingly popular attempts to ‘greenwash’ their brands, which are popularly perceived as cynical and self-serving. Whether these businesses commit to profit over people, or to sustainability and CSR, this study suggests that they ultimately drive people away.

In contrast, B Corp is seen as providing an authentic commitment to social and environmental causes, and so are extremely attractive to those wishing to demonstrate their rejection of shareholder-based companies.

The final potential explanation is based on a comparison between the performance of B Corp in Europe and the US. Despite the movement originating in North America, certified companies are reporting higher sales growth in Europe, suggesting that there is a notable, beneficial difference in their operation.

The factor which this study points to is the strong community which B Corps have cultivated across Europe. They observe that ‘B Lab Europe aims to build a network of impactful companies and create the appropriate infrastructure to conduct business in a socially responsible manner’. This focus on networking is likely a major factor in helping each individual company become more resilient and enable a great deal of success.

What does the future hold?

The B Corp community has done a great deal of outreach and support work during the pandemic. From the companies that have pivoted to produce PPE materials, to those that have done what they can to provide outreach services, this has been a real opportunity for B Corps to demonstrate their value.

Where they’ll go from now is the question, though. Will commitments lapse, as we pass out of the pandemic? Will their success prove to be short-term, and due to their novelty rather than true innovation? Or is this period soon going to be viewed as the one which proved the success of the B Corp model?

Here at Complex Creative, we’re betting on it being the latter. We’ve been watching all the good work that certified companies have been doing, and what we want is to be part of it. That’s why we’re working towards becoming a B Corp ourselves – and looking forward to being able to announce our success sometime in the next few months.

To hear more about our process towards certification, as well as other news and updates from Complex Creative, check out our blog.