This month, Kiwibank joins a global grouping of more than 4000 B Corps – for-profit companies working to balance commercial success with positive social and environmental impacts. But getting certified is harder than you might think. Nikki Mandow talked to Kiwibank and three other New Zealand companies about the road to becoming a B Corp. (Content Partnership)
For Kiwibank chief executive Steve Jurkovich, the road to becoming a Certified B Corporation began with an autobiography: Let My People Go Surfing by Yvon Chouinard, the founder of outdoor clothing chain Patagonia.
Chouinard’s book is subtitled “Education of a Reluctant Businessman” and describes the sometimes tough road the climbing enthusiast and son of a French Canadian blacksmith took towards running one of the most respected and environmentally responsible companies in the world.
It was a pertinent message alone but for Jurkovich, reading Chouinard’s book reinforced his recognition of a wider change in the world of business and investment. He listened to credible global corporate leaders talking about how there didn’t need to be a trade-off between profit and a wider purpose for companies involving sustainability and social change.
He saw investors – from big funds and individual shareholders – looking for signs of social and environmental responsibility from the companies they put their money in.
And he knew customers were asking hard questions about the ethics of the businesses they supported.
Kiwibank had an opportunity to be part of the movement, Jurkovich says.
“We already had a strong purpose, Kiwi making Kiwi better off, but we started asking ourselves ‘What do we mean by that? What’s our proof that we are making Kiwi better off? What is best practice around purpose?’
“It led to a conversation around having an external eye to look at how we are really going.”
The beginning of the B Corp road
That was music to the ears of Julia Jackson, Kiwibank’s head of sustainability.
“We know the most highly regarded purpose-led organisations upgrade their baseline efforts, metrics and reporting to be better at and more transparent on the environment, social and governance (ESG) aspects of their business,” Jackson says.
She was a big fan of the B Corp movement, with its focus on businesses balancing the interests of workers, customers, communities and the environment alongside those of shareholders.
Being a certified B Corporation would give Kiwibank a chance to establish a point of difference vis-a-vis its larger, Australian-owned competition, Jackson believed. But it would also enable Kiwibank to walk the walk – balance purpose and profit, join a global movement, be an industry leader, and use the business as a force for good.
She liked that B Corp contenders are put through their metaphorical paces, having to fill in a detailed questionaire, and then importantly having to prove what they have written down – by providing lots of evidence.
“I like that B Corp looks at every part of your business, more than any other certification,” Jackson says. “They want to know how you are operating, how you treat your workers, the communities you operate in, how you are structured from a governance perspective, and how your operations minimise the impact on the environment.
“But also, the B Corp process looks at how your products and services impact on people and the environment, and tailors the questions you get based on your industry, size and where you’re based. For example, as a bank, B Corp certifiers want to know how we are addressing key challenges like financial inclusion, housing affordability, and access to safe credit.”
What exactly is a B Corp?
B Lab, the not-for-profit behind B Corp certification, was founded in 2006 by three former college mates, who shared digs at Stanford in the late 1980s. The B stands for “benefit”, as in benefiting workers, stakeholders and the planet.
“The actions of B Corps address the fundamental design flaw in our economic system: shareholder primacy,” B Lab co-founder Jay Coen Gilbert wrote. “That principle states the purpose of the corporation is to maximise profits for shareholders by any legal means necessary, even if doing so harms people, communities and the natural environment on which all life depends.”
Being a B Corp in New Zealand and Australia is a bit different to the US where it’s a specific legal structure, Jackson says. In New Zealand there’s no legal requirement yet.
Still, when becoming a B Corp here, companies must commit to balancing profit with purpose and consider stakeholders such as their staff, customers, the community and the environment.
Any for-profit business can apply to become a certified B Corporation. You fill out an online 200-or-so-question self-assessment, submit it to B Lab, and then set about proving the statements you have made, and answering any gnarly supplementary questions B Lab might throw at you.
“The certification is very robust,” Jackson says. “You might think you can provide a policy document, but the B Corp view is that policy is a nice piece of paper; now show us what you have actually done.”
“You can write a policy in a couple of days, but B Corp wants to see change happening.”
Julia Jackson, Kiwibank
Take the section on volunteering days. Great, said the B Lab assessors. Now prove you are actually doing it. Kiwibank could provide a report from payroll about which staff had spent which days doing worthy stuff in the community. But B Lab needed more than that.
They came back asking for testimonials from employees about their volunteering days, or photos they had taken of themselves planting trees or working with children.
“B Corp is about driving change. You can write a policy in a couple of days, but B Corp wants to see change happening in your organisation,” Jackson says.
How does B Corp work?
You could think about B Corp certification like building up points in a video game. Collecting coins in Super Mario, for example. Complete a B Corp task successfully – whether it be verifying your supply chain, switching to EVs, benchmarking well on water or power use, or providing products that result in positive social impact – and you collect B Lab points. Get to 80 points out of a total of around 200 (the high score can vary) and you are eligible for B Corp accreditation.
But that’s not the end of it. Every three years or so you have to play the game again – go through another round of B Lab auditing – and improve your performance to meet an updated set of standards.
That expectation of continual improvement was the biggest mental hurdle for Kiwibank’s Jurkovich when making the decision whether to go for B Corp certification, he says.
“You have to work through the fact that this isn’t once and done. If you slip off that pathway you could lose your accreditation, your reputation could take a hit and you would have to rebuild it.
“But then we realised that expectations – from investors, from customers, even from regulators – are rising anyway. So B Corp certification is a way to make sure you keep investing.”
Kiwibank’s first B Corp score, announced with its certification last week came in at 90.3 out of 200 – a good margin over the 80-point minimum, and well up on the 50.9 median score for ordinary businesses.
A B Corp spokesperson says businesses often start with scores in the 50s or 60s and need to do considerable work to achieve the certification benchmark score of 80 points.
“Kiwibank’s score of 90.3 points is a strong number for its first certification, setting a basis on which to continue improving.”
Patagonia joined the programme in 2011, with a score of 107. In 2014 that rose to 114. It’s now 151.4.
Raglan Coconut Yogurt
Picking up B Corp points isn’t easy, says Tesh Randall, co-founder of Raglan Coconut Yogurt. The company got accreditation in January this year and the process was “the most thorough and most intense certification process I’ve ever been through”.
“I couldn’t believe how many questions they ask and how detailed/specific they get; it was quite impressive, and you did feel like you’d worked hard for the points.”
Randall says she chose B Corp because “it’s the only certification I could find that looks at every area of the business and holds you accountable to a really high standard”.
Each part of the B Corp questionnaire encourages you to think about a particular bit of the business, Randall says. Many are industry-specific, benchmarking you against your peers.
Some of the challenge of the B Corp process is about gaining points, but much of it is simply because the questions make you think differently about your company’s impact and purpose, Randall says.
“For example, we have to track our water usage as a B Corp, and one of our biggest uses is washing out the fermentation tanks at the end of each day,” Randall says. “We were paying for wastewater services to come pick up the water and take it to the nearest treatment plant because we don’t have sewer access at our new factory site.
“We weren’t happy with this and explored other options. We’ve ended up partnering with the neighbouring avocado farmer to pump our water up the hill to irrigate his 800 avocado trees.”
Apparently, the avocados like the fat content in the water from Raglan’s coconut cream residue. And the farmer likes the free water.
Or at least, he pays for it with avocados.
“It’s nice to create a little closed-loop cycle for resources locally.”
Raglan Coconut Yogurt ended up with 96.7 B Corp points, Randall says. “Pretty good for a first round.”
Gnarly questions to answer
At Kiwibank, Julia Jackson doesn’t have a water quandary that can be solved with avocados, but there were plenty of other questions that arose from the accreditation paperwork.
Take the section on the bank’s lending and investment practices, for example. As a requirement to even be able to certify, banks need to prove that they don’t have investments in or lend to a number of sectors that may pose high environmental or social risk.
With Kiwibank’s having introduced a Responsible Business Banking policy in July last year, Jackson thought this section would be easy.
However, as part of B Corp certification the bank still had to review any exposure to sectors classified as sensitive (alcohol, tobacco retailing, adult entertainment and class 3 and 4 gambling venues, for example) and provide proof as to how much of Kiwibank’s business these sectors represented.
The bank’s answers were reviewed by an independent committee. B Corp also wanted information about additional areas of social impact like conflict minerals (natural resources extracted in a conflict zone and sold to perpetuate the fighting) to make sure Kiwibank’s policy lined up against global standards of responsible lending.
“B Corp gets you questioning every way you run your organisation.”
“Having this independent review of things like our Responsible Business Banking policy is incredibly useful and really makes you think,” Jackson says.
“We have committed to review this policy on an annual basis and when we go through the next review, we can look to B Corp’s guidance to ensure that we’re considering all industries we could have an exposure to.”
At the very least, B Corp gets you questioning “every way you run your organisation,” Jackson says.
“You can use B Corp as a test and proof point and also as a guide for your internal improvement plans and targets, to understand where you are currently and what actions you need to take to get better.”
B Corp adds credibility: Ethique
Plastics-free shampoo bar and cosmetics company Ethique was one of New Zealand’s first B Corps – getting its initial accreditation (105 points) in 2015 and its second one (117 points) in 2018.
“We’ve always been New Zealand’s highest B Corp,” says founder Brianne West. “Not that I’m competitive.”
Ethique has grown hugely since its kitchen beginnings – its products are now in over 4000 retailers in 24 countries. Sustainability in its many forms is a major part of the brand.
“Our ingredients remain: cruelty free and vegan, palm oil free, ethically and fairly sourced; we still pay staff a living wage, donate 20 percent of profits to charity and are 100 percent plastic-free,” according to the website.
Being a certified B Corp helps add credibility to those statements, West says.
“We make a lot of claims as a company – like calling ourselves the world’s most sustainable cosmetics company. Having something all-encompassing adds credence to that, especially since B Corps are strong from an ethical point of view.
“Right down to measuring the wage gap between the lowest paid worker and the CEO.”
West says the B Corp brand still isn’t well-known – particularly in New Zealand and Australia. However, having the accreditation recently helped Ethique pick up a “reasonable-sized retailer in the UK”.
“They were looking at B Corp accreditation themselves, so it helped – made our offering even more compelling.”
This year Ethique is going through its third B Corp round and will be aiming to claim back its No 1 status.
In March, Nelson-based drinks company Chia Sisters achieved 118.6 in its first B Corp accreditation, taking it ahead of Ethique.
Chia Sisters was also awarded ‘Best in the World’ status by B Corp – a recognition for companies whose B Impact Assessment scores rank in the top 5 percent in their corresponding size group.
Being part of a network
The chia drinks business was founded by neuroscientist Chloe Van Dyke and her dad Ben in 2012, and sister Florence joined the business in 2015, leaving a career as a corporate lawyer.
The company was already living wage certified, carbon zero and climate positive before they decided to go for B Corp certification.
But they liked it because the reach was wider.
“It takes the focus you had before and puts it into every area of your business,” Van Dyke told Newsroom. “It goes into so much detail in areas you hadn’t even thought of before.”
Like subconscious bias in hiring decisions. “One of the questions is ‘Do you cover up any identifying information when you are choosing applications for new roles?’ I’d never have thought about that.”
Van Dyke also likes the chance to be part of a network of companies with similar goals and, hopefully, a reason to support each other by developing a supplier relationship.
She says as she looks for suppliers in the future, B Corp will be one of the criteria she will use. Not just for products, but services too.
“One of the sections is about your bank. Where is it investing its money, is it an independent bank, a cooperative, investing in the local community? I sent an email to my bank manager to say ‘Do you tick any boxes?’ and they sent me a lot of information about the amazing things they do.
“I forwarded it to B Corp and they said ‘No. Just because they are doing good, that doesn’t mean they are not doing bad stuff’.”
“So, I’m not getting any points for my bank. If our bank doesn’t clean up its act, we will look to take our business elsewhere,” Van Dyke says.
Finding a bank – Kiwibank for example – with B Corp status would provide reassurance of that company’s purpose and values.
“Likewise, it would be nice if larger companies like Kiwibank stocked their fridges with B Corp-certified drinks.”
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