Since communications agency Clearly PR became a B Corporation in November 2021, the average value of its contracts has risen by 63%. The firm has also saved about £10,000 a year on recruitment agency fees, thanks to a growth in the number of speculative job applications it’s received from high-quality candidates.
The company’s founder and MD, Paul MacKenzie-Cummins, reports that achieving the certification “has given us an edge over non-certified PR agencies when pitching for business. It’s helped us to better sell the value we can deliver to clients.”
His firm’s experience is far from unique. The turnover of the average B Corp in the UK grew by 26% between 2017 and 2020, compared with a mean of 5% for all businesses nationwide, according to research by awarding body B Lab UK.
But, while B Corp status offers clear benefits, companies aspiring to it must understand that they can’t assume that an immediate and substantial return on their investment is inevitable.
“Its positive impact on the bottom line will depend on the nature of your business,” says Hannah Williams, impact and sustainability manager at Good-Loop, an ethical advertising platform that has been a B Corp since June 2019.
She believes that certification has had “less of a direct influence” on Good-Loop’s profits than a non-B2B enterprise might expect to see, because the firm’s clients “prioritise tangible business results over B Corp status”.
That said, including the B Corp logo in your marketing materials and pitch documents is a clear sign to prospective clients that your firm is committed to ethical practices. This could have at least some influence on how much business it wins.
In consumer-facing industries – for instance, food, where the logo is associated with responsible farming practices and high-quality produce – B Corp status is likely to have more of a direct impact on sales and profits, according to Williams.
“Certainly, when I see the logo on a product, I’ll automatically trust that brand more than a non-B Corp competitor and be more inclined to buy it,” she says.
B Corp status can help attract and retain like-minded recruits
It’s hard, if not impossible, to accurately calculate a firm’s return on investment in becoming a B Corp. In any case, some of the benefits extend beyond simple financial gains for the business.
Take, for instance, what certification can do in terms of recruitment and retention. There’s plenty of anecdotal evidence to suggest that it can help a firm to attract highly skilled people who are drawn to employers that demonstrably care about things other than the pursuit of profit.
Helen Fox is sustainability director at Flotilla Group, a consultancy that helps enterprises to execute their net-zero plans. The firm became a B Corp in April, which has already made it “a magnet for like-minded people who want to contribute to a better world”, she reports.
Fox believes that Flotilla’s increased ability to attract highly motivated candidates has strengthened the organisation and its culture. Because of this, “our values continue to thrive organically at the core of everything the team does”.
Its positive impact on the bottom line will depend on the nature of your business
Benjamin Davis has observed similarly positive effects on his business too. He is CEO of Octopus Investments, an asset manager, which has been certified since February 2021.
Davis believes that “the alignment B Corps have with an individual’s personal values will often enable them to thrive, meaning that employees can end up staying with them for many years”.
When it comes to retention, B Corps mustn’t rest on their laurels and become complacent. But, given that they must seek recertification every three years, that’s unlikely. When Good-Loop reapplied last year, for example, one of the firm’s main priorities was to encourage its 45-strong workforce to participate more actively in its mission to do good. To this end, it set up a year-long challenge: employees would log their runs and walks with the goal of accumulating 7,094 miles – the total distance separating their offices in Edinburgh, London and New York. For every mile completed, Good-Loop would donate 10p to carbon-offsetting projects.
“Recertification provides an opportunity to stop, take stock and move forward in a way that best fits with B Corp guidance,” Williams says.
Davis stresses that, whatever decisions B Corp leaders are making, they must consider the potential effects of their choices on employees as well as shareholders, the environment and the community. He adds that purpose and development, including a focus on training and education, are a key part of his company’s staff retention strategy.
The work that Octopus Investments and Good-Loop have been doing in this area should benefit them financially at least in terms of the reduced costs of replacing leavers. Research by B Lab UK indicates that B Corps are better at holding on to their talent than non-certified employers. At only 8%, the average staff attrition rate among B Corps in the UK is about half that of all firms nationwide.
Sustainability-focused investors are more attracted to B Corps
Raising growth capital can also help a business to recruit and retain talent – and B Corp status can help to attract such capital. It’s a virtuous circle.
Firms with strong environmental, social and corporate governance (ESG) credentials are attracting interest from a growing number of investors. They in turn are under pressure from a range of stakeholders, including consumers, who are demanding improvements in ESG performance from businesses. B Corp certification can therefore enhance a firm’s credibility with investors seeking sustainable returns from demonstrably ethical operators.
According to B Lab UK, 70% of B Corps that seek equity finance end up raising the amount they want, compared with 56% of all companies.
Although Flotilla hasn’t sought to raise capital yet, Fox says that being certified “demonstrates that we’re a low-risk prospect” to potential investors.
B Corps must balance purpose and profit
There’s no doubt that becoming a B Corp will enable a firm to stand out from the non-accredited crowd. Research suggests that achieving this status this will increase the company’s potential to attract more capital, talent and custom.
But there are no guarantees, of course. While the qualification process provides an ethical framework for building a business that’s inherently more responsible than the average company, a firm cannot assume that it will see an immediate and substantial payback on its efforts to gain certification.
B Corps must also work hard to maintain the standards they have achieved, Fox adds. While the B Corp logo is “a badge of honour we wear with pride”, she says, “certification is merely a recognition and assurance that we’re doing things properly”.
