Food Companies Consider Becoming B Corp Certified
A B Corp business takes into account stakeholders in general, rather than holding as pre-eminent the return to its shareholders. The B Corp movement has grown substantially since its launch in the US in 2007 and now claims a foothold in some 150 countries. Food manufacturers, from the very small to just about as large as they come, have found themselves drawn to the B Corp ideals of sustainable business. Ben Cooper spoke with B Corp food companies and advocates for the B Corp movement in the US and the UK to find out more.
When encountering the B Corp concept for the first time, it is hard not to be intrigued and then, to vary degrees depending on how instinctively sceptical you are, to find the idea somewhat inspiring.
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By GlobalDataVery simply, B Corp is a certification companies can qualify for if they meet certain requirements set out by B Lab, the US-based non-profit which created and administers the system, including obtaining a qualifying score in the B Lab impact assessment covering a raft of environmental, social and governance (ESG) criteria.
Having achieved B Corp certification, companies can call themselves B Corps, use the logo of a B in a circle in business and consumer communication, and join the B Corp community. Around 12% of the 2,400 B Corps around the world are food manufacturers, foodservice operators or growers.
B Corp and food companies
There are a number of underlying reasons why B Corp certification is proving compelling to food companies. First, B Corp has so far been a certification scheme and network for SMEs and, quite simply, the food sector has a lot of SMEs.
In addition, many of the critical sustainability issues on which B Corp companies seek to differentiate themselves are extremely pertinent to food, such as sustainable sourcing and packaging.
“I think there clearly is a good fit [with food companies],” says James Rutter, director of brand and strategy at Cook, the UK-based, B Corp-certified producer and retailer of premium prepared meals. “Within food, you have some really live ethical/sustainability/responsibility issues that, particularly for smaller challenger brands, present opportunities to differentiate themselves.”
Further underlining the significance of B Corp to the food sector is the support the movement is receiving from a number of its largest players, notably Unilever and Danone. “Examples from B Corps around the world prove that an economic agenda that serves people’s needs while respecting planetary boundaries is compatible, and ultimately even necessary, for financial success,” Unilever CEO Paul Polman tells just-food.
B Corp and big corps
In Ben & Jerry’s, Unilever owns perhaps the best-known B Corp brand in the world. Over the past eighteen months, Unilever has acquired three more B Corps, including one in the food and beverage sector, UK organic tea supplier Pukka Herbs. “It is a good sign that a growing number of companies like ours are interested in engaging with the B Corp movement,” Polman continues, adding Unilever is “part of the B Corp family” through its subsidiaries.
French giant Danone is another food multinational to have voiced strong support for the B Corp movement. Six of its subsidiaries are now certified B Corps, including Danone Dairy Spain, US baby-food unit Happy Family and Danone Dairy UK, while the company says two others are “close” to achieving B Corp status, including its US subsidiary DanoneWave.
However, Danone has gone further than Unilever, with CEO Emmanuel Faber last year committing to Danone itself becoming a B Corp. “Our ambition to obtain this certification is an expression of our long-time commitment to sustainable business and to Danone’s dual project of economic success and social progress,” a Danone spokesperson says.
Faber has set no timeframe for Danone achieving B Corp status, and for good reason. While the B Corp model works well for SMEs, the size, complexity and legal obligations of publicly-listed corporations make B Corp certification a hugely challenging undertaking for a global multinational.
So far, only a handful of listed companies have achieved B Corp certification. “Our ambition to become a certified B Corp is a first of its kind for such a large multinational company,” the Danone spokesperson continues. “It obviously comes with challenges and complexity.”
B Lab, meanwhile, has recognised adapting its processes to allow publicly-listed and multinational corporations to pursue B Corp status represents an opportunity to scale up the programme and make it more inclusive.
“An increasing number of mission-aligned, multinational and public companies have expressed interest in B Corp certification and in helping to accelerate the movement,” says Alicia Darvall, executive director of global partners at B Lab, adding: “B Lab has been on a mission to chart a clear path to certification for multinational and public companies that is manageable and meaningful, but still maintains the rigour of our standards.”
That B Lab first initiated this process in 2015 and the draft proposals of its multi-stakeholder Multinationals & Public Markets Advisory Council (MPMAC) are only being published this year underlines the challenges faced. The proposals will be made available for public comment and testing before being incorporated into the B Corp certification process.
Other publicly-listed food firms participating in this process are Campbell Soup Co. and Hain Celestial, both of which own B Corps.
Megan Maltenfort, senior corporate social responsibility manager at Campbell, which owns two B Corp subsidiaries, Plum Organics and the fledgling The Soulfull Project, emphasises the positive influence they have on the group as a whole. “Campbell embraces our B Corp businesses, whose culture and values, along with their disruptive and agile nature, influence our whole organisation for the better,” Maltenfort says. “Campbell plans to maintain B Corp status for both these businesses moving forward.”
What are public benefit corporations?
Maltenfort adds Campbell was committed to preserving Plum Organics’ B Corp status after it acquired the company in 2013, and in order to make that possible assisted the company in becoming a Public Benefit Corporation immediately new legislation was passed making this possible.
Sometimes confused with B Corps, a public benefit corporation (PBC) is a legal form of constitution companies can adopt which balances the interests of shareholders with the benefits a company brings to other stakeholders, such as its employees, suppliers and customers.
It is possible for a company to be a PBC without being a B Corp though incorporating as a PBC is often the first step to becoming a B Corp. As with Plum Organics, reconstituting a company as a PBC is a means by which publicly-listed companies can seek or retain B Corp status for their subsidiaries.
The food sector boasts a further noteworthy example in DanoneWave, the US unit Danone created following its acquisition of US business WhiteWave Foods last year. DanoneWave was incorporated as a PBC in 2017 with the aim of becoming a B Corp.
“Our subsidiary has thus officially been given the legal mandate to serve the interests of not only shareholders, but also society at large through a clearly defined purpose and targeted goals,” a Danone spokesperson says. Having originally said DanoneWave would be B Corp-certified by 2020, Danone now expects this to be achieved this year.
B Lab, the administrator of B Corps, has been an active proponent of company law reform to enable the creation of PBCs. “B Lab has been the creator and driver of benefit corp. legislation in the US, first introducing the model of benefit corporation in 2009,” Darvall explains.
Since 2010, 35 US states have passed benefit corporation legislation, while Italy became first country to pass such legislation in 2015. According to B Lab, more than half a dozen other countries have benefit corporation legislation in various stages of development, including France. There are now some 6,000 public benefit corporations worldwide.
Benefiting all stakeholders
What the designation of the public benefit corporation and B Corp certification have in common is they recast business priorities to take account of stakeholders in general, rather than holding as pre-eminent the return to shareholders.
Like advocates of higher sustainability standards in other contexts, B Corp champions stress having this broader recognition of the benefits for and impacts on a wider range of stakeholders need not in the end disadvantage shareholders. “What we’re trying to do is elevate the interests of all the other stakeholders to those of the shareholders, and then actually you can see long-term that if all those interests are all taken into account then shareholders do well anyway,” says Katie Hill, executive director of B Lab UK.
“The idea of just certifying and then leaving ‘as is’ is not really in the spirit of the accreditation”
A further strength B Corp food companies stress is how continuous improvement is built into the programme. “It’s always an ongoing process,” says Ed Smith, co-founder of UK chocolate maker Doisy & Dam. “The idea of just certifying and then leaving ‘as is’ is not really in the spirit of the accreditation. It’s all about constantly improving and making future decisions based off the guidelines the B Corp certification gives you.”
To retain its B Corp status, a company must re-certify every two years and, Hill explains, as the assessment requirements themselves are also reviewed every two years, companies will generally find the assessment “pushes a little harder” each time a company comes back.
Unique concept
Given it is a non-profit looking to reshape capitalism, B Lab rather amusingly appears to have something that any company – reborn or unreconstructed – would covet. What it offers is perceived by those buying into it as unique and effectively impossible to substitute.
There are other NGOs, such as Conscious Capitalism and One Percent for the Planet, which are also trying to foster a more sustainable approach to business. There is also no shortage of more narrowly defined sustainability certification organisations, particularly in food sector.
However, at present there is no organisation providing the comprehensive sustainability accreditation B Lab offers, though companies can simply opt to become PBCs, where appropriate legislation exists, without seeking B Corp certification.
It should be borne in mind B Lab is a private organisation, albeit a non-profit, rather than a statutory body. Some might argue, given the role it has embarked upon and the prominence it appears to be gaining, that one single private organisation having cornered the market for sustainability accreditation of this kind carry risks. It certainly gives B Lab weighty responsibilities.
In this context, Mindy Lubber, CEO and president of Boston-based sustainability non-profit Ceres, believes transparency is critical. “As long as they’re transparent and people know what they’re buying into, I think it [B Corp certification] is helpful,” Lubber says. “I believe the transparency is there and that’s good.”
Describing B Corp certification as a “good general standard” for sustainability, Lubber says B Corp can make an important contribution to creating more sustainable businesses. “It’s not the sole answer but it’s an important part of the equation,” Lubber says.
A natural home for food SMEs
Notwithstanding the interest and support from large food corporations, B Corp has so far largely been a certification system for SMEs and Lubber still sees B Corp certification principally as a means of helping smaller, privately-held companies to engage more actively on sustainability.
“For those that want to engage, want to be involved, they need some structure, they need some guidance they need some basic tools,” Lubber says, adding the B Corp movement could be an effective agent in raising sustainability standards among companies lacking the resources and structures larger corporations can allocate to sustainability.
Mark Cuddigan, CEO of B Corp-certified organic baby food producer Ella’s Kitchen, owned by US group Hain Celestial, also believes in B Corp as an agent of change and expects its capacity to change how companies operate to increase. Cuddigan suggests many of the first-mover B Corp companies may have had to change little to reach the qualifying score, an observation shared by other B Corps. They were attracted to B Corp because of shared values they were already putting into practice.
It is, Cuddigan believes, as more companies, with further to travel in raising sustainability standards, engage with the movement, that B Corp’s true potential as a game changer might be realised. “When the companies that are really struggling to get to that level start certifying, that’s when we’re going to see real change,” he says.
Networking dividend
Another critical facet of the B Corp system for SMEs is what it offers as a network. The B Hive is a networking platform administered by B Lab exclusively for B Corp-certified companies through which they can “connect, collaborate and share knowledge” as well as offer discounts to fellow B Corps.
Indeed, B Corp business leaders often appear as effusive about the networking opportunities B Corp offers as about the certification itself. “Every time we have any kind of B Corp get-together, be it in the UK or America or elsewhere, you will meet somebody who is both fascinating, has some kind of insight or value towards your business,” says Cook’s Rutter. “And, most important though, you immediately know your values are aligned in terms of how you want to approach business and life, and that is kind of unusual in the corporate sphere.”
Interestingly, Cuddigan says Ella’s Kitchen had not considered the networking potential as a particular motivation for joining the B Corp movement.
However, having joined he describes the feeling of community as “amazing”. “It’s amazing to be part of a group of people who feel the same way about business, about the environment, about the people that work for them.”
Areas where Ella’s Kitchen has cooperated or will be cooperating with other B Corps include human resources management and sustainable packaging, while networking and proselytising on behalf of the movement also extends to suppliers. Cuddigan says four of the company’s five major suppliers have said they will certify as B Corps this year, while Doisy & Dam says one of its cocoa suppliers in Colombia is also in the process of certifying.
A benefit to recruitment
B Corp food companies also say certification has helped improve recruitment, a particularly significant benefit for companies with small workforces.
“We’ve genuinely had quite a few job applications from people who’ve just been looking to work for a B Corp,” says Rutter. There is, he adds, a “small but growing” group of mainly younger people who see B Corp certification as “a real validation that this is a company I would want to work for”.
Cuddigan reports similar experiences saying there are at least two people working at Ella’s Kitchen who had approached the company because it was B Corp. B Lab’s Hill says this is generally viewed as a “huge” benefit by B Corp companies. “Across the globe we’ve picked that up,” Hill says. “We’ve just done a survey of our B Corps and that has come out as a very big point.”
Regarding consumer awareness, the consensus among UK B Corps interviewed for this article is consumer recognition remains low but is rising and they expect it to continue to do so as the B Corp community expands. “B Lab seems to be on quite a growth trajectory in the UK but this is a B2B process,” says John Elkington, founding partner and chairman of business consultancy Volans and a B Corp advocate.
Elkington also sees significant further growth potential for the movement in Australia and New Zealand, where there are 212 B Corps. Meanwhile, Cuddigan forecasts the number of B Corp-certified FMCG companies in the UK will rise from 14 to between 40 and 50 by April 2019. Since B Lab UK was launched in 2015, the UK’s total B Corp community has grown to 150 companies.
Elkington considers B Corp to be a movement for the current age, speaking directly to the kind of changes reforming capitalists like Polman are advocating and ever-growing ranks of ethically-conscious consumers are demanding. “I think B Corp plays right into that space at exactly the right time,” he says.
However, despite these factors, Elkington questions whether B Corp in the UK can rely on consumer awareness simply growing organically as more companies engage, suggesting some form of collective effort to raise consumer awareness may be necessary.
Interestingly, the view from the US, where the B Corp movement has been in existence considerably longer, is somewhat different. “B Corp is already a consumer-facing brand, given the hundreds of B Corp companies with logos on their products in stores in the US and around the world,” says Darvall. Raising broader consumer awareness of B Corp certification is important to B Lab and the B Corp community, Darvall adds, and to that end, a “brand awareness campaign for the B Corp movement” is planned for early 2019.
Looking ahead
Over the next few years, the B Corp movement can be expected to grow and develop in a number of different dimensions.
In addition to the anticipated continued expansion in countries such as the UK and Australia, B Lab is looking to build the movement’s presence in emerging markets, notably in Latin America but also in Africa. It will become a more consumer-facing entity and consumer recognition will grow.
If the vision of Danone CEO Faber and others is to be realised, it will also have to evolve to facilitate closer engagement and certification by larger companies, and that should in turn also boost consumer awareness.
As they have during its first 11 years, food companies can be expected to feature prominently in the movement’s next phase of development and, given B Corp’s potential to foster both sustainability and innovation, the food sector as a whole should be the better for it.
