In an Economy Ravaged By COVID-19, B Corps Open a Door for Change
As the world struggles to emerge from the COVID-19 crisis, B Corporations may offer the reeling economy a way forward. Jessica Yinka Thomas, Poole College of Management’s director of the Business Sustainability Collaborative (BSC) and president of B Academics, explains how these businesses are better positioned than many other companies to withstand economic downturns.
Certified B Corporations, present in 150 different industries and more than 70 countries globally, are for-profit companies certified by the nonprofit B Lab for meeting the highest standards of public transparency and social and environmental performance. These companies are committed to balancing profit and purpose with strict legal accountability – and their model just might be the solution to more stable businesses and a more equitable economy.
Already, B Corps have proven to be more resilient to economic downturns. Anthea Kelsick, co-CEO of B Lab U.S. & Canada, notes – in a Forbes article written by contributor Esha Chhabra – that these businesses were 64 percent more likely to fare well during the 2008 financial crisis than other businesses of comparable size. The key to their resilience? Stronger relationships, Kelsick thinks.
B Corps, with an emphasis on stakeholder engagement, are well-positioned to weather financial storms like the one caused by COVID-19. Because of their commitment to maintaining strong relationships with workers, customers, suppliers and communities alike, they are more prepared to make necessary adjustments in the face of economic turbulence.
Kelsick explains, “When a company’s business model is to deliver value to stakeholders, when the needs of their stakeholders change, that company will more intuitively pivot their business model to serve those shifts in needs.”
Additionally, employees of B Corps experience greater protection. Before the COVID-19 crisis hit, B Corps were already well-positioned to protect their workers. B Corps are more likely than other comparable businesses to offer employees a living wage, health care benefits, paid caregiver leave and sick leave. In most cases, these businesses provided adequate benefits for employees before the Families First Coronavirus Response Act and CARES Act required them.
Because people of color and lower-income workers have been disproportionately impacted by COVID-19, the pandemic has exposed economic inequities. People of color, who are more likely to be categorized as essential workers, have been at higher risk for exposure to COVID-19 – and many people of color, when the outbreak began, lacked sick leave and felt compelled to go to work while sick. B Corps, with a model built on diversity equity, inclusion, professional development and fair treatment of workers, safeguarded the vulnerable in various ways.
B Corps, then, may be the key to building a more equitable economic system that meets everyone’s needs – and that offers greater job security, too. While stories of CEOs giving up salaries in order to keep employees on the payroll have swept the nation, B Corps were less likely to have significant wage disparities between workers to begin with – making such measures unnecessary.
In fact, many B Corps also offer significant financial support for workers. Rhino Foods, for example, developed an Income Advance Program that gives employees access to same-day emergency loans.
A force for good
But in addition to their resilience and their emphasis on protecting employees, B Corps are also outward-facing. The stability of B Corps in the COVID-19 crisis also allows them to more effectively be a force for good in their communities.
The B Corp model is good news for societies facing staggering unemployment rates, struggling businesses and people in need. B Corps, compared to comparable sized businesses, are more likely to create job opportunities for chronically underemployed populations, support other local businesses and promote civic engagement.
For instance, in a recent article in the News & Observer, Happy Dirt CEO Sandi Kronick mentioned hearing from farmers she hadn’t heard from in years. Happy Dirt, a farmed-owned food distributor in Durham, offers its farmers a network of restaurants, stores and home delivery box clubs. She’s also seen a resurgence in community-supported agriculture, in which farms sign customers up for a season of weekly boxes containing meat, produce and other goods.
Ryan Hurley, co-founder of Vert & Vogue in Durham, N.C., is collaborating with other community leaders to create an emergency loan fund for local small businesses. Duke University, in response, agreed to match up to $1 million toward a small business recovery program.
Another B Corp, Whiteboard, launched a community website for the Chattanooga, Tenn. area highlighting practical ways to serve neighbors. Meanwhile, Murphy’s Naturals in Raleigh, N.C. altered its production to produce hand sanitizer for thousands of essential workers. “Part of Murphy’s Naturals’ DNA is to Do Others Good, so when we identified an opportunity to serve, we acted,” says founder Philip Freeman in an article posted on bthechange.com.
As consumer needs change due to COVID-19, these corporations have made necessary adjustments to ensure they provide products benefiting customers.
Several B Corps, recognizing the need for a greater supply of Personal Protective Equipment (PPE), have adjusted their business models to produce and sell PPE. Likewise, Safe Hands Kenya mobilized an alliance of various Kenyan organizations, including B Corp 4G Capital, to develop a new supply chain, ensuring that sanitation products would reach every Kenyan.
As the pandemic rages on, B Corps have proved incredibly resilient – yet they are not immune to its impacts.
In response, many B Corps have banded together to support one another. They formed a Financial Resiliency Task Force to help smaller B Corps access capital they need. Shea Moisture and its parent company, Sundial Brands, launched a $1 million fund to provide relief for women of color entrepreneurs impacted by COVID-19. B Lab East Africa developed a resource hub to help local B Corps navigate the various challenges introduced by COVID-19.
And though COVID-19 has forced many companies to make difficult decisions, B Corps’ devotion to transparency has set them apart. Ben Coniff, co-founder and Chief Brand Officer of Luke’s Lobster, explains in a Conscious Company webcast that the company’s culture of transparency allowed employees to understand the finances behind its decision to shut down 25 of its 26 restaurants. “Our employees have a very good understanding of how the business works and how we make decisions,” Coniff says. “When you understand how the business operates, you can have conversations about layoffs in an honest and transparent way.”
Indeed, COVID-19’s economic effects have been manifold. The pandemic, among other things, has turned economic fissures into gaping chasms. Many B Corps, with an aim to build an economic system that works for everyone, see the crisis as an opportunity for businesses to reexamine their foundations and seek long-term solutions to systemic problems.
For instance, B Corps have a responsibility to measure the impact of their business on the environment. B Corps around the world are already providing opportunities for employees to use alternative commuting options and to telework. They’re doing more with less, understanding resource scarcity. B Corps are more likely to have transparency across their supply chain and understand potential disruption risks. They’re tracking the impact of energy, water, and other natural resources from their business.
Amidst this time of product shortages as a result of COVID-19, many people are turning to B Corps to fill those needs while keeping their supply chain safe. Dr. Bronner’s has altered their production schedule but is still trying to maintain all of their environmental practices. Darcy Shibber-Knowles, director of operational sustainability and innovation at Dr. Bronner’s and co-leader of the B Corp Climate Collective Steering Committee, understands the importance of connecting with the broader B Corp community. As shared in an article for the Certified B Corporate website, “working and learning together with other B Corps to address the climate crisis is a crucial, timely, and thrilling part of Dr. Bronner’s commitment to ‘Treat Earth Like Home’, one of our cosmic principles.”
For companies eager to learn from B Corps, the B Impact Assessment is a helpful place to begin. This free tool, used to assess companies for B Corp certification, provides a roadmap for organizations seeking to strengthen their own policies and strategies.
Poole College’s Business Sustainability Collaborative is also committed to helping students and companies learn from B Corps. BSC offers a B Corp Clinic that connects students to aspiring and certified B Corps.
The program works with teams of graduate and undergraduate students from multiple North Carolina universities to help companies examine their business models and strengthen their social and environmental impact.
The BSC is part of a broader movement, B Academics, a network of over 1,900 researchers, educators and partners from more than 50 countries working to advance the study of B Corps and business as a force for good. For a recent example of the B Corp Clinic in action, click here.
This post was originally published in Poole College of Management News.