You’d be hard pushed to find a more passionate lot than small business and startup folk. These are people who commit to big ideas and follow their dreams; who see something others don’t, and double down. Often, they put everything on the line to do it.
But more and more, entrepreneurs are looking beyond their brand, customers and growth. They’re thinking hard about their impact on their communities and the environment, too.
Sure, they want to make money. But they also want to act as a force for good. They want their ventures to create only positive outcomes.
That’s where the B Corp movement comes into play. And it’s picking up speed.
Part One: What is a B Corp anyway?
Back in 2006, in the US, college friends Andrew Kassoy, Bart Houlahan, and Jay Coen Gilbert put their heads together to form B Lab, a not-for-profit dedicated to helping businesses define their purpose, measure their social and environmental impact, and do ‘better’ for their workers, communities and the planet.
Those businesses could certify as Benefit Corporations – or B Corps – committing to certain standards, and to transparency in their actions.
In June of 2007, the first 19 companies put their hands up to be a part of the movement. By the end of that year, 81 founding B Corps had been certified.
At the time, this was radical.
As the B Lab co-founders shared in 2022: “Sixteen years ago, the idea that we needed a different ‘purpose’ for business was considered marginal — even heretical — in the corporate world.
“Today, business schools around the globe have added ‘purpose’ to the five P’s taught in Marketing 101, the largest investors in the world are encouraging public companies to become benefit corporations and exercise stakeholder governance, and policy makers and media on every continent point to B Corps as the credible example for what good business looks like.”
There are now more than 7,000 certified B Corps in 91 countries around the world, supporting more than 600,000 workers.
B Lab Australia & Aotearoa New Zealand launched in 2013, and has certified more than 470 B Corps to date.
What does it mean to be certified?
Certified B Corps measure their impact across five key areas: environment, community, governance, workers and customers.
B Corps are for-profit businesses that may or may not not have ‘impact’ built into their business models. Certification is suitable for all kinds of businesses of all sizes in all sectors.
The key is that they measure success not only in monetary gains and growth, but in the positive impact they create along the way.
There are three steps to the certification process. Kira Day, Policy & Advocacy Manager at B Lab Australia & Aotearoa New Zealand, explains:
First, any business can measure up their performance using the B Impact Assessment (BIA), to see how they stack up.
Businesses that generate an overall score of 80 points or more (out of a possible 250), are able to start the certification process, including independent verification.
For context, the median score for all businesses who complete the impact assessment globally is 55.
In Australia, most companies must change two clauses in their governing documents. The first locks in their purpose, Kira explains.
The second allows directors to act in the interests of all stakeholders, rather than only to shareholders. Stakeholders include anyone who could be affected by a change, including employees, customers, local communities and the public as a whole.
“That’s a big departure from the traditional shareholder governance model, in which directors’ duties are to deliver as much profit for their shareholders as possible,” Kira says.
“B Corp gives directors permission to think about other things other than just profits.
“And if you want a long-term successful business, you have to do that.”
Once a business has passed the verification process and met the legal requirement, they have to publish an overview of their score and an ‘impact profile’ on the B Lab website.
That means any member of the public can confirm B Corp status, and see where they’re performing well.
“The amount of change that needs to happen for companies to get to 80 points is quite significant,” Kira says.
“It really requires a whole company approach where you look at everything from operations to how your leadership makes decisions, to your supply chain and how you manage customer data.
“It’s not necessarily that those things are done perfectly to a tee every time, but they’re done with intention, and the business is committed to improving those things continuously over time.”
Part Two: What makes a B Corp?
In Australia, B Corp's include toilet paper brand Who Gives a Crap, outdoor clothing retailer Kathmandu, as well as Tractor portfolio companies Public Sector Network, Wrappr and Goodtel – a telco that donates 50% of its profits to charity, pairing profitability with social consciousness in an incredibly competitive space.
As Tractor co-founder and co-CEO Jodie Imam points out, these are all purpose-focused businesses that are also successful at generating revenue. That trait makes them good candidates for the non-dilutive debt funding Tractor are specialists at disbursing.
“Our lens is on loan affordability, that’s where we start,” she says.
“But our team members are all very impact-motivated.”
B Corp certification is also “hopefully” in Tractor’s own future, Jodie says.
“I think, as entrepreneurs, it’s in our blood. We are entrepreneurs because we want to make an impact – a positive impact.”
Here’s a closer look at some certified Aussie B Corps:
Users share information on their vehicle, driving habits, hobbies and interests, plus any brands they love. They’re paired with the best fit and turned into a moving billboard – earning them up to $600 a month.
Jonte and Liam started working on Wrappr full time in 2020, with a small amount of equity funding.
In the 2021-22 financial year, they saw growth of 299%. But more importantly, they worked with “really cool brands” including Qantas, Woolworths, eBay and Bank of America.
Wrappr is not directly a social impact business. But it has had B Corp certification since September 2022.
For Jonte, it represents “the right way to do business”.
“We want to run a business that we’re proud of, and we wouldn’t be proud of a business that we don’t think is having a positive impact in the world in some respect.”
B Corp provides a detailed framework for how to do that. The impact assessment alone opened the founders’ eyes to improvements they hadn’t considered before.
“It allows us to be quite conscious in the way we run our business and the things we’re thinking about.”
The Commons is a creative co-working business with seven locations across Melbourne and Sydney – and two more in the pipeline.
Despite the slight blip of the COVID-19 pandemic, it’s seen significant growth over the past two years.
“The way businesses work and the way people come to work has changed … we’re providing different solutions for business than what they may previously have considered,” National Membership Manager Shannon Horn says.
“The spaces are really full and buzzing again. It's nice to see – I think people want that connection and community and want to come in.”
The Commons has community at its very heart – ‘members first’ is one of its company values.
In fact, a lot of those values are aligned with the values B Corp certification recognised, Shannon explains.
Again, the impact assessment provided a useful tool for the team to assess whether they were meeting their key impact criteria.
“It took us a really long time to get it – I think we worked on it for like two years,” Shannon says.
“Now that we’ve got it, we’re really proud of it.
“It’s a nice marker for us to see if we’re still doing all the right things as we grow. We’re still able to measure our values in a really tangible way.”
Public Sector Network
Public Sector Network essentially does what it says on the tin – it’s a network helping government executives around the world to connect and share information and best practices, in a bid to increase innovation and reduce costs.
“While it is improving, the public sector tends to work in silos,” co-founder Ross Ashman says.
“Very often information isn't shared across departments, let alone different agencies, states or counties.”
So far, the business has been self-funded, making revenue through selling advertising to trusted and credible suppliers.
It has also taken on some revenue-based financing through Tractor to expedite its growth plans – and it has continued to grow year-on-year.
The business has been a certified B Corp since 2018.
“As founders we are committed to our mission – improving government services to improve citizen lives – and the B Corp certification spoke to how we want to do business: doing well by doing good,” Ross says.
“Purpose and profit can co-exist, and that's what the B Corp status helps enshrine.”
Sally Hill: Impact as a lifestyle
Sally Hill is an entrepreneur and investor who wears a few different hats in the world of purpose-driven business.
Her agency Wildwon was one of the founding Aussie B Corps. She’s now general manager of Tripple, an impact-driven private investment firm – also a certified B Corp – and she runs Purpose Conference, which brings together purpose-driven businesses to foster conversation and positive change.
Sally says Purpose is a “broad church”, welcoming entrepreneurs and business folk wherever they are on their impact journey, with no judgement. That includes welcoming businesses of all sizes.
In very large businesses, even a small change can make a positive impact on a huge scale, and that should be celebrated.
But it’s new businesses and startups that are innovating, Sally explains.
They’re building their values into the core of their business from day one, and winning loyalty from customers and employees, thus posing a threat to the incumbents.
“The idea of encoding companies early on with values and a really tight mission lock is an important way we can change the next generation of businesses, which become the next big businesses of tomorrow.”
Part Three: Why go B-Corp?
There’s been a steep increase in the number of B Corps globally in recent years, as well as in the number of entrepreneurs using the BIA. Kira believes there are a few factors contributing to this.
We’ve seen a “culmination of crises”, she says, including COVID-19, the associated economic crisis, the ongoing climate crisis and a general crisis of inequality around the world.
“There was an impetus for a lot of businesses to question why they do business, what they’re in it for, and to look into the fundamental changes we need to make to be future-fit and resilient."
“There has been a growing understanding of the importance of business in our economy and our social systems – they have a really important role to play in solving for and addressing the social and environmental challenges they’ve created.”
Wearing your values on your sleeve
For some business owners, going down the B Corp route is a way to clearly show their values – and to prove they’ll put their money where their mouth is.
It’s also a way for them to set their intentions, map a pathway to get there, and keep themselves accountable along the way.
As Sally notes, it forces founders to put “rigour” around what they’re saying. Any business can call themselves an equal opportunities employer, for example. B Corp requires policies to enforce that.
“It gives you a framework for creating foundational documents that you should do anyway, as part of good business and good governance,” she says.
“It can be really beneficial to get ahead of that stuff. When it comes time to talk about it to investors or to the public, you have your ducks in a row.”
Attracting the right kinds of people
As recognition of the B Corp brand grows, Sally has seen companies using it almost as a screening tool. Certain businesses will only work with certified B Corps.
In the war for talent, B Corps also stand out to conscientious job-seekers, and of course consumers are becoming ever more mindful of where they spend their money.
For The Commons, certification gives its co-working spaces an edge above the competition.
The newest location in Sydney’s CBD has received multiple enquiries from founders who have heard about the space through the B Corp community.
“The more B Corps we have, the more that part of our community grows,” Shannon says.
B Lab Australia & Aotearoa New Zealand team works out of The Commons, as do the Tractor Ventures team.
When like-minded people are sharing physical space and building communities, that’s where the magic starts to happen.
What’s the trade-off?
It doesn’t come easy.
Measuring impact using the BIA is one thing, but actually becoming B Corp certified is quite another.
The process is infamously laborious, requiring stringent verification, independent assessments and legal changes. It’s a process that can take months or even years.
However, as Kira explains, this is by design.
"There are a lot of things companies can do to greenwash, to appeal to the consciously minded consumer, or to hop on to the sustainability bandwagon."
"B Corp is not necessarily one of them."
"It’s not something you can do easily without having a long hard look in the mirror. Are you ready to hold yourself up to a microscope? Are you ready to put that scrutiny and that accountability out into the world?"
"We don’t necessarily want it to be onerous, but if it was easy it wouldn’t really have meaning."
- Kira Day, Policy & Advocacy Manager, B Lab Australia and Aotearoa New Zealand
Cashflow vs conscience
Public Sector Network founder Ross notes that considering things like sustainability in every decision means you can’t always take the cheapest or easiest option (although he stresses it’s worth the trade-off).
It’s certainly possible that living your values is more difficult when there’s a large contract on the line.
For The Commons – a business build to accommodate other businesses – Shannon says it’s important to be a little discerning.
“There’s definitely certain types of businesses that we don’t want.”
Businesses in coal mining, for example, would probably not be a good fit. In Shannon’s experience, this hasn’t led to any confrontation… yet.
But she wouldn’t shy away from a tough chat, if it was required.
“We want to be honest with our members, and I don't think there's anything wrong with telling business we don't feel like they're aligned with our values, if they're really obviously not.”
Part Four: Who’s funding B Corps?
In Australia, B Corps have attracted equity funding and debt funding (including revenue debt funding), and they’re even listed entities on the ASX.
Clearly, having B Corp certification isn’t mutually exclusive from having a strong – and backable – business model.
Tripple is one of a growing cohort of impact-focused investment firms in Australia. Some span social and environmental impact, while others focus on specific high-growth sectors – renewable energy or agri-food tech, for example.
Even outside of that group, however, Sally says there’s a growing understanding that impact isn’t a trade-off for financial success.
“I think it's really well understood now that it's a really good place to put your money. This is the next big industrial revolution, and where a lot of the innovation is coming from,” she says.
Wrappr founders Jonte and Liam secured equity funding early on, but they haven’t taken the route of fast growth, burn and big equity cheques.
“We’re trying to be a profitable and sustainable business in our own right,” Jonte says.
More recently, they’ve secured Tractor funding to scale their revenue drivers in the business and progress to their next short-term milestones.
In the advertising world, there’s often a delay between a campaign going live, and payment. The Tractor loan allows them to cover those upfront costs.
It’s a funding method that suits the business model, but Jonte feels there’s also value alignment between Wrappr, Tractor and B Corp.
“It’s about doing business in a sensible, sustainable, conscious sort of way,” he says.
“You’re obviously looking for profitability … but you also need to think about how you’re benefiting your customers, how you’re treating employees, and the environment.”