The real deal in assessing green | B Corporation seeks to set the standard for truly socially responsible business
Photo/Courtesy Barkwheats
Chris Roberts has a reputation for being a little bit radical. In late 2007, Roberts and his girlfriend, Renee Johnson, founded Barkwheats and began making gluten- and grain-free organic dog biscuits, using local ingredients like buckwheat, chamomile, parsley and honey. Organic ginger, which can’t grow in Maine, comes from Belize.
But it’s Roberts’ business model more than his products that has earned him a reputation for being progressive. He’s an advocate of pay caps for executives and believes organizations for socially responsible businesses should adopt stronger standards for membership — ideas, he says, that are not “widely accepted in a lot of places, where accountability just doesn’t matter. But accountability really does matter.”
Luckily for Roberts, he’s found a place as radical as he is, and that place is B Corporation, a network of 200 socially and environmentally responsible businesses — the “B” stands for beneficial — in 24 states and Canada. The network represents 31 industries and $1 billion in collective revenue, and includes such national names as non-toxic cleaning products maker Method, shoe manufacturer Dansko and King Arthur Flour. Businesses interested in becoming a B Corporation must endure a rigorous, 170-question survey with questions that range from how often businesses conduct annual carbon inventories to whether they hold suppliers accountable for their impact on the environment (for more on the process, see “Take the B Corp challenge.”) Businesses are vetted by the B Lab, a nonprofit organization based in Berwyn, Penn., and must back up their claims of sustainability with written policies. The purpose of B Corporation is to separate the true sustainable businesses from the “30,000 businesses in the United States that call themselves triple bottom line,” adding credibility much like a LEED certification in architecture, says Kenli Okada, a certification associate at the B Lab.
This is what sets B Corporation status apart from other memberships or certifications, says Roberts, who first learned of B Corporation from his company’s credit card processor, Dharma Merchant services, also a member. Barkwheats earned its B Corp certification in December 2008. “It differentiates between businesses that are good businesses versus ones that have good marketing,” Roberts says. “To have that differentiation was really important to us.”
Setting a new, measurable standard
B Corporation was founded in 2007 by a trio of Stanford alums looking to help socially minded businesses thrive in a for-profit world. The goal is to create a new sector of the business community — somewhere between for-profit and nonprofit — that would give businesses the legal right to base decisions not just on the bottom line, but also their impact on the community and the environment, says Christine Houlahan, B Corporation’s vice president of services and wife of B Corporation co-founder Bart Houlahan (other founders are Jay Coen Gilbert and Andrew Kassoy). Their organization has been working to get the sector legally recognized and tax-preferred status by the IRS, with the ultimate plan to grow the number of B Corporations to rival the size of the country’s nonprofit sector, which makes up 5%-7% of the U.S. gross domestic product.
Once a company passes the survey, it must undergo a telephone interview, pay one-tenth of 1% of its annual revenues to the B Lab and change its legal framework to include consideration of all the company’s stakeholders, not just the shareholders. The benefits include discounts on business development software and better rates at lending institutions that are also B Corporation members.
About 4,500 businesses have taken the B Corporation survey, which is free and can highlight areas where a company can improve. “The process of the survey was immensely important to our growth because it made us articulate our values,” says John Rooks, president of The SOAP Group, a Portland-based communications and marketing firm. The SOAP Group, which serves socially responsible businesses, encourages its clients to take the survey because it’s a useful “prequalification tool” to determine if they would be a good fit for SOAP, Rooks says. The SOAP Group became Maine’s first B Corporation in June 2008.
The B Corporation network helped Jeremy Litchfield move his startup from Virginia to Maine, his home state, in order to find investors looking to support sustainable businesses. Rooks found Litchfield and his company, Atayne, which makes performance apparel out of recycled plastic and natural materials, through the B Lab and offered him office space through its entrepreneur-in-residence program, Litchfield says. The SOAP Group also shares office space with goodfocus, a production company and the state’s fourth B Corporation.
Besides office space, the other major benefit of B Corporation status for Atayne has been exposure. Since earning its certification in March, Litchfield acknowledges the company, which has yet to make a profit, “hasn’t seen a huge spike in sales — but that’s not necessarily why we’re doing it. If people are doing it for the wrong reasons — to put the logo on their websites and packaging to boost sales — they’re going to be disappointed,” he adds.
For Roberts and Barkwheats, the connections to the B Corporation community have meant more than the logo has. When he had questions on how to expand his ingredients source, the B Lab facilitated a meeting between Roberts and an executive at Organic Valley, a nationwide farmers cooperative. And after posting a question about finding financing for growth on a listserv, Roberts received an in-depth response from Xavier Helgesen, one of the founders of BetterWorld Books, which left Roberts “starstruck,” he says. “All that mind power — that’s what does it for me, the access to all those kinds of people.”
Barkwheats has seen tremendous growth in its year-and-a-half existence. Distribution of Barkwheats products has grown from 150 stores to an anticipated 600 by the end of August. Last year, the company brought in $15,000 in revenue; so far this year, it has netted $17,000, and Roberts says it’s on track to bring in $95,000 by the end of 2009. That growth means it’s time for Roberts to move his operation out of his home and into a new facility in Bucksport.
And while Roberts doesn’t attribute all this growth to his company’s B Corporation status, it has helped the company gain positive exposure. “When I talk with people about what [B Corporation] is, they really become more interested in the things we’re doing and why we’re doing them,” he says. “People are starting to understand the kind of stuff B Corporation stands for, and that strengthens the relationship between the consumer and the company. It’s definitely been a part of our growth.”
Mindy Favreau, Mainebiz staff reporter, can be reached at mfavreau@mainebiz.biz.
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