B Corp | Andrew Davies
In conversation with Andrew Davies
B Corp is a certification for businesses that meet the highest certifiable standards of social and environmental performance as well as transparency, and accountability. These businesses form a thriving community that drives a global movement of people using business as a force for good. To date, over 3,500 businesses have been B Corp certified in 70 countries and 150 industries, and more than 100,000 companies manage their impact with the B Impact Assessment. In this interview we chat with B Lab CEO on creating a community of business that positively impact the world.
“Our global vision is to see an inclusive, equitable, and regenerative economic system for all people in the planet”
Full Podcast Transcript - Andrew Davies
Pru Chapman:
Hey, Andrew, welcome to the show.
Andrew Davies:
Thanks, Pru, thanks for having me.
Pru Chapman:
Now, I'm really excited you're here. The reason is because quite a lot of our listeners here are business owners and B Corp is just leading the certification space in good business. So a lot of our guests have also been B Corp certified and some of them for a really long time, like Stone & Wood, TOM Organic, Bellroy, and then also some of the newer B Corps like Bank Australia and Olli Ella. So, I feel like this conversation, from my mind, has been a long time coming and just something that our audience are so hungry to hear.
Pru Chapman:
In this episode, I'm really excited to dive and give our listeners both a deeper understanding not only of the how of B Corp but also some of the big picture, the community that people become a part of and the vision that B Corp and B Labs really has for business. So I was hoping that we could kick off with you describing B Corp for our listeners, what is it?
Andrew Davies:
Look, sure, Pru, and I'm sure having interviewed some of those great businesses that you got some great perspectives from real businesses who've undertaken this certification, because I think their stories are also really important in understanding not just what B Corps about but why people do it. But look, B Corps are businesses that meet the highest standards of social and environmental performance. They measure and manage their impact on the environment, on their local community, on their workers, their suppliers, and their customers, and they adopt governance models designed to hold themselves to account. So it really is a benchmark of performance.
Andrew Davies:
Probably the most significant thing to understand is that it's a holistic assessment of your business. It looks at every aspect of your organization not just a particular raw material or a supply chain issue or how you deal with your employees. The holistic nature of the process makes it both simultaneously very challenging but also fairly unique in the sense that not many other certifications take such a wide lens on a business.
Pru Chapman:
Yeah, absolutely. That's definitely the feedback that I've received. Well, actually, all the businesses that I've interviewed that have been B Corp, I mean they love having the certification and having the beautiful logo either on their products or on their website, but really they use as an auditing tool of their business. And that's what I love about it, is it provides this opportunity to really take a whole sweep across the business, get yourself a baseline, and then look at each area of business and how you can improve to really move yourself up and be advancing and striving to do better in those areas of social and environmental.
Andrew Davies:
Yeah, and I think that's a great way to look at it, Pru, is that sense of an architecture or a roadmap. In fact, all businesses are great at some things and have quite commonly simply not thought about other things. That's certainly feedback we get, is that we find people who go through the assessment say, "Well, it asked me some questions that I'd simply never thought of." And that's a great process to go through, especially for younger businesses who are starting up, but even for very longstanding businesses. And the longer a business has been around, the more embedded it tends to have it's way of operating, and it's always good to challenge that.
Pru Chapman:
Yeah, I couldn't agree more. For full transparency, right at the top end of this podcast, is that One Wild Ride and, of course, our parent company, Owners Collective, has just started the process of becoming a B Corp, which I'm so thrilled and excited about. We are a small business. We've been around for quite a while, but haven't had, I guess, the capacity or have just been growing so quickly in those years as well. So I guess we fit somewhere in between, that we've been around for a while but also using the B Corp process to look across our operations and say, "All right, let's take full stock of what's going on and where can we strive to be better." So I'm actually incredibly excited to be going through the process, and I'm sure I'm going to pick your brain on some of the pieces here.
Pru Chapman:
Just before we do dive right in, I'd love also, for our listeners, if you could clarify how B Lab fits in with B Corp, because you're obviously the CEO of B Lab. What is that relationship?
Andrew Davies:
Sure, so I'm the CEO of B Lab Australia and New Zealand. B Lab is a global organization who has developed the certification and who stewards the movement of organizations using business as a force for good. B Lab itself is a network of not-for-profit organizations. We're headquartered in the US, but we've really become a truly global organization. We've expanded globally by working with independent organizations, so B Lab Australia and New Zealand is its own entity. We have our own board and governance and financials. But all we do is work in partnership with B Lab Global to support the certification and the community of B Corps in Australia and New Zealand. It's not just certification, we work with B Corps on a range of different policy issues, occasionally on campaigns. But our core flagship product is very much the certification of businesses as B Corps.
Pru Chapman:
Great. I really wanted to clarify that because I think some people can be a little bit confused. So, the B Lab is really the engine driving behind that B Corp certification?
Andrew Davies:
Yes, correct. Look, like all organizations, we're having a look at our branding at the moment to try to make that a little easier to understand. But any certification, whether it's fair trade or organic, will tend to have some form of organization behind it that sets the standards and enforces the rules, and that probably the easiest way to think of the work that we do.
Pru Chapman:
Yeah, brilliant, brilliant. All right, well look, let's dive in here, Andrew. I'd love to, for our listeners, get a little bit of the history of B Corp. How did B Corp start?
Andrew Davies:
Yeah, look, it started off... The three founders were based in the US. Actually had a great story. They'd gotten involved together in starting a basketball shoe business, an athletic shoe business called AND 1. They built that business with a really strong culture of looking after their community and their workers. They built business processes and policies in it to take a wider view and to make sure that their business did operate as a force for good. They went through a really challenging process where when they sold that business, they found themselves obliged to affectively accept the highest offer on behalf of their shareholders. They knew that the party buying their business was effectively going to stop a lot of the practices that they were really proud of and felt were really integral part of the business.
Andrew Davies:
And that caused them when they'd finished that transaction, and they were obliged under US law to accept that highest price, they set back and after a period of time figured out that what they could do to make a difference in the world is help other businesses take that approach and challenge the rules and assumptions and culture of business that led to them having to sell under those conditions. That's really the driving force behind the certification. It started in 2007. We brought it to Australia in late 2012. The first B Corp here was the Small Giants organization. The people behind Small Giants, Danny Almagor and Berry Liberman were integral in starting off the first B Lab here. And since then we've grown pretty rapidly to be a community of over 300 businesses here.
Pru Chapman:
Wow. I didn't realize actually... Well, I hadn't heard that story of how it started, so that's so wonderful to put that context behind it, because it didn't just... How do I say this? It was just a theoretical exercise, it had actually come from business owners who had ridden that ride of business ownership themselves, and so did have a deep understanding of business. And then I didn't actually realize how quickly it had come to Australia, really from the US. It normally takes things a lot longer to migrate over the ocean than that.
Andrew Davies:
Yeah, look, absolutely. I think that's a really important point you picked on, Pru. The certification did come out of business people looking to do business differently not out of policy think tank or an academic institution. I think that has very much impacted the way we work with business and the fact that we've created a community of like-minded businesses around the world so quickly. I think a lot of that success is to do with the fact that we are of business. We are a movement of for-profit and for-purpose businesses. That growth, I think, is a real credit to the founders for sticking to the principles that they had established in starting their own business.
Pru Chapman:
Yeah. You've touched on a point that I really love there as well, is that it sits behind businesses that are for-profit businesses. So it's not about being a charity and... Not that there's anything with charity certainly, but it's for businesses who are still existing in a traditional business world, for some sense, but looking at, "Okay, how can we take that and make that better?" And I guess blur the lines between being this mutual exclusivity that we've experienced in the past, which is around either earning a profit or doing the right thing. We can bring those together, and I love that the B Corp Certification is supporting the union of those two.
Andrew Davies:
Yeah, look, I think that that's probably one of the most significant trends that we are both influencing and following in the same sentence there. But the idea of the role of business is a fascinating conversation. It was only 50 years ago, in fact, late last year was the 50-year anniversary of Milton Friedman's assay in the New York Times where he effectively built an argument that the role of a corporation is to provide returns to shareholders and that's about it. Of course, there was a lot more in that essay, but that has become the common paradigm that's influenced the growth of business for the last 50 years. But the reality of it is completely different and there's been a significant shift in that thinking in the last few years, a lot of it led by younger generations of people. We've often heard about millennials working in business. Well, now they're starting to run and own businesses, so that change of their world view is accelerating.
Andrew Davies:
But it's also a complete fiction, Pru. The idea that business has one purpose, to provide returns to shareholders, is nothing more than a fig leaf that get wheeled out when usually a CEO or a business itself has done something a little untoward and they're looking for justification to say, "Well, that decision drove returns for shareholders even though it negatively impacted perhaps the environment or a group of people or a community." And I think that that fiction is simply no longer sustainable, because the externalities of the last 50 years of growth are really coming home to roost. We see that not just in climate, but we see that in a significant rise in inequality around the world. We all know that people in businesses are not automatons, sort of rocking up to work every day to just drive shareholder returns.
Andrew Davies:
Business is the largest organizing principle we have for our lives. It's where most people get their livelihoods in different ways. We all rock up to work looking for personal fulfillment, as well as income, as well as camaraderie and lots of other factors. So the idea that business has this sole purpose, I think was never the truth, but I think we definitely need to challenge that assumption whenever we see it being wheeled out. Sorry, that turned into a little bit a diatribe there, but I think that if there's a common theme to our work, it's very much changing the culture of business. I see it as a critical exercise to get us heading in the right direction.
Pru Chapman:
I absolutely agree. I think you've touched on an important point there where you say that business really is the key organizing structure that we have in our world today. I loved everything that you talked about then, because it's almost as though business was incorrectly labeled, and so we started falling down a rabbit hole of business just being around to make financial returns to shareholders.
Pru Chapman:
The red flags are all around us, and it's as though we're sucking out now. This movement that's now being created, and it's almost a rebranding of business as a whole, if you like, that business really can be used as a force for good. It can make profit, but profit in so many areas. These metrics of success that we have can be reevaluated to also incorporate the way that we're treating our environment, not just stopping the negative influences that we have but actually regenerating our environment, re-enlivening our communities, the way that we treat our stakeholders. I think it's such a powerful conversation to be having, and I think it's one also, which I'd love to get your take on, that feels like it's growing at rapid speed at the moment. Have you noticed there in B Lab that the uptake of the B Corp Certification is increasing now?
Andrew Davies:
Look, absolutely. We were tested last year through the pandemic and the economic shutdown impact or consequence of that. Of course, we looked at what we do and said, "Well, this could be a challenging year because any business is going through questions of survival, and that means costs are going to be very carefully scrutinized." But what we found last year was that we saw a huge spike in demand globally. We saw more businesses coming to use our platform to measure and manage impact, and we've seen a growth in demand to actually get certified.
Andrew Davies:
I think that's a lot to do with in a crisis people look to all institutions to solve problems. I think that that was a trend that was very much already in place with people looking to businesses not just to do no harm, but increasingly, "How can my consumption, how can my spending actually help solve problems?" We see businesses who really articulate themselves to solving a particular problem tend to be very well supported. But we also see a growing expectation of all businesses that they're looked at through the lens of, "Well, I'm happy to support you, but what are doing for me in the world?" It doesn't just play out in terms of environmental issues, but clearly that's a very high profile and important lens to look at. So that demand is absolutely growing, and I see it very much as an ongoing trend. But that was a big test last year, and I think we saw the result of the pandemic being an increased expectation amongst consumers and people everywhere that business should be here to help.
Pru Chapman:
I think for business owners as well who actually... It was a great time of re-evaluation. Society, in general, took to the time to pause, particularly as we all went into lockdown and social events went out the window and off the calendar and all the things. It gave us that moment to really drop into ourselves and just re-evaluate why am I here, why am I doing this? I know personally for me as a business owner, that was really, I guess, the time and the pause and the breath that I needed to say, "You know what? We need to just reprioritize our time and what we're focused on." Personally, that's when we committed to the B Corp process.
Pru Chapman:
Certainly a lot of negative things are happening with the pandemic, particularly loss of lives, of course. But from a business perspective I think it did provide that pause that we needed to get out of playing the game of more, which seems to be the default, old school way of businesses, and take the opportunity to re-evaluate, re-assess, and realign to why we're doing what we're doing.
Andrew Davies:
Yes. Look, I think as well as that pause effect, giving a bit of space to think. I've had quite a few people describe the pandemic in many respects as a great acceleration of some trends. Some obvious examples, things like working from home or the move to increased telehealth with medical service providers, which has been one of those technologies that's been around for years but the pandemic really accelerated the adoption of it. Some of those things will not go back to the way they were. I think if there's some positives out of what's been an incredible human catastrophe, some of those accelerations are certainly going to be, I think, good outcomes for society, provided we seize the opportunities to keep those good things and continue to ask ourselves the questions that need to be asked about the sustainability of what we do in business.
Andrew Davies:
So, yeah, look, I think that pause factor is certainly a big one as well. It gave people the time to think about making change in their businesses as well.
Pru Chapman:
Absolutely. Also, the millennials and the Gen Zs that are coming up behind them, they're just not going to stand for business as usual. They're so engaged at the moment. They really do consider themselves as global citizens, and they're particularly concerned about societal issues and environmental issues. It is just so wonderful to know that that's the wave of energy that is going to be supporting business, that's purchasing from business, that will really be sitting behind that drive of change.
Andrew Davies:
Absolutely, couldn't agree more.
Pru Chapman:
Awesome. Awesome. All right, so I want to tell the story of B Corp a little bit further. Now, you did mention two very important names here of Danny and Berry who sit behind Small Giants. I think they definitely deserve a shout-out here for, number one, bringing B Corp Certification to Australia but just with all the work that they do with small Giants. It's just absolutely incredible. A lot of the businesses that they sit behind and really are just such fore-founders in Australia in this movement of business for good. So I did want to just pause and give them a little hello and a little shout-out. Hopefully they are tuning in. Then I also wanted to ask you though, Andrew, when did you come on board in this journey of B Lab into Australia?
Andrew Davies:
Sure. Well look, I had the good fortune to start in this role about a year and a half ago. It's been a pretty spectacularly challenging year and a half. Just as I was getting settled in, obviously, a lot of things changed last year. Look, it's an absolute privilege to have this role. Probably the best thing about it is this community of over 300 businesses in our region that are just so incredible to work with and to be able to connect with people across different industries who are united in the values that they bring to their businesses is a big privilege.
Andrew Davies:
I've come from a background of working in lots of different businesses. I started off in law firms. I moved to corporate roles. I then stepped into run a family business when my father in law became ill. That turned into a 10-year journey, and I started businesses with my wife, and we worked together for years. I've started and failed spectacularly in small businesses. I've got them as great MBA experiences, where you spend a lot of money and learn a lot. And so I had a fairly unusual pathway but I think that's turned out to be quite helpful in terms of both working with diverse businesses. But also, we have our own challenges at B Lab. We have to make our own organization both sustainable in every level but including financially sustainable. That's a difficult environment for a small not-for-profit.
Andrew Davies:
So it's been a really great learning curve for me stepping into the world of running a not-for-profit, but even though we're a not-for-profit, we're very much a movement of businesses. So it's a little bit unusual the circumstances I find myself in, but I couldn't have more fun.
Pru Chapman:
I have to admire your honesty there. I think all of our listeners just probably let out a big exhale. "Listen to him, did you hear about that? He said that he failed spectacularly." I mean I love the ride of entrepreneurship and business ownership. I think if we could all can this concept of failure we'd progress a lot faster and a lot quicker. I mean, a great business person is someone who has depth and breadth in business, and that means businesses on the rise, businesses on the floor, how do you scrape yourself pack up and start again? It's all learning, isn't it?
Andrew Davies:
Look, it is, and I think one of the things that you get from a bit of experience is the perspective of what drives successes is that combination of, of course, your own smarts and hard work and the energy that you bring. But it's equal parts good fortune. It's the serendipitous connections that you make and what other people choose to bring to your success. And then also it's wider macro-economic factors. So often if you find yourself in an industry where the tide is going out and everyone's in decline, it's awfully hard to be a success. You can convince yourself that, "I'm going to be the smartest person in the industry and outperform." But if all ships are going down, there's that old analogy that you're going down too, you're just might be going down a little slower.
Andrew Davies:
I've had all those perspectives. I think the biggest one that you realize as also you get a bit older is that it's the people around you that really drive your success. We all fool ourselves at times into thinking that we can be the sole hero that will determine successful outcomes, but I've had some really good fortune to be surrounded by great people. That's properly very much the case at the moment. It's amazing being in a community of businesses who very much want to see us succeed. It's quite humbling every day to be supported in that way.
Pru Chapman:
Absolutely. Now, to round out our initial conversation here with the development of B Corp, you do work with a range of different partners. And so I was just wondering if you could give us just a top-level overview of how that fits in, because I believe there's sponsoring partners. There's different sorts of partners. So can you just round us out with them?
Andrew Davies:
Sure. So, we've had some of large B Corp like Australian Ethical and Beyond Bank who've really got behind us and provided very generous financial support to help our operations grow. The challenge with B Lab is that as we start off as a small community, our financial model doesn't really sustain us, and as the community grows it becomes more sustainable. So in the early days, some of our larger early B Corps were critical in going well and truly above and beyond not just paying their fees for certifications but effectively sponsoring us as well.
Andrew Davies:
We've had small B Corps in the services sectors like Mkt. Communications. They're our PR urgency. Harvey's done a lot of work with us on marketing and Quiip is this brilliant organization that helps businesses with building community. Alice [inaudible 00:22:51] has been a really strong advisor to us. So they're all B Corps who effectively go that extra mile. We try and provide them with a little bit of credit in exchange for that and call out their good work.
Andrew Davies:
Last year we worked with Torrens University. It's not well known that there are tertiary institutions who are also B Corps. So Torrens University was part of a global tertiary organization called Laureate Education, who are a certified B Corp. One of their teams helped to create an online course for us, so that was a brilliant contribution and a very generous one. We've been able to develop a short online course that's all about introduction to B Corp. The 45-minute online course is a very effective way to dive in a little deeper, and you can find that on our website. It's probably the best way to understand what is a B Corp. There's a few interviews with Australian B Corps. And it's a proper learning platform, so it'll give you a few Q&As on the way to help you learn. Those sorts of partnership are really important to helping our organization grow its impact.
Pru Chapman:
That's incredible. As you're talking through that, I can only think what a beautiful demonstration and example of everything we've just spoken about, the business not just being about the profit but rather as this community-building tool, seeing these resources in our community and supporting one another and investing in returning in different ways. I think that's a great example.
Andrew Davies:
Yeah, and it's probably the thing that struck me most joining B Lab and working with B Corp is how quick they are to collaborate and work with each other and open source, particularly, policies and practice. So the B Corp community is very quick to share with each other when they develop an approach. Whether it's an HR policy or an approach to going carbon neutral, they're very quick to share and work each other. That's great particularly when you see it within industries, where you've got theoretical competitors who are both B Corps, they're still pretty quick to work together. And that's just a lot to do with values, is that idea that you don't win in business by just beating the person next door. You win by creating opportunities for your whole industry.
Pru Chapman:
Absolutely. Awesome. All right, well, I'm going to shift our gears a little bit, Andrew. I want to shift to talking about what it really means to be a B Corp. I guess in your opinion it covers off on everything we've just talked about. But why do you believe that businesses should certify to become B Corp?
Andrew Davies:
Yeah, so look, I think at the highest level, thinking about all businesses, it really is to show the value and the role of stakeholder engagement and the idea that businesses exist to both serve and rely on community. I think that changing the culture of business is probably the common alignment across all B Corps. But when it comes down to an individual business, we typically talk about some key benefits. The obvious one is around differentiation. So you'll find that lots of businesses talk about doing good or their sustainability programs. Going to a third party certification allows you to not only talk about it but be able to say, "Look, we're different because we're actually certified. We've actually got a third party confirming the things that we talk about." And that's often really critical in certain industries where everybody talks about being green or being good for community, sometimes you need to be able to show that.
Andrew Davies:
Another aspect is benchmarking. So once you get certified, you can really benchmark yourself against other B Corps across a range of factors. Building community, staff retention and engagement, very big factor, especially in businesses like professional services of all forms. We find that B Corps get sought out by people who come to them because they're a B Corp. The war for talent is always ongoing, so certainly attracting and retaining staff is a huge factor. Sometimes we find some B Corps are just looking to hold themselves to account, so through that saying, "Well, we've had programs and initiatives for a number of years, but we really want to put our feet to fire and make sure that they are the best, they are as good as they can be."
Andrew Davies:
That accountability can be internal as well. The reality is for an individual it can be one of those factors, it can be a mix of those factors, or it can be something a little bit different as well. But they're probably the most common value drivers that we talk about.
Pru Chapman:
Absolutely. I think that really covers everything. It's internal as well as external and also future-proofing the business as well. I mean, we know with Gen Ys and millennials that they really are looking for a greater sense of purpose at work. They're redefining what it means to be in the workplace. I know that with the external certification that B Corp provides, it just naturally grabs attention. If you land on someone's website and you see that logo, which is so simple and so distinctive, it just says so much about that business, the level of transparency with which they have and just their strive to do better.
Andrew Davies:
Absolutely.
Pru Chapman:
Brilliant. What types of businesses are in the B Corp community?
Andrew Davies:
The short answer is all types. We've got large listed companies like Kathmandu, Australian Ethical, and Synlait New Zealand, a big milk nutrition company. And then we've got small businesses across thousands of industries. We've got businesses like [inaudible 00:28:16] and Applewood Distillery in the Adelaide Hills, they're a wine producer and a distillery. We've got architecture practices like Clarke Hopkins Clarke. We've got agencies like Mkt. Communications I mentioned before. We've got financial institutions like Beyond Bank and Bank Australia and Co-operative Bank in New Zealand who just certified a few weeks ago.
Andrew Davies:
So really we've got all company types, from private to listed to co-ops to customer-own entities, to sole proprietors, really virtually any type of business and we've got a very wide spread of industries. I think the typical numbers we quote are... There's something like probably still 70 or 80% of that B Corp community tends to be small to medium businesses. But we've absolutely seen a trend in recent years towards much larger businesses seeking out certification and that's a global trend.
Andrew Davies:
Probably the biggest factor in the evolution of our work is redesigning the certification to work across so many industries. There's about 85 different forms of the assessment. It's designed to adapt to the nature of your business and your geography. I sometimes say it's designed to please everybody so it please nobody. That's definitely a challenge is that sometimes you find yourself answering questions that you might think, "I'm not sure it fits." But when you understand that diverse community of businesses that puts it in a bit more context.
Pru Chapman:
Now, that's actually really interesting that you've mentioned there that 70-80% are small to medium-sized businesses. Because when I have the conversation around becoming a big B Corp with a lot of the businesses listening to this podcast, they quite often think that they're too small to certify. So could you speak a little bit to that?
Andrew Davies:
Yeah, look, absolutely not the case. There's a fantastic business in Geelong near Melbourne where I live called Cherish Pets. Alicia Kennedy runs that business and she's a vet. To our knowledge, I think she's still the only B Corp certified vet going around. And she got certified when she was a sole practitioner. She's incredibly passionate person about animal welfare but also the role that pets play in our lives. She's a brilliant story. But she also explains how the certification for her... She got certified when she was really just one person. But as she grew her business, she found that was a useful architecture for her think about, "Okay, now I'm employing people, so what sort of policies and practices should I have in place?"
Andrew Davies:
And I think it's good to understand that if you're even the tiniest of one-person businesses, as you're doing the assessment, for instance, the section that asks you questions about your workers, your employees, a lot of that will be not applicable. But then the assessment has an algorithm that effectively re-weights other questions. So you're not penalized if there's questions that simply aren't relevant to you. The other questions are just re-weighted. So really encourage anybody in any business size or shape.
Andrew Davies:
Probably the only point worth making there as well is that we do look backwards. So the assessment looks at your last 12 months of trading is where most of the questions focus. For startups, we do have a rule that you need 12 months of trading in order to get certified, but that doesn't mean you have to wait until 12 months of trading to start the assessment. It just means that if you actually apply to get certified once you've been using the tool, you need to have that 12 months trading. We typically tell startups, "Look, feel free to start using the platform straight away, it's free. And then maybe hold off pressing submit until you've got nine or 10 months trading behind you. And then the passage of time through the assessment process will see you took over that 12 month threshold." So there's a slight nuance there for startups, but otherwise it's any size or shape is just fine by us.
Pru Chapman:
That is so great to hear, and I can almost as this podcast goes live hear people typing in the B Corp website, now having that information that they can certify as a really small business. I love that you've described there about how this can provide an architecture forward as businesses grow. So listeners, please jump on it. You're never too small, and good to make that line in the sand of 12 months' trading, I think then there's enough information to go off. But that's just so wonderful to hear because particularly all of the B Corp that I have interviewed, and I quite often ask them, "When did your sustainability journey start?" And they will all... Not all of them actually, I shouldn't say that. A lot of them will say, "We set the guiding principles in place very early on." They quite often also say, "It wasn't till we were five years into trading or 10 years into trading that we could really give back as much as we wanted to or really contribute to our community in the level and the scale that we wanted to. But because we had those foundations in place right from the start, we always knew where we were going. We always knew that that's the business that wanted to be."
Andrew Davies:
Yeah, look, it's a truism of any business that creating change is hard, so the earlier you can embed principles, the better. But equally, we're talking to 100-and-something-year-old family businesses that are looking to explore certification. You can come at it from the other end as well. I stress with startups as well that... Obviously, a startup is just an insane amount of work chasing your tail. It can sometimes seem counterintuitive to think, "Actually, I'm going to stop chasing that new revenue that's going to keep me afloat and start worrying about a certification."
Andrew Davies:
Of course, we understand that, and I think any businesses has its own journey. But building an architecture from the ground up will always help you down the track.
Pru Chapman:
Excellent. Excellent. All right, well now we really have to dive in here, Andrew. I would love to just talk a little bit about the process of becoming a B Corp. Now, we don't want to get too into the nitty-gritty because, of course, you do have a fantastic website and I love that you just referenced that that course that you just developed as well for people to get a better insight. But if you could, just top level, if you could talk us through the process of what it means... or sorry, the way a company becomes B Corp certified.
Andrew Davies:
Absolutely. I'll try, as you say, keep it to the key points. So, in terms of the certification itself, there's three fundamental requirements. One is the performance requirement, which is all about this online assessment. We call it the B Impact Assessment. It's a free online tool and you can find your way through the website. Essentially, it's a giant survey. You answer all the questions and the system will allocate points that do have some technical aspects behind the scenes that determine those point allocations bases on your business. And you need to get to an 80 point benchmark out of a total that's somewhere around the 200 point mark, depending on your individual business.
Andrew Davies:
Now, that doesn't sound like a lot, 80 out of 200, but most businesses land somewhere in the 50s. I remember putting my business through it when I was interviewing for this role and I got a dreadful score in the 30s and really questioned what I was doing with my life. But don't be discouraged, you really just need to approach that assessment honestly, don't be too harsh but don't be too generous, and get a sense of what is my baseline. Then you go through a process of identifying and the platform can deliver for you some improvement report tools that really help you identify what's the low hanging fruit, what are the quick chances we can make to improve. That's often things like changing our HR policies or something like that can really earn you more points.
Andrew Davies:
So getting that 80-point benchmark is what we call a performance requirement. The second requirement is a legal requirement. This is possibly a deeper conversation for another day. But businesses in Australia, not yet New Zealand but in Australia, need to adopt some changes to their company constitution that do two things. Firstly, they embed a purpose clause that says, "The purpose of this business is to make profit whilst delivering an overall public benefit." It's a fairly vague statement when I put it that way, but the idea is just to directly challenge the shareholder primacy principle and make it clear in what is effectively your agreement between shareholders and management that the purpose of the business is not just to make profit but to deliver a benefit. It does not mean that you have to make certain profit ratios or anything like that.
Andrew Davies:
The second clause is that in making key decisions we're going to think about stakeholders that we impact. That's our workers, the environment and our community, alongside shareholders. Again, it does not say that you have to make certain weightings or it doesn't tell you what outcomes you need to get to, it just says, "In making decisions, we're going to think about our impact." To be honest, most businesses considering be B Corps, they're already this, they just might not have documented it in a board meeting, they might not even have board meetings, and that's fine too. The idea is to create a long-lasting agreement between you and your shareholders, which sometimes that's the same person, about the way in which you're going to run this business. That legal requirement's really important because it goes to that broader question of changing the culture and practice of business for the longterm and there's heaps of resources on our website that go into a lot more detail.
Andrew Davies:
The third requirement is transparency. This is critically important but fairly easy to meet, because what we do is publish your assessment result on our directory. And you can go to our directory and see any B Corps resulted. We don't publish any of the information you've given us in the assessment. We publish your score and a high level breakdown. So that transparency commitment's really important to be able show that result. To be honest, it's not a challenge because most B Corps are pretty proud to share that. So it's about the performance requirement, the legal requirement and transparency.
Andrew Davies:
I could talk all day about that legal requirement, it's a really fascinating area of public policy. Companies when they first started were all designed around a particular purpose. Some of the earliest companies where licensed by the English Crown to go rape and pillage in the East Indies, and that was their sole purpose. There's a really interesting history to companies. We've now evolved where companies can do absolutely anything they want. In exchange, you get limited liability and different tax treatment. So what we're saying is that let's get serious about what companies should be about and start to restate a purpose and a stakeholder governance commitment.
Andrew Davies:
Those three requirements are the necessary parts of it. Perhaps worth just mentioning quickly what the assessment platform asks you about. There's five key areas here. It asks you questions on five topics; governance, so how your business is organized, its mission, its accountability structures, your workers, so a lot to do with your HR policies and practices and what those practices do for your workforce, a lot of questions around community, that really evaluates the community impact that you have, including topics around diversity, job recreation, supply chain relationships, charitable giving is a big topic here. Then the fourth area is environment, and this is probably the most self-explanatory. It dives into your environmental policy and practice and your impact on the planet.
Andrew Davies:
And then the last of five question topics is around customers, but really goes to your business model. Some businesses are just designed to be fairly traditional businesses, like a law firm for instance. Other businesses are actually designed to really tackle a problem. So you might have a business that takes recycled material and turns it into active wear. Where you've got a business model like that, is what we call an impact business model, you'll typically be answering some questions in the customer section. So that's governance, workers, community, environment, and customers are the five key topics and the questions are all organized under those. You navigate your way through that on our B Impact Assessment platform. So a lot of information there.
Pru Chapman:
I think that that is a fantastic overview, and also just puts some perimeters because a lot of our listeners, again in the conversations that I have had, really keen to become B Corp certified but it seems big and giant and how are they ever going to navigate their way through it. I think it's lovely how you've broken that down quite simply. Also, coming back to an earlier point where you said with smaller businesses that if some of those areas aren't applicable to you, like you don't have staff per se, that that part will essentially close down of the assessment and that the remaining four areas will be weighted differently. Is that right?
Andrew Davies:
Yeah, correct. The practical guidance we give businesses is that it's best to tackle the impact assessment with someone relatively senior who understands the whole business. If your business is a bit bigger and more complicated, maybe put a project team together where you can get people from different departments to tackle different parts of the survey and you can have multiple users. The big tip is don't give it to the summer interns, you'll probably end with a score of 180 out of 200, because they simply don't know the businesses and they're probably tuned to be optimistic. But equally don't be too hard on yourself. What we find is there's typically three responses. A question might ask you about a particular practice and you might be absolutely a powerhouse in that area. So let's say you're a fully carbon neutral already, you've got it documented, in fact, you've got your carbon neutrality certified, documented, it's tick the box and, "No problem, I've got the documents if I'm going to have to show them."
Andrew Davies:
The second area is, "Well, we're carbon neutral but, geez, we've never actually been certified, and I don't think we ever wrote down what we do. We just did an assessment a few years back and now we know we're carbon neutral." Under that position you might be saying to yourself, "Well, I'm going to tick the box that say I am, but I've got a bit of work to do because I know I'm going to have to get some documents together to show that." And then the third area might be, "We never even thought about going carbon neutral or maybe we've thought about it but we've never acted on it." So you're not going to earn the points there but you might make that question as an area that you know you're going to work on and come back to.
Andrew Davies:
It really varies for businesses but we often see businesses that have really great practices and the problem is they haven't documented it. So part of certification is this verification process. It's like an online audit. A sample set of your questions will be selected and you have to actually show our auditors that you do do these things. So that's where the documentation comes in. But an issue for much later. Don't worry about that in the first go. Don't get to bogged down in chasing documents, just really focus on working through the assessment to get a sense of where you're at.
Pru Chapman:
James Perrin actually gave me some brilliant advice. James Perrin, here's one of our past guests and also the sustainability manager at Stone & Wood. He said, "Play to your strengths in that assessment." He said, "For us, we do environment really, really well, and so that's actually where we get the majority of our points." So look at what you do have in place and where you can document it and when you can really score some wins early on and make note of what you are already doing well and keep moving through it in that way. I think that was just a nice starting point and a good tip from James, who's obviously been integral in taking Stone & Wood through that process.
Pru Chapman:
So I guess this just leads onto a secondary question, and that is around B Corp consultants and just whether you see is it best to do it from inside your own business or to have a consultant give you a hand on it. How do most people go through it or is there pros and consumer to either?
Andrew Davies:
Yeah, look, it's a great question, Pru. The reality is it depends on your business and where you're at. We've just actually launched a new cohort of B consultants, where we're helping accredit consultants by giving them a high level knowledge of the assessment process. But the reality is that it will depend on, coming back to James' point, where you want to create change in the business. If you want to really massively improve your environmental performance, yes, there's a growing pool of consultants who can help you with your emissions neutrality or if you're a manufacturer you might need to dive really deep into sourcing a particular raw material and you might need a specialist consultant in that sector.
Andrew Davies:
So the nature of the consultant will depend a little bit on your business, but plenty of B Corps have got there with no external help at all. Sometimes they put a project team together. You don't need a sustainability manager, you can do it with your existing team. It really depends, I guess, on the nature of the changes in your businesses that you either want to take on or need to take on to achieve that performance benchmark.
Pru Chapman:
Great advice there. Great advice. That really wraps up my questions on B Corp Certification. I'm absolutely thrilled that you were able to talk us through that, Andrew. I think it's so important to, as I said, get a scope on the community of B Corps and also some of that nitty-gritty and how does this actually work. As we were just talking about, there's huge interest in B Corp Certification at the moment, and I imagine that's just going to grow exponentially this year in 2021 as business refind their feet after what was 2020. I mean, what's next for B Corp?
Andrew Davies:
Yeah, so look we really do have a focus on helping exactly your listeners, people who are running or owning or working in businesses that want to explore this. So we're building a lot of resources that we're steadily trying to get online. That was our big change last year, is that we've developed a lot of our material to be online friendly, a lot of our workshop. We've built this B consultant program to make sure that B Lab itself is not the only organization that holds the knowledge. We're very keen to be open source and to empower other people to help businesses as well, otherwise, we become the bottleneck.
Andrew Davies:
We want to be working with 25,000 businesses in our region over the next five years, and that number is focused on thinking about where's the tipping point, where there's enough businesses who are measuring and managing their impact that it becomes a very normal thing to do. So not expecting 25,000 B Corps, I don't think we would have the capacity globally to do that for our region. But if we can achieve that and have 25,000 businesses using our tools, then I think we'll start to see some real change.
Andrew Davies:
So for us it's really our core business of supporting business, directing them towards our tools, providing education and access to specialist consultants. That's really all we're really focused on. We do have a broader goal as well of really getting more companies to consider embedding stakeholder governance principles into their legal structures. You don't have to be a B Corp to that, and that's a conversation that we'd love to have with academic institutions and government as well. When you're tackling cultural change, you really need to think about it on multiple levels and the reality is we're trying to change an economic system from within. I think that that means you've got to work with players within the system as well. So we're pretty excited about some partnerships that we're developing with academic institutions and government to really continue the conversation about the role of business.
Pru Chapman:
That sounds incredibly exciting. I can't wait to hear more about that. And then so, Andrew, I guess final question before we cut into our rapid fire One Wide Ride question is, what's the big vision for B Corp global?
Andrew Davies:
Well, look our global vision is to see an inclusive, equitable, and regenerative economic system for all people in the planet. As I mentioned, our work is around improving the culture and practice of business to get to that outcome. We just went through a pretty comprehensive exercise with our global network last year to try and more clearly document our theory of change, to make it clear, as much as possible to draw lines between the work that we're doing and the outcome that we want to achieve.
Andrew Davies:
What excites me is that I think you start to see micro-economic systems really build on these things. You see cities start to think about, "How can we make our city a sustainable city?" or even hyper local communities where there's enough businesses that have a common value's frame work to really think about this. I know up in your part of the world there's a lot of incredibly aligned businesses that are looking to improve their community as a collective. So I think that that culture really exists in lots of small places. It's about getting that to a point where the norm for business is very much having a positive impact. And why would you go into business, Pru, if you weren't going to have a positive impact in all that you do? What right do we have to start a business and make some private gains if it's actually causing a negative impact somewhere else? So doing no harm is important, but unleashing the power of business is incredibly exciting. I mean, we've got global organizations, global businesses that have more money and more reach than plenty of countries now.
Andrew Davies:
On one level, that's absolutely terrifying, because they operate across borders with very little restriction, and regulation has a really important role to play. But it's also really exciting because we know that business is an organizing structure that can solve problems often faster than government can. Whilst I'm a big supporter of more regulation in the role of government, we cannot rely on it alone to solve problems. Businesses that are increasingly being designed to solve problems just are so exciting when you see people using a profitable business model that is also going to solve a problem. So businesses like Who Gives A Crap and the work that they did through the pandemic when we had those crazy toilet paper crisis, they are brilliant. They ended up delivering more toilet paper, which ultimately serves their mission of improving sanitation in the developing world. Businesses that are really well articulated to solve problems, that gets me very excited. I just want to see a lot more of them.
Pru Chapman:
What a great place to land at the end of our interview. I mean, that is the whole reason I do what I do both in One Wide Ride and in Owners Collective as well, is that we can use business as a force for good and go well beyond what's been done now and also much faster as well. I think, as you alluded to earlier when we were talking about solving problems, it does come from a multi-stake holder opportunity. We need to be coming at with governments, with charities and businesses. Business is right on the tidal wave of it, and it just gets me so excited as well. I think Who Gives A Crap is a great example. I think it was $9 million that they donated to sanitation around the world, which is just absolutely massive. So it's incredible and really just in a glimpse of a moment showed us what's possible when you do have these foundations in place and your through north in the right direction.
Pru Chapman:
Andrew, thank you so much for joining me. To wrap this up, I'm going to ask you some of our One Wild Ride rapid fire questions. Are you ready?
Andrew Davies:
Sure.
Pru Chapman:
Righty, let's go. Tea or coffee?
Andrew Davies:
Coffee.
Pru Chapman:
Great. Faith or free will.
Andrew Davies:
Free will, I think.
Pru Chapman:
Do you have any kick-ass daily habits in place?
Andrew Davies:
I'd always swore that I was not a morning person, but through the pandemic and our lockdown in Melbourne, I started a combination of exercise and yoga first thing in the morning. I surprised myself not only in being able to stick to it, sort of getting up really early to do that, but just how good it's made me feel. So never believe that you're a certain type of person and in fact, I've now declared myself a morning person. That probably my most useful habit at the moment.
Pru Chapman:
Wonderful. Wonderful. Now, this is a hypothetical question of the times, but I do love asking it and hearing the answer. So, if you could jump on a plane tomorrow and go anywhere in the world with anyone, where would you go and who would you go with?
Andrew Davies:
Geez, that's a fascinating question at the moment, isn't it? Something we've taken for granted has just been taken away from us. But, look, I'd be sitting in Rome with my wife in a heartbeat drinking a coffee and just absorbing that incredible Italian culture.
Pru Chapman:
Me too. I'd be at the table next to you. Okay, finally, to finish this off, Andrew, is there... Or who else would you like to see me interview on the podcast?
Andrew Davies:
Yeah, look, I mean, you've done some fantastic B Corp interviews and I just love you to keep doing them because they're incredible stories that need to be told. There's always more, so there's a couple in New Zealand, Miranda Hitchings and Jacinta Gulasekharam. They founded this incredible business called Dignity New Zealand which is focused on getting period products to women in need throughout Aotearoa. They work with businesses to get this done, and they're a business themselves. It's just such incredibly passionate young women who are doing really important work. So I'd love to get their story told.
Andrew Davies:
But then I'd also like to get some counter views. I mean for you, geez, if you could land someone from the Business Council of Australia. They do some really important work but they often tend to reflect the traditional view of the role of business. I think we need to really start to bring different perspectives to this conversation as well. So there's a couple of very different ones for you.
Pru Chapman:
Yeah, great suggestions, actually. I'd never even thought about having someone on the podcast that might counter my point of view. That's probably a good thing to do. That's a great suggestion, Andrew. You wouldn't believe it, but with the Dignity Project, they just reached out to me last week, so I am looking to have them on the podcast which will be wonderful to hear their story. They're doing some absolutely incredible work.
Pru Chapman:
So, Andrew, thank you so much for joining me. I could sit here and talk to you all day. I would just encourage all of our listeners to head over to the B Corp website, check it out. There is some wonderful tools and resources there for you to get started on the journey. We're all in this together, so becoming that community of business do-gooders, I think is incredibly powerful at the moment. Andrew, thank you so much.
Andrew Davies:
You're most welcome, and that's bcorporation.com.au or .co.nz. If you find yourself in our global site, bcorporation.net, just try and get our local site because you find information that's a bit more relevant to our region. But if you're a listener who's somewhere else in the world, head to bcorporation.net.
Pru Chapman:
Excellent. Head over there, folks. It's packed with resources, and particularly that 45 minute training that Andrew mentioned earlier. Jump on it. All right, folks, we'll see you here next week. Thanks again.