Update: HQ Raleigh achieved B Corp status in March 2016, joining 31 other B Corps headquartered in North Carolina. It continues to work to make the certification process easier for the 140+ companies in its space.
The story below was originally published December 10, 2015.
The paper towels at HQ Raleigh are made from recycled material. Members stir their fair-trade coffee with uncooked spaghetti noodles. The toilets use as little water as possible. And the amenities for members include bike parking, showers and free locally-made beer.
It’s all part of a two-year quest to earn certification from a growing national movement called B Corps and recognition for valuing profit equally with how the startup campus treats people and the planet. And unlike the top-down approach societies and governments typically use to force positive business practices, the B Corp movement is led by the businesses themselves.
That’s why HQ Raleigh is partnering with the non-profit agency that certifies businesses as B Corps to train more local companies how to implement the practices, and why it’s helping to bring a national gathering of B Corp members to the Triangle next year to celebrate the movement.
The message is resonating and North Carolina is positioning itself to become a leader of the burgeoning movement. Besides the startup hub, Seventh Generation’s Raleigh-based CEO, the insect repellent maker Murphy Naturals, a restaurant known for its beers and burgers, and nearly 30 other seemingly unaligned businesses have coalesced into an active community of B Corp companies. And more than 300 people interested in the movement gathered over the summer to advocate for and eventually win a bid to host B Lab’s annual conference retreat, the “Champion’s Retreat,” coming to the Triangle next October.
The self-proclaimed “movement” is centered on the premise that businesses can benefit society as much as they can benefit from the profits they earn. And nationally, notorious businesses like Kickstarter, Etsy, Ben and Jerry’s and Patagonia are leading the charge.
B Corps have been a hot topic in Triangle startup community in recent months too. From a panel discussion at the Innovative Women’s Conference at NC State in November tova presentation at a recent RTP 180 networking session and a workshop topic at UNC’s Global Entrepreneurship Week, local leaders are proactively educating and recruiting other businesses, entrepreneurs and individuals to consider partaking in the B Corp movement.
What is a B Corporation?
B Corporations (B Corps) seek to “redefine success in business” by using the markets and businesses as “a force for good.” The non-profit driving the movement, B Labs, was established in July 2006 and had already bestowed its first certification by that year’s end. Ever since, it’s been leading the charge to change the way businesses do business around the world.
At its core, the B Corp movement is centered on the premise that, “business should be a source…and a driver of social good,” as Chad Dickerson, Etsy’s CEO described in a 2015 speech.
While this concept sharply contrasts with the traditional profit-driven business model, it doesn’t negate the importance of profiting in business. Instead, it challenges the notion that profits and social responsibility and sustainability are mutually exclusive. Much like the social entrepreneurship movement, B Corps believe that businesses can be profitable and benefit society at the same time, and even be more profitable in the long run by creating a sustainable infrastructure.
To become a certified B Corp, a business must complete B Lab’s impact assessment, “to meet rigorous standards of social and environmental performance, accountability and transparency.” The assessment includes things like providing documentation on a company’s employee benefits, hiring practices and vendors.
Companies must provide answers and documentation for questions like, “what is your parental leave policy?” “who are your top suppliers?” and “do you have an employee handbook?” Once completed, a score is calculated and if between 80 and 200, the business is invited to join the B Corp community by signing a B Corp Declaration of Interdependence, a term sheet and paying an annual fee.
The assessment also serves as a benchmarking and planning tool for internal use and comparison to other companies. Liz Tracy, the director for community engagement at HQ Raleigh, says the assessment has been a “great guideline for us as we grow HQ, allowing us to ask questions we wouldn’t have thought about.”
That growth will soon lead to triple the square feet and number of member companies. To continue to grow thoughtfully, using the assessment tool to evaluate the impacts of each building material, new appliance or benefit offered to members is increasingly important.
Phillip Freeman, Murphy's Natural's founder, echoes the sentiment, saying, “The certification process made us aware of what we do well, but need to properly document…and (it) made us aware of opportunities for improvement.”
A certified B Corp should not be confused with a Benefit Corporation which is the official legal incorporation structure a business can choose in lieu of more traditional options like a Corporation or a LLC. In 2010, Maryland became the first state to pass legislation allowing benefit corporation structure.
Since then, 30 other states have passed similar laws. Despite repeated attempts, North Carolina has yet to pass a law adding benefit corporations to its existing incorporation structure.
The Rise of B Corps
In 2012, there were just 100 certified B Corps. Today, there are over 1,400 spread throughout 42 countries. This rapid increase could be a result of many things, but certainly is influenced by a few key drivers including more case studies that doing good is financially viable. There are also an increasing number of Millennials in the workforce, and they seem to care more about social and environmental issues. There’s also more consumer demand for sustainable, locally produced products.
Proof that B Corps and businesses focused on improving the social good can be financially profitable is found in examples like The Honest Company. Its' most recent valuation was $1.7 billion, earning it the prestigious title of “unicorn.” Or in the 2015 Inc. 5000 list, where 26 B Corps ranked among the 5000 fastest growing private enterprises.
In the Triangle, pasture-raised, fresh ground beef and made-in-house beer has made Bull City Burger and Brewery one of Durham’s most popular restaurants since opening in 2011. It was so successful that the team opened a sister restaurant called Pompieri Pizza in early 2014. In February of the same year, Bull City Burger and Brewery became the first restaurant in the state to become a certified B Corp, and the first brewpub in the US.
According to “The 2014 Millennial Impact Report,” sponsored by the Case Foundation, Millennials aren’t just a part of today’s culture, they’re defining it. And popular culture isn’t the only culture they’re defining, their preferences are heavily impacting workplace cultures. One of those preferences is a nearly universal desire to work for an organization where they can use their individual skills to help a cause. And 92% report wanting to work for a company that values having “a positive effect on the world.”
Millennials, and others too, also increasingly want to know where their products are coming from and how they’re being produced. Some are even willing to pay more for products if they know it has been produced in a sustainable way. The increase in companies like Conscious Commerce, which links brands to philanthropy, or sites and stores that curate hyper-local, handmade products exemplify the demand for thoughtfully made products and services.
B Corporations in North Carolina
The Triangle is home to 22 of the existing 32 B Corps in North Carolina. Others can be found in Asheville, Winston-Salem, Wilmington and even in smaller towns like Spruce Pine and Henderson.
North Carolina’s B Corps have formed an informal group with a strong organizing capacity called, NC B Corps. They spearheaded the campaign to bring the next B Corp Champions Retreat to the Triangle and organize other events to spread information about B Corps. Leaders like Seventh Generation’s CEO, John Replogle—whose charge to Seventh Generation employees to invite partner companies resulted in 200 new companies completing the assessment—were integral in bringing the retreat to the Triangle in 2016.
Next year’s retreat, which will take place from October 18-20th, is the eighth of its kind. Cities across the country compete to host the retreat that attracts over 300 members of the B Corp community each year. Two employees per member company are invited to attend the retreat and once there can attend conference sessions on emerging topics and themes, participate in community service activities, and celebrate the B Corps members who “most embody the spirit of the community” at an awards dinner.
According to B Labs, becoming a certified B Corp has its perks—it helps differentiate a business from its peers, protect the company’s mission, attract and retain talent, and participate in a community of international business leaders.
Freeman (pictured below) of Murphy’s Naturals says his company was already operating much like a B Corp before he became aware of B Corps. It’s helped validate an existing commitment to sustainable practices and that “it means something when you have something that can be verified.”
He says the team is proud of its certification and “shouts it loud and proud.” While Murphy's hasn’t seen an increase in sales from the B Corp certification yet, Freeman says that’s only due to timing. Sales rise and dip seasonally and B Corp certification was finalized at the tail end of the 2015 busy season (June).
Freeman offers benefits like paid volunteer days, a wellness stipend and funds for employees to contribute to charitable organizations. The company also donates two percent of its gross revenue to 12 charities including 1% for the Planet, Activate Good and Triangle Land Conservancy. Freeman cites the company’s mission and these benefits as the primary attraction for a recent key hire.
HQ Raleigh is still completing the certification process, but that hasn’t stopped it from spreading B Corp values and information to members. HQ has hosted several information sessions and launched a pilot B Corp clinic in February 2015. The clinic matched students from UNC-Chapel Hill, NC State and Duke with four HQ Raleigh member companies—Pendo, Learn Trials, Vaporware and Vital Plan. The students received course credit in exchange for helping the companies determine how to best accomplish different requirements found in the B Labs assessment.
For example, Pendo—which recently announced a major Series A raise—is working with the students to determine the best benefit plan to attract and retain employees as it rapidly scales.
Since HQ Raleigh has made B Corp-friendly choices about its real estate and amenities, members can earn points on the assessment just for being in HQ’s space. Vital Plan—which Tracy says is close to reaching the number of points needed to become a certified B Corp—was able to earn points because HQ uses local vendors (for products like beer and coffee) and implements sustainable practices like composting.
Similarly, Freeman says his team has already begun the assessment process for his forthcoming co-working space—Loading Dock Raleigh. He hopes the space will become the region’s hub for socially conscious entrepreneurs, non-profits or individuals and sees the B Corp certification as an essential part of that distinction.
How far and how fast the movement can spread is up to the companies that have signed on as champions and allies. And with competing interests like making sure your business operates day to day and staying ahead of competition, businesses in the movement certainly will face challenges in maintaining their own certifications and spreading the movement.
But they see it as critical to any future for their business, despite the pressures.
As Tracy says, the movement is “not just a hippy environmental thing, it’s (thinking through) how do you roll these better business practices into creating a better business to work for.”
*This story has been updated to reflect a change in dates for the Champions Retreat.