Why there’s a growing trend of employee-owned businesses wanting to become B Corps | EOA Big Read
Just under 10% of all B Corp businesses in the UK are now employee owned – but why are so many EO businesses wanting to become certified?
This is a question the Employee Ownership Association (EOA) wanted to explore further amid a growing trend of EO businesses meeting the “rigorous standards” put in place to achieve certification by B Lab, whose mission is for “business to be a force for good”.
In the last three years, both the employee ownership and B Corp communities have grown rapidly. There are now more than 1,000 EO businesses in the UK and 1,000 B Corp-certified businesses. And the success of these models is generating additional focus on what it means to be a responsible business.
Here, we aim to show the synergy between our respective models by highlighting EOA members who have achieved B Corp certification.
Insight is provided by:
- Annie Olivier, Head of Growth at B Lab UK, which certifies companies.
- Nic Ryan, Director of Colleague Support at One+All. The school uniform provider became EO in 2015 and a B Corp in 2020.
- John Baumback, Group CEO at Seetec, which provides services within sectors such as skills and education, employability, health, criminal justice, and social care. Seetec was already B Corp certified when it became employee owned in 2020.
- Kingsley James, EOA Board member and Executive Director at Emperor. He is a minority shareholder since its sale to an EOT in 2020. The creative communications agency was the most recent employee-owned business to be certified in October 2022.
What is B Corp?
Back in 2006, B Lab was created in the US with the mission to inspire and enable people to use business as a force for good.
The non-profit network wants to “build an inclusive, equitable, and regenerative economy” that benefits all people, communities and the planet, and certifies companies – known as B Corps – who are leading the way.
B Lab UK was launched in 2015 and is part of a global network made up of more than 5,000 B Corps from 86 countries and 158 industries.
“The movement was set up to galvanise business leaders to really challenge traditional ways of doing business,” said Annie from B Lab UK.
“One of the ways B Lab is doing that is through this B Corp certification, but we’re also stewarding a community of leaders who are collaborating across sectors thinking about how they can continuously improve and engage in collective action to have that widespread systemic and cultural change.”
Certified B Corporations, or B Corps, are companies verified by B Lab to meet high standards of social and environmental performance, transparency, and accountability. To become accredited, businesses have to score above 80 points in a B Impact Assessment.
What entices businesses to apply?
One of the things B Lab hears a lot from companies is that they’re looking for a “framework or roadmap” and that reasons for wanting to join the B Corp movement include:
- the assessment tool helping provide a “wholistic look” at an organisation’s purpose and impact;
- the third-party verified credentials;
- joining the B Corp community and sharing best practice with like-minded businesses.
John from Seetec shared that “because of the work we do as a social value business, B Corp was a natural fit for us. The concept of the triple bottom line of being responsible for the planet, being environmentally aware, but actually governing correctly and not just putting shareholder value at the heart of the business is really important.”
Meanwhile, since Emperor was founded in 1996, responsible business has been a core principle of the way it does business. Kingsley added: “I think over the last couple of years it’s become clear that involves a lot more than it used to. B Corp for us is just the guiding light, the thing that gives us a path to being a more responsible business.”
People, planet, profit
This concept of the “triple bottom line” – people, planet and profit – is something that comes up a lot when speaking with our members about the B Corp movement.
And Nic Ryan from One+All said: “Becoming employee owned was a lot about our ethos and our response to risk and the way that we want to make sure that all colleagues benefit from the business. Becoming employee owned was the real next natural step from really a big piece around culture and improving the culture and performance of the business.
“When we’d become employee owned, the business was secure, we could start to sort of perpetuate this great culture that we’d built and so B Corp was the next natural step from then.
“I suppose our mindset and logic was that if we care about colleagues, customers and suppliers as a responsible business then we’ll care about the planet too, because everything that’s happening with the planet has a real impact on people.
“As we start to think about future proofing the business, that triple bottom line of people, planet and profit is really key.
“There’s a growing demand from consumers and new recruits for businesses to care about the planet, and be more responsible and transparent, so it’s important to focus on.”
More than just a badge
B Corp certification is also a way to prove a company’s ethical credentials, with John explaining that from Seetec’s perspective, of working in public services predominantly, it “really is a badge to show that we do what we say”. He added: “B Corp allows external stakeholders to see that we go through a process to prove our values are embedded and intrinsic to the organisation we are.”
One+All promotes its B Corp status with pride and feels part of “something special”, but Nic Ryan insisted it was “never just about the badge”, but about adding value to the business and driving improvement – a point backed up by the fact B Lab says certification is “not an end unto itself”, but the start of the journey for continuous improvement.
And Kingsley from Emperor added: “We want to demonstrate that we’re a responsible business. We want our people, potential recruits, clients and potential clients to understand that, but it’s not about the badge itself, it’s about wanting to be a better business and having a way of measuring our success along that journey.”
Synergy between employee ownership and B Corp
Annie from B Lab UK can see why almost 10% of all B Corps are EO as “we’re quite missions and values aligned”. She said employee ownership and B Corp both focus on:
- challenging traditional ways of doing business;
- a shift away from shareholder supremacy towards stakeholder governance;
- how you engage employees with your mission and key decision-making;
- the impact businesses have on communities for the long term.
“Those are shared values,” Annie added. “So, it’s no surprise employee-owned businesses are intrigued by B Corp or that B Corps hear about the employee ownership model and are interested. I think they’re quite symbiotic.”
B Lab, in fact, has an employee ownership question on the B Impact Assessment, so any employee-owned company automatically gets additional points during their application.
Kingsley at Emperor believes employee ownership and B Corp “go hand in hand”, because EO businesses listen to their people, and it matters to people now to work for businesses that take an interest in things apart from just the bottom line.
“I think the ethos in employee-owned businesses and around B Corp is it’s not about earning the last pound out of the business,” he said. “It’s about developing a business that’s responsible, sustainable, cares about its people and has a resilient future everyone in the business will share in.”
Nic at One+All thinks both communities are “really honest” and full of like-minded people that are happy to share the good and the bad of their journey so others can learn, apply that to their business and be better as a result.
“There’s a huge synergy with our ethics and ethos as a business. B Corp is about high standards of environmental performance, transparency and accountability so fits really well with our ethos of sharing, being open, honest and showing care. It was most definitely the next logical step from employee ownership,” she said.
How to become a B Corp
B Lab UK acknowledged it can feel “quite daunting” to figure out where to start when thinking about becoming certified, but it gives support to show businesses how to get started in a meaningful way, “rather than just ticking boxes”.
There are three core requirements when applying:
- Fill in the B Impact Assessment of around 200 questions on five areas – governance, community, workers, environment and customers. This is verified independently and evidence submitted. At least 80 points are needed to pass.
- Meet the B Corp legal requirement by amending Articles of Association to embed a commitment to consider the impact of decisions on all stakeholders, and “lock in your missions and values for the long term”.
- To be transparent, companies who have been certified share their score on its directory, provide annual impact reports and re-certify every three years.
Emperor was the most recent EO business to go through this process, and said certification is “not the final destination”, and “looks forward to continuous improvement with a B-Corp mindset”.
To achieve certification, Emperor said it met “rigorous governance, social and environmental standards, which represent its commitment to goals outside of profit”. It provided evidence of responsible business practices relating to its employee ownership and its pledges around commitments to partners, community and the environment.
Thinking of applying?
Annie at B Lab said the advice she gives any company exploring B Corp certification is to make an account and fill in its B Impact Assessment.
It’s a free tool, so any business can use it without needing to apply, which gives them the chance to figure out their starting point and set goals to improve their social and environmental impact to reach the 80-point mark.
Kingsley at Emperor says the assessment is a “really useful tool as it enables you to have a critical look at your business”, while Nic from One+All said: “It’s not just an assessment you do and stick in a box for three years, using that assessment you’re able to constantly look at where you can add value and improve as a business.
“We recommend all organisations do the assessment. It’s great for measuring and improving, which is something all businesses should do, regardless of whether they’re going for accreditation or not.”
In summary – why businesses seek B Corp certification after becoming EO
So what about this pattern we’re seeing of more and more EO companies going down the route of seeking B Corp certification?
EO businesses regularly demonstrate that they are highly innovative and, from talking with our wider membership, the one thing that comes across is this appetite within the EO community for continuous learning and improvement.
The EOA believes employee ownership is a great mechanism for unlocking or enhancing innovation, and it’s this commitment and culture to continuous improvement that means EO businesses are likely to explore other innovations or solutions such as B Corp.
John from Seetec sums it up nicely around some of the reasons it’s often the “next natural step” for an EO business to apply.
“EO and B Corp combined says there is another way of running a business, there’s a way that’s sustainable for our planet and making profits ethically at the right level,” he said.
“What we’re seeing with EO now and through our employee owners is a sense of being guardians of the planet, that sense of community and inspiring individuals, that’s what gets Seetec employees out of bed in the morning, so I think the link is really intrinsic now (between B Corp and EO).
“I can completely understand why EO organisations would want B Corp, because it’s really a kite mark on the type of business that you are, that you’re not a business that’s driven by shareholder value, you’re driven by something else way bigger.
“With B Corp, you’ve got an external organisation in B Lab that come in and access your impact on the environment, on your employees and on your stakeholders and ascertain whether what you say you are as an organisation is true.
“It’s not for everybody and it has to show real commitment, but I think it’s a good way of distinguishing EO businesses. I think, first and foremost, if you’re an employee owner you care about the organisation that you’re in and that’s not just about caring about the profitability, it’s caring about the impact that organisation has on society and the environment, and I think that dovetails nicely to the ethos and the values of most EO businesses.”