Becoming a B Corp: Lessons from KeepCup and Leor childcare

More and more businesses are seeking to prove to consumers that their business model stands for profit as well as purpose by becoming Certified B Corporations.

Certified B Corps are businesses verified by B Lab, a nonprofit organisation founded in the United States. B Lab gives third-party certification to companies based on how they create value for non-shareholding stakeholders, including the environment, the local community, and employees. To date, there are 4,000 B Corps worldwide in 150 industries, up from 3,500 last year.

The first Australian company to achieve B Corp certification was investment firm Small Giants, in 2012.

Given applications can take several months to complete and businesses pay a yearly fee to maintain their certification, it’s important to know whether becoming a B Corp is right for your business.

In this article, two Australian B Corp business owners share why they believe becoming certified improved their businesses and why others should follow.

We learn why Abigail Forsyth, co-founder and managing director of KeepCup, believes there’s no better alternative to show you’re committed to being ethical. And, Andrea Christie-David, founder of in-home childcare provider Leor, explains why more service-based businesses should apply. 

KeepCup: Reusable coffee cups

Founded in 2009, KeepCup manufactures barista standard reusable coffee cups. It was founded in Melbourne by sibling duo Abigail and Jaimie Forsyth, who ran a chain of cafes and wanted to reduce the use of single-use coffee cups.

Abigail Forsyth. Source: supplied.

Abigail Forsyth tells SmartCompany Plus she was motivated to become a B Corp seven years ago because it allowed her to show the public that KeepCup was the kind of business it said it was.

“When we first entered the market people weren’t really sure what we did and often asked if we were Fair Trade or organic,” she says.

“None of those certifications had any relevance to what we were trying to do.”

In the first year of being accredited, Forsyth says the US organic superstore Whole Foods began stocking her products.

“It was the deciding factor when they were choosing between competing brands,” she says. 

Six years on, Forsyth believes being a B Corp has helped persuade corporations to buy or stock KeepCup products, enhanced her supply chain and helped her commit to continuous improvement. 

A two-step application

The process of becoming a B Corp begins with a free B Impact Assessment, which is a self assessment tool that allows you to measure the social and environmental impacts of your company. There are five so-called impact areas, including community, customers, environment, governance and workers. If you receive 80 points out of 200 in the first step, you can proceed to the second step. 

During the verification process, businesses complete an application that involves providing evidence of how the business performs in the five impact areas. These documents can include employee handbooks, employee engagement surveys, sustainability or corporate social responsibility reports, and supplier audits. Toward the end of the verification process, a B Corp employee will interview the business owner or representative, before making their final assessment.

The cost of submitting an application is $250. If your application is approved, you have to pay annual certification fees that are based on your businesses’ revenue for the previous 12 months. From July 1, 2021, businesses with annual revenue of $150,000 to $3 million pay between $1,000 and $1,800 per year. Businesses with revenue between $5 million to $50 million pay a tiered fee of $2,000 to $16,000. 

Greener and fairer supply chains

Forsyth says the process of verifying KeepCup’s supply chain was complex, covering materials used as well as whether her suppliers included small and large businesses. “It’s brought a discipline to the business about how we view our own practice,” she explains.

When the business started selling stainless steel products in 2019, they sourced the steel from one of the biggest manufacturers in China. The manufacturer wanted to send the products in plastic bags, which would reduce KeepCup’s B Corp score.

“B Corp gave us an education about the influences you can have over your customers and suppliers,” Forsyth says. “So, we worked with the manufacturer to get a different packing method.” Ultimately, Forsyth convinced her supplier to use open pallets instead of plastic.

To renew KeepCup’s certification, Forsyth has also had to answer more detailed questions about diversity and equity across the supply chain. Specifically, she has demonstrated that she works with smaller suppliers and supports women-led business.

“One of our suppliers in China is a small independent business run by a woman,” she says. By providing B Corp with evidence of the kinds of suppliers she engages with, Forsyth has been able to continuously improve her supply chain and B Corp certification score. 

No better alternative

B Corp has come under some criticism since it was founded in 2006 by Stanford University alumni Jay Coen Gilbert and Bart Houlahan, and former investment banker Andrew Kassoy.

The main criticism leveled against the organisation relates to the fact that B Corp standards are not legally enforceable. Neither B Lab’s board nor the corporation are liable for damages if a company fails to meet them.

Certified companies can also abandon their accreditation if B Corp’s values no longer meet their business strategy. One example is the online marketplace Etsy, which left the B Corp community in 2017.

Forsyth says while there was a big debate between her and her co-founder about whether becoming B Corp was a good use of their time, she doesn’t regret having joined. Fundamentally, B Corp has given her business a stronger sense of purpose. “We’re trying to steer the world in a better direction and this is a great way to signpost that and have some shared understanding of what that means,” she says. 

She also admits that she hasn’t seen a better alternative that examines the whole business and its role in society. “I can’t think of any other mechanism that’s providing a way for businesses to stand up and be counted,” she says. 

Leor: In-home childcare

While many notable B Corps are product-based, such as Patagonia or The Body Shop, B Lab also certifies service-focused businesses.

Andrea Christie-David, founder of the in-home childcare provider Leor, says service businesses can expect to show they treat their workforce fairly, have green initiatives, and good corporate governance. In fact, B Corp requires businesses to develop a constitution that balances profit with purpose.

Andrea Christie-David, founder, Leor. Source: Supplied

Christie-David founded Leor in 2019 to provide a high quality early childhood education and disability support in the family home. She also aimed to improve the employee value proposition for educators. “I wanted to give educators more autonomy, pay them above award wages, and give them the respect that they brought to their profession,” she says. 

Leor caters to three types of families: private families that choose in-home care; families that can’t access appropriate mainstream childcare; and families with complex needs such as disabilities. Fees for families that fall under the third group are covered by the federal government, as Leor is an approved National Disability Insurance Scheme provider. 

Think about it early

Christie-David says any business considering applying for B Corp accreditation should start thinking about it early. “If you’re looking at starting a business, it’s a good thing to think about at the start,” she says.

For businesses that have been operating from sometime, she says the B Corp certification process is “a good opportunity” to audit your processes and work out if there are different approaches that would give your staff, the community or the environment a better outcome.

Fair treatment of employees

Service-based businesses can expect the verification process to focus less on their supply chains and more on how they treat their staff. Christie-David says Leor didn’t have a large environmental footprint to assess because even pre-COVID, her entire operations team worked remotely. The emphasis then becomes on how the business treats its workforce and customers. “You have to have fair contracts and you also have to show ways in which you give back to your employees or the community,” she says.  

Christie-David says she had to demonstrate that Leor provides training opportunities to its workforce, that it doesn’t offer better benefits to permanent staff compared to casual ones, and that the business had a good employee satisfaction rating.

“You want to be able to prove that you’re measuring employee engagement and that you’re trying to keep it on a particular trajectory,” she says.

Proof of ethical principles

The entire process from start to finish would take someone who knows their business well about 100 hours, Christie-David says. But she warns businesses not to be deterred by the effort required to apply. “I would definitely encourage business to apply,” she says. “It gives you that higher level of standing and shows you want to make sure your decisions are ethical and fair.” 

“It ensures that you have principles, that you want to hold your business to a high standard and that it’s capable of scrutiny,” she says.