B Corps: Redefining Corporate Success

Fall 2015

Certified B Corporations voluntarily meet high standards of transparency and sustainability — and are attracting younger employees.   

OVER THE PAST several years, a small but growing number of commercial real estate companies have sought and achieved Certified B Corporation (B Corp) status. Similar to LEED certification for buildings, the B Corp label is applied to businesses with the dual goals of “doing good” — through their treatment of employees and their impacts on the community and the environment — while making a profit.  

B Lab, the nonprofit organization behind the B Corp certification, was established in 2006 by a group of former Stanford University roommates who recognized the need to apply common standards to the growing number of companies participating in the impact economy. (The Aspen Institute defines the impact economy as the “twin forces of supply and demand, impact investing and social entrepreneurship, that are driving systemic change in the US and around the world.”)  

Since B Lab certified its first B Corps in 2007, the roster has grown to more than 1,250 companies representing 121 industries in 41 countries. At least 25 companies in the commercial real estate industry, including developers, contractors and design/build firms, have earned B Corp status. Two real estate developers made the organization’s 2015 “Best for the World” list: TAS, a Toronto-based builder of custom homes and condominiums, and Telesis Corp., a Washington, D.C.-based firm that plans, finances and builds urban communities.  

In addition to certifying B Corps, B Lab lobbies for the creation of benefit corporations, a new corporate form. Essentially a hybrid of a nonprofit and a traditional corporation, a benefit corporation is legally permitted to balance shareholder value with social benefit. Incorporating as a benefit corporation can help business owners protect their company’s social mission in times of declining revenue or during a sale. Since 2010, 26 states have adopted benefit corporations and another 14 have legislation pending.  

Why Become a B Corp?

Companies like Telesis seek B Corp status as a way of formalizing and publicizing their already established commitment to revitalizing distressed urban communities. Echoing that sentiment, Mazyar Mortazavi, CEO of TAS, explains, “As a forward-thinking developer, we wanted to have accreditation that went above and beyond us just saying that we’re good guys. It wasn’t just our marketing department telling the world that we were really doing these things.”  

Benefits of Being a B Corp

The primary benefit of obtaining the B Corp badge of approval lies in how it differentiates companies that follow through on their social and environmental missions from those that simply use their social mission for marketing. As Mortazavi explains, “being a different kind of developer has aligned us with consumers who look at value alignment between who we are as a company and who they choose to spend their money with.”   

Being a B Corp is also helpful in recruiting, retaining and motivating talented employees, particularly millenials, who may be more focused on corporate responsibility than previous generations. A 2015 Deloitte global survey found that for six in 10 millenials, “a sense of purpose” is part of the reason they work for their current employers. Mortazavi remarks that TAS’s corporate culture is one of the things that attracts people to his company: “There is definitely an allure around the way we approach things and the culture we have. People value being part of this type of culture as compared to a traditional commercial real estate firm.”  

Reciprocally, employees are drawn to B Corps not just because they believe in their mission, but also because they offer diverse benefit packages. While B Corps may or may not pay as well as traditional companies, they typically offer unique and generous benefits. For example, 65 percent of Telesis employees pursue company-subsidized external educational programs. TAS pays a living wage to all full- and part-time employees, who also enjoy extended weekends during the summer and over the holidays as well as a rooftop vegetable garden. 

Becoming a B Corp

While the best-known B Corps are large consumer goods companies like Etsy, Patagonia and Ben & Jerry’s, certification is open to all for-profit companies. For privately held companies that already have a social/environmental mission, such as Telesis, the process is straightforward. The entire certification process took Telesis less than 10 weeks.  

To get the ball rolling, all prospective B Corps take an online survey. Following the survey, companies submit to a phone interview, provide supporting documentation and, most significantly, amend their corporate bylaws to include their commitment to making a positive social and environmental impact. The cost of certifying as a B Corp is based on company sales and ranges from $500 to $50,000. All B Corps must recertify every two years.  

The Future of B Corps 

The nonprofit B Lab has gained impressive traction in the past few years. Several top business and management schools, including Yale University’s School of Management, Columbia Business School and New York University’s Stern School of Business now offer loan assistance for students choosing to work at B Corps. The city of Philadelphia has started offering tax credits to B Corps. When more local, state and even federal governments add these benefits to their tax codes and procurement requirements, the number of socially responsible companies will likely expand dramatically.   

For TAS’s Mortazavi, however, being a socially responsible company is not just about “raising awareness but also about creating demand around what you do.” He elaborates that “with the way the market is moving and the emergence of the role that millenials are playing, the value alignment with the customer is becoming that much more important than the product.”