Switch on any business channel; You will find analysts and journalists tirelessly discussing and analyzing the top-line, profitability, PE ratio, return on investment and such other parameters of companies on the stock market. Academicians comment on current business models and scalability potential of startups. Ever heard any talk or a discussion about the social impact of a business or environmental performance of a top trading stock or an upcoming startup?
I wonder why there is excessive focus on profitability and market share in corporate boardrooms and not towards overall social and environmental sustainability of a business. Maybe because these things don’t matter to shareholders. Maybe reporting standards don’t mandate them. Maybe because there is utter lack of awareness in our country. I am not sure what the reasons are. However there is an organization that is compelling businesses to think differently.
B Corp Certification
B Lab is a nonprofit that serves a global movement of people using business as a force for good™ . With its offices in the United States, Europe, Canada, South America, Australia and New Zealand, it certifies for-profit companies on their social and environmental performance. Currently there are 2297 B Corporations in 50+ countries across 130 industries.
Source: B Lab
Why B Corps Are Needed
With their obsession for incessant and exponential growth, businesses have been exploiting people- employees, vendors, consumers, natural and material resources to the fullest extent possible. 250 years of industrialization and globalization and still 77% of people are at the bottom of the pyramid, approximately 3.1 million children die from hunger each year and 38.2 billion tons of carbon dioxide was emitted into the air last year which is directly responsible for climate change. Clearly resource intensive and people exploitative practices need to change if we want this situation to change.
Business is the most disruptive force mankind has ever created. It has shaped and affected our lives like no other empire or government in the history. If businesses, big and small can be goaded towards responsible behaviour, human society will witness a sea of change in the quality of life and a better future.
Imagine if every business is required to report their impact on people and planet besides the conventional metrics related to profit. Imagine if failure to comply to certain minimum standards come with a cost to their operations and brand. While mandatory reporting may still be some distance away, voluntary disclosure and compliance to social and environmental standards is a good beginning. This is where organizations like BLab play a crucial role.
Currently India does not have an institutional framework for such reporting. It’s even more shocking to learn that India has only 1 B Corp in this year’s list of B Corps. There have been only a handful of certified B Corps from India in the history of BLab.
Meet India’s First Certified B Corp
eKutir comprises a group of for-profit social enterprises that employ digital technology to provide economically sustainable solutions in agriculture, food & nutrition, water & sanitation (WASH) and enterprise development. It works with thousands of small farmers, rural communities and micro-entrepreneurs across 4 countries including India and Nepal. Suvankar Mishra founded eKutir 7 years back by assisting smallholder farmers involved in subsistence farming in Odisha.
eKutir’s Journey Towards B Corp Certification
I spoke to Suvankar over a Hangout to understand his personal experience of undergoing a B Corp certification. Below are excerpts from my conversation with him:
“eKutir aims to improve economic opportunities, bring about social economic empowerment, and provide market access to small farmers through previously unavailable infrastructure, network of micro entrepreneurs and service nonprofits. We focus on alleviating poverty through supply chain, sourcing from and partnering with fair wage certified suppliers by guaranteeing them future purchases and contracts”.
“We have a network of 800-900 entrepreneurs spread across agriculture and sanitation, reaching out cumulatively to 150,000 people in India and Nepal which is largely 50-75000 households. We are looking at reaching out to a million farmers in next 3 years”.
“Svadha (eKurtir’s WASH subsidiary) has 543 micro entrepreneurs who reach out to 125,000 people in Odisha and Bihar. Mr. KC Amin started this company”.
On Certification Process
“For us the first step towards B Corp certification was to have consensus of co-founders on what type of organization we wanted to create. All of us wanted an equitable and financially sustainable organization. Not only was socioeconomic development of our beneficiaries important but also being financial sustainable was very crucial”.
“eKutir received certification for its work across different subsidiaries in India; not specific to a particular geography or area of operations. You don’t get certified for free. There is a fee associated with the certification process”.
“Evaluation process went on from January to mid of May 2016. In the 1st week of June we got official news of our certification as a B Corp. Some organizations may take more time. I have realized that it is very crucial for founders to be involved personally in this process”.
“B Lab staff does not visit during the first certification process. However as far as the questionnaire is concerned, they are constantly curating and changing the weightage to every question. All the questions across the 40 page document were not equally weighted”.
“A heavily weighted question may look something like this- Does your company routinely engage and seek feedback from the local community about the company’s activities and social & environmental performance. If Yes, select which methods used for the feedback. For such questions supporting documentation is mandatory”.
“Here’s an equally weighted question- Are there key performance indicators or metrics the company tracks at least on annual basis to determine if you are meeting your social and environmental objectives. Evaluators check this during the interview and ask for relevant submission”.
“There is a multiple selection method to mark answers. It was a back & forth process. Evaluation scores kept changing through multiple rounds till the evaluation committee was satisfied with all the answers and materials we gave them”.
“eKutir had only 2 rounds of interview after we submitted our first assessment. Generally, companies need a raw score between 85 to 98 to be certified as a B Corp. Anywhere between 70-80 you are still a sustainable business. Below 70 you are a traditional and unsustainable business”.
“Our first score was 118, then it moved to 126 and the final score settled at 140. Ben & Jerry’s is at 110. Patagonia 108 or 107. eKutir aced it because of our impact business model”.
“eKutir’s mission statement and articles of association give societal and public benefit equal weightage with financial and shareholder benefit. You have to report numbers across Workers, Community, Environment, Governance and Customers every 2 years as a B Corp”.
“Our score of 140 received in 2016 will be up for assessment in 2018”.
“Organic India USA is certified; Caspian are other Indian B Corps”.
A big country like India with myriad socioeconomic challenges direly needs social impact focused, responsible and purpose-driven businesses and startups. Entire business ecosystem needs a paradigm shift in its approach. B Corp certification could be a good start. Here’s learning about this certification, directly from India’s first B Corp.
If you want to know more about B Corp certification, click here.