98% of sustainability programmes fail. Is B Corp the answer?
When it comes to sustainability, the gap between a company’s good intentions and what it actually achieves is vast. The B Corp certification model aims to create a closer alignment
In 1994, John Elkington coined the term ‘‘the Triple Bottom Line”, or TBL – a sustainability framework that examines a company’s social, environmental and economic impact.
Twenty-five years later, Elkington issued the equivalent of a “product recall” on TBL, saying: “TBL’s stated goal from the outset was system change – pushing toward the transformation of capitalism. It was never supposed to be just an accounting system.”
Are we now seeing a repeat with ESG and sustainability programmes in general? The gap between intention and impact is widening.
On one hand, research by B Lab UK shows 78 per cent of people in the UK believe that businesses should be held legally accountable for their impact on people and our planet. This aligns with the UN Global Compact-Accenture CEO study, which found that 98 per cent of CEOs now consider sustainability integral to their roles.
Yet, according to previous research by Bain & Company, a staggering 98 per cent of sustainability programmes fail. This misalignment between intention and reality raises the critical questions: what’s going wrong, and how can we fix it?
The key stumbling blocks appear to be: a lack of a clear sustainability framework; unrealistic goal-setting; poor internal and external communication of goals; and the failure to embed sustainability into everyday business operations.
Having witnessed these pitfalls first-hand, it is evident to me that a radical shift in mindset and approach is needed – which is why many businesses are turning to the B Corp model.
B Corp certified businesses, or B Corps, are businesses driven by a purpose beyond profit. They are legally bound to consider the impact of their decisions on all stakeholders, not just shareholders, and must be transparent about their actions.
For companies, becoming a B Corp involves navigating the B Impact Assessment, a rigorous online assessment that guides organisations toward sustainable and responsible practices across all parts of their business.
It’s not about reinventing the wheel but ensuring the wheels are moving in the right direction. Through the BIA, companies are encouraged to adopt a more comprehensive and forward-thinking approach to business as usual, with the emphasis not just on doing good, but on doing it effectively and sustainably.
Gone are the days where the success of a business is judged purely on profitability and shareholder returns. Businesses must justify their existence if they are to meet the rapidly changing needs and expectations of customers, employees, investors and, indeed, the environment.
In its recent report, “A New World Disorder – Navigating the polycrisis”, Ipsos says: “We are seeing a movement away from shareholder value at all costs to a more holistic understanding of the human and environmental impacts of capitalism.”
It adds: “In a world whose existence is threatened and where the future is uncertain, does every business have the right to exist?” Understanding why the business exists – otherwise known as its purpose or mission – thus becomes the North Star of any organisation. A clear purpose should underpin strategy, goals, policies, processes, communication, performance and governance.
Being clear and transparent about, and accountable for, the impact of your business decisions on all stakeholders, alongside your shareholders, requires impact representation in the boardroom, and should lay the foundation for long-term success in this new world.
Forward-thinking organisations, having clarified the purpose of their business, then set clear, realistic and courageous impact goals to deliver it. This comprises several steps, namely to: engage the board and the wider team; plan clear, realistic, courageous impact commitments; align goals to business strategy; communicate to all stakeholders; and activate and embed impact goals throughout the entire organisation and value chain.
All B Corp certified businesses are required to produce an annual impact report. This is an opportunity to communicate progress on their impact goals transparently and authentically, not a standalone ESG report.
Impact is embedded into every part of the business, and an impact report should tell stakeholders: what companies set out to achieve; what progress they have made; what they have learned (both positive and negative); and how they intend to improve.
B Corps must re-certify every three years, which focuses the mind away from achieving the initial certification and onto long-term impact improvement.
Many B Corps concentrate their goals to achieve an impact business model, which is intentionally designed to create a specific positive outcome for stakeholders. These companies are rare, exceptional and have a long term strategy.
Faced with global challenges such as climate change, social inequality and environmental degradation, businesses can no longer afford to operate within the confines of outdated paradigms. B Corps represent the evolution of responsible business, offering a viable solution to the profit/impact dilemma we face today. And the movement is growing rapidly, with over 7,000 B Corps globally and 1,500 in the UK as of October 2023.
As financial and business leaders, the choice is clear: continue down the path of failed sustainability initiatives, or embrace the transformative power of B Corps. The more we do, the better the world we create.
B Corp is not just a badge but a journey from doing things better to doing better things; transparently, accountably and impactfully.
Donna Okell is co-CEO at consultancy UK for Good