You may be familiar with C corporations, S corporations, or even Benefit Corporations. But what’s a B Corp? In this episode, we learn that B Corp is short for Certified B Corporation - a label only bestowed to for-profit companies that go through an independent certification process led by the nonprofit B Lab. B Corps represent “the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose”.
Nathan Stuck, Director of Culture & Strategic Impact at Ad Victoriam Solutions explains the ins and outs of becoming a B Corp from the rigorous process to the community of likeminded organizations. Nathan was introduced to the world of B Corps when overseeing his own company’s certification. His passion resulted in the founding of B Local Georgia and partnership with the University of Georgia to educate students on B Corps. Discover how B Corps build successful businesses while focusing on all stakeholders, not just shareholders.
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Episode Transcript:
JJ (the host of The Understory Podcast): Welcome to another episode of The Understory Podcast. Understory is a global community of innovators and companies that are trying to make impact in our world.
And today, we're really excited to have Nathan Stuck to be our guest. Nathan welcome. It’s really interesting what you're doing, and we’d love to learn more about what you're building. First off, tell us more about you and give our audience an introduction.
Nathan Stuck: First off, thanks for having me. I’m always excited to get the opportunity and platform to talk about B Corps, purpose, and everything in between. Excited to be here.
I'm a Director of Corporate Culture and Strategic Impact for Ad Victoriam Solutions. We’re a Salesforce implementation partner consulting company out of Alpharetta, which is just north of Atlanta. We have people about 150 employees across the country. I oversaw our B Corp certification and that has led me down a road both professionally at work and through my nonprofit B Local Georgia. Both keep me very busy in the B Corp space, trying to help companies be less afraid of taking the assessment, getting through it, putting some numbers together to see current states and help them start their journey to becoming better corporate citizens.
JJ: Tell us more about B Corps. I think people see certain companies and say OK there is a B Corp. What should people know about B Corp? Why is it significant?
Nathan: It's funny because it's gotten a little bit better. I remember 3-4 years ago, everybody I told B Corps about thought it was some form of corporation status like S Corp or C Corp, or they just kind of nodded and had no idea. It's getting a little bit better. There's over 4000 now worldwide.
I describe B Corps, or the certification at least, as the gold standard of corporate social responsibility. It is a certification that for profit businesses can attain. It's literally an assessment with a pretty lengthy, detailed list including everything from corporate governance to employees, to community impact, to diversity equity, inclusion to the environmental impact that your company's making all the way down to customers and data privacy, and full disclosure and transparency.
It's the thorough assessment of where business is, and I guess their journey to move away from shareholder capitalism and ensure that they're focused on all of their stakeholders.
It's to businesses what LEED certification would be to a building or certified organic would be to milk. And it's the only one that like it too. There's a lot of great organizations. I was just at a Go Beyond Profit event, and I collaborated with Conscious Capitalism earlier this year, so I'm friends with all these people. They're great organizations.
B Corp is the only one that really makes you put your money where your mouth is. You either get 80 points then you certify, or you don’t, and you continue your journey to get those points. It's a rigorous, high barrier to entry.
JJ: What you're saying is that any organization can become a B Corp.
Nathan: Yes, any for profit business can become a B Corp. We have everything in the community. There's everything in Georgia itself. We have 18 companies right now. It's everything from a solopreneur to a small medium business with 25-50 employees up to what I would call medium size with 150 employees, all the way up to Danone North America. The yogurt milk dairy company Danone North America is now the largest B Corp in the world and the parent organization has a has a pledge to certify all. I think they have 50 subsidiaries around the world by 2025.
JJ: I think that's one of the potential misunderstandings which you point out here. When people see a B Corp on a company website, that's not the incorporation status. Yes, it's a certification that says, OK, this is the business regardless of incorporation status and they have gone through these certification measures or criteria, and satisfy those criteria to become a B Corp.
Nathan Correct. Ad Victoriam - we're still an LLC. There are there are states where there is a separate thing called Public Benefit Corporation, A PBC. Delaware has a PVC LLC structure, but not all benefit corporations are B Corps and not all B Corps are public benefit corporations.
There are some legal requirements in the B Corp certification. For LLCs, you have to amend your articles of incorporation for an S Corp or a C Corp. You have to re-incorporate as one of those public benefit corporations, basically making sure that you are legally bound to take into account the welfare of all stakeholders.
A good example is Whole Foods. John Mackey has said that he regretted not having stakeholder language in their articles of incorporation. Because when Amazon came in, there was really nothing he could do to prevent that sale because it was in the best interest of shareholders and that that that was his legal duty to his shareholders and do it was in their best interests.
JJ: Interesting. When companies or organization come to you through the nonprofit work that you're doing with B Local Georgia and they say Nathan, I want to become a B Corp. What do you tell them? What do they need to consider in order to actually pursue the path and become a B Corp?
Nathan: That's a great question. Without scaring them away, I don't temper expectations, but instead give them a realistic timeline and understanding of everything that's going to go into the work. The amount of time commitment that is required depends on the whether they want to spend a little bit of the money to a hire an outside consultant to help. There are consultants who have done some of that work as well. Once you've been through this assessment 25-30 times, I won't necessarily say you know everything, but you know a lot more than somebody going through it for the first time.
That's a question I always ask is there a budget and how quickly do you want to move. If there isn't a budget and they really want to move fast. We've partnered with the University of Georgia, where we actually have a formal B Corp class in the MBA program now.
I, by the way, tip of the hat to any and all teachers out there. I only had to do three lectures and now the students are working on their projects. Even that is a very difficult job. I can only imagine somebody teaching the same lecture six times in a day, like my mom, was high school history teacher. That is tough work.
We're running six projects out of University of Georgia this fall, and then Emory is running a pilot this year. We have 11 students at Emory working on two projects. I was just down there on Friday and spoke to the students about some of the tips and tricks of navigating the what’s called, the impact assessment.
I had a colleague that just met with Kennesaw State last week and I've worked on a project with Agnes Scott in Atlanta. One of our newer B Corps wants to get involved with running some of these projects, so we're really looking to grow our academic infrastructure to both include B Corp in the curriculum, but also to give the students some hands-on experience with the assessment.
By helping companies navigate the assessment, it will help our ecosystem grow. There's only one of me, so the more the more help I can get, the better.
A lot of our students -- I like to joke that I'm one of maybe three or four that have gone through the program in the last four or five years at UGA that works for a B Corp. -- A lot of them are going to traditional, for-profit corporations, especially out of an MBA program. They’re going to the Home Depots and the UPSs and the Coca Colas of the world. Those companies are wonderful and fine.
But there's still change that needs to happen, and I'm sending these students out into the world with a new set of tools in their toolbox. A new way to look at corporate social responsibility. A new way to do goal setting strategy. Strategize around diversity, equity, and inclusion initiatives and pay equity analysis and materiality assessments. They're going in now. It's my hope that we're training them to change capitalism from the inside and so we get everybody to become B Corps.
JJ: I think that's super interesting. I really got to see that you're taking this to students and got more students from an educational academia perspective to learn more about B Corps. You’re debunking a lot of the things about B Corps.
Who issues that certification like where, what, who, you know? What's the entity that's providing this certification? And for B Corp and giving that stamp, is it an entity or is this government associated? How does that work in the background?
Nathan: There's a nonprofit that started up outside of Philadelphia in 2007 called B Lab. They're the nonprofit governing body. They created the assessment, and they have a whole team of analysts that essentially come in. You take the assessment; you get to the point where you feel good about your 80. You go ahead.
For us as an LLC, we went ahead and amended our articles of incorporation and fulfilled the legal requirement. Then you hit submit and you get into a queue right now. Honestly, the line is really long, and people are looking at the lab like what are you doing. What they don't realize is that there's 40 certified B Corps around the world right now and then last year there were 400 applications so basically more applications last year we even had B Corps.
With everything that happened in COVID and some of the effects of climate change becoming more evident and George Floyd's murder. You saw these things that were tipping points for capitalism. A lot of businesses and business owners say that this is no longer a nice to have, it's a must have.
Once you get through the queue, somebody verifies your data. You'll send them your employee roster with birth dates and whatever you have said you do in the assessment Whether it's tracking different forms of diversity, whether it's our pay multiplier was only 5X from CEO to lowest paid employee, all those things you basically then have to upload documentation and verify. They go through and check those and then an audit takes place. Once they verify everything you get on a phone call for about two hours and somebody from the lab literally walks through the assessment and asks you questions about your answers to make sure a that you answered it correctly. At the end of that process, if you are still above 80, you are officially certified.
You pay a small annual fee to B Lab. They've got a whole team of analysts and marketing team and a bunch of collective action groups, so that's where the annual fee goes to support things like the Vote Everyday campaign that they came out with a couple years ago. And now there's the We the Change which is a women's collective action group. There is a climate collective and different groups for us to get to know each other, network to add value to the community. Once you get certified, you're not just done, but this is a journey and we should all be learning from each other, supporting each other, working with each other, buying from each other, and opening doors for each other.
JJ: For the audience: actually, the B stands for beneficial. And it's exactly what you said, Nathan. It's about transparency, accountability, sustainability, and performance. They're really creating that value for stakeholders and not just shareholders of companies.
Given the macro trends of ESG and sustainability and climate action and some expectation in the US that SEC, the securities regulator in the US, may come out with reporting requirements for companies specific on ESG funds. Mirroring some of the stuff that you are already doing with companies. Is it a fair statement or a correct statement to say that companies that satisfy will have really strong ESG posture?
Today or tomorrow would most likely become B Corps or they have an easier path to become B Corps? The other way to ask this question is how people reconcile B Corps versus G etc.
Nathan: I always say that when I meet a company or if I know a brand and they approach me and say hey, we're interested in doing this. I have a good idea pretty early on whether it will be easy or not. I can take a look at your website, look at your annual impact report, looked at your executive team. I was looking at one company, they had all their employees listed and pictured and I'm looking through and it was super gender diverse. They have an office in Mexico City, so there was a bunch of ethnic diversity and gender diversity. And then I read their annual impact report and I'm looking at their website in general and they're ‘About Us’ and I'm like I bet they're doing a lot of these things and then the cool part is you get a company like that that is doing a lot of those things.
Which is why I'm totally for some of the ESG reporting because it's essentially a lot what you're doing is you're going through this assessment. I always use us as an example. We had always thought we were doing good, and we had the intentions to do good. But when you start putting some of your numbers together when you must answer a question and say whether it was 25 to 40, 40 to 55 percent, 56+. When you have to crunch numbers and you go wow, I thought we were way better than that. Or what percentage of revenue did we give back to the community last year as far as time or product. Oh, that's not as much as I thought it was. You start seeing what the loftiest number is, and then you see where you are and there's room for improvement.
We're well intentioned, but then it's really easy. Now you just go what does that look like for us to get from .25% of revenue to 1% of revenue? What would that look like and then you can start basically modeling it. We would need to do this same thing with Scope 1 and Scope 2 emissions. It’s kind of daunting, but you get through the assessment.
I want to answer that question, and I want to understand what we're doing as far as our economic or environmental footprint. There are nonprofits out there that will help you answer questions like how much square footage do you have and give us all your utility bills and then you can get into Scope 3 and go how much did we travel last year and those types of things where now you can go and I understand we need to do more than just carbon offsets in the world.
We need and we need to do it pretty quickly, but I think the fact that businesses are even doing this now. You think about 10 years ago, nobody was doing it, so we are making progress. We can't go 500 miles if you don't drive the first 5, 10, 15, 20. I think a lot are all steps in the right direction. I don't think you can ask for everything right now. I think that a lot of the changes that are happening in the reporting around ESG, is the most valuable part of the impact assessment is the certification is great.
The community is wonderful, but even if you're not going to certify it is a free tool to help you not only define your current state but quantify your current state and say I want to be at this number next year. Boom, let's put together a strategy that helps the business grow but also does it in a way that's responsible and ethical and stakeholder focused. You can't improve anything if you're not even measuring it. It's the first real ground step to say hey, we believe in these, so let's really put a number behind it and then let's drive to a goal just like we would with sales or revenue or employee retention or anything like that.
JJ: I think that that's a great perspective, and I agree. We saw lots of activities from an Understory perspective, for ourselves and also for the ecosystem and we expect that to continue. We do see. progress made in terms of companies either becoming more aware or trying to apply technology to find new innovation and levers to push sustainability, whether it's internal or external. I think one of the concerns, hopefully it's not repeated compared to the last wave of green tech, it's greenwashing. I think for people like you and your organization and training students and others to really understand the fundamentals of assessing companies and think about how to do certifications are incredibly important.
Nathan: It's funny because my first lecture was about Milton Friedman and laying the capitalist case for why he was wrong as far as his Friedman doctrine. Stating that employees and customers will not want to work for social purpose organizations. They'll want to work for companies that can pay the most that can make it the cheapest and that's who they're going to want to do business with. He was wrong in which direction they would want to go.
My second lecture was on greenwashing. Being an MBA class, I'm trying to push their buttons a little bit and get them thinking. I brought up that the origins of the greenwashing were the hotel industry. Hotels with the towel and you know hang your towel up if you care about the planet. Everybody is like, that's so shady that I can't believe that they would do that just to save money. I'm like but did it save energy? Did it conserve water? Did it save energy on water treatment plants where that water has to be treated in the manufacturing or detergent and the running of the washing machines. And they all went, huh?
It was kind of that ‘Ah ha’ moment for them. This was done to save on their bottom line, but at the same time, it did have a positive effect on the environment. If you think about the grand scale of hotels, and I think it's made people more conscious when they see the little sign in their hotel room. Do I really need to open the second bar of soap to put it in the shower when there's one right next to it on the sink? And I'm here for one night. I think it's opened people's eyes.
I think a lot of greenwashing is done. I struggle with it because there is greenwashing that I can't stand like Keurig's spending money to announce that those stupid little plastic cups are recyclable, when really they're not recycled in 60 or 70% of municipalities. To me is pure greenwashing for marketing’s sake. But I think there is a lot of greenwashing where they're trying to sell you something, but is it bad?
Look at all the commercials and the shifts within commercials. I'm 38. I can't remember seeing interracial couples in commercials when I was ten. I think it probably would have been a backlash in the other way, and do I really believe that these companies believe everything that they're doing with some of them. I think they've recognized that it's good for business and the effect of that is that kids growing up now see interracial couples and commercials. They see people that look like them. They see people with handicaps and disabilities like they see all these things that reflects what society really looks like. If that makes it more normal and more accepted, isn't that a positive effect on society?
I have this love hate relationship with greenwashing. I think some of it is downright probably lacks a little bit in ethics, but the effect of it is positive on society. I just I basically leave that lecture with do your research, do your due diligence. Come to see what are they actually doing, and do they deserve your vote of your with your wallet? Do they deserve your dollar? Do they deserve your employment?
I don't know if that answers the question or if it's just me rambling on about that.
JJ: No, I think it's a great perspective. I think for these kinds of activities where people are pushing the boundary, organizations are trying to transform in a rapid way and consumers are demanding it. Other organizations, suppliers and vendors and governments are all looking at this. Mistakes are bound to be made, but I think the net effect will be positive exactly to the point you're saying.
Is that the next generation? Even the current generation are expecting more from organizations in terms of how they operate. They can move out the world that we live in and the society that we're living forward in a positive way, and so really appreciate that perspective.
Nathan, really great work that you're doing with The B Corp and both your day job. I will say your other job, which is probably also a full-time job right now.
So last question, how do people find you? Or how do people learn more about B Corps? Tell us where people can learn more and reach you.
Nathan: Yes. I won't say to use Google. I will tell you to use a certified B Corp out of Berlin that's a search engine called Ecosia. It makes that your default search engine and they plant a tree, I forget what the ratio is, but for every number X number of searches they plant Y trees. A really awesome B Corp.
Ecosia, B Lab or B Corp certification. I think the actual website is bimpactassessment.net. I'm 99% sure, but if you type B impact assessment into Ecosia it'll come up. Our company is advic.com. We finally shortened Ad Victoriam Solutions because everybody wants to see they're putting a U in it or they want to call us Victorians, so we just we decided to just buy the domain advic. So ADV like Victor.
I always open to connecting with people on LinkedIn. I'm one of those firm believers in your net worth is your network. Feel free to connect. Reach it out. Say hi, ask questions. I'm always happy to answer B Corp questions or, speak or anything like that. You can find me on LinkedIn at linkedin.com/nathan a stuck.
JJ: Great! Well Nathan, thank you so much for coming on to The Understory Podcast and sharing what you're doing and educating us about B Corps. Thank you so much.
Nathan: My absolute pleasure. Thanks for having me.
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