There is much interest in environmental, social and governance (ESG) issues, with widespread acknowledgment of the challenges we face in terms of environmental and social justice. Many law firms have responded to this sharpened focus with net zero pledges and engagement in a plethora of diversity and inclusion projects. B Corp certification is one response that several UK firms, including full-service firms such as Brabners and Shakespeare Martineau, have attained, and there are many more B Corp law firms in the pipeline. I have recently completed a research project into the drivers, motivations and benefits of B Corp certification for UK law firms.
B Corps are profit-making firms that voluntarily meet heightened standards of social and environmental performance and accountability. B Corps seek to use their business as a force for good and form part of a community of businesses seeking to accelerate the trend towards a sustainable global economy to the benefit of all people, communities and the planet. There are over 5,000 certified B Corps in more than 84 countries, with over 1,000 in the UK. Their numbers have risen exponentially in recent years and, as of last month, there are eight certified law firms in the UK.
To qualify for B Corp certification the firm completes the B Impact Assessment (BIA), an online survey that asks over 200 questions tailored to the firm’s size, sector and location. It measures a firm’s impact on four main stakeholders: workers, suppliers, community and environment, and evaluates the firm’s governance ability to pursue and achieve its better business mission. They must achieve at least 80 points out of the 200 available. The responses are validated by B Lab (an independent not-for-profit organisation) and the firm must also formally commit to ‘creating a material positive impact on society and the environment, and consider the impact of their firm’s decisions on all of the stakeholders, including shareholders, employees, suppliers, society and the environment’. There is an annual fee calculated using the firm’s total revenue in the last 12 months. It ranges from £1,000 (based on annual revenues of £0-£149,000) to £50,000 (£750m-£1bn).
Doing the right thing
My research identified the BIA itself as being a driver for B Corp certification. It is a helpful tool to validate a firm’s ESG activities. ESG is of heightened importance for many firms but it is a complicated landscape. The BIA confirms that a firm is ‘doing the right thing’ for actions already taken. It was also identified by B Corp law firms as a useful framework to focus high-level management decision-making because it enables future decisions to be considered in a structured way. The framework exposes areas where a firm may be weaker and provides direction on where further attention could be directed for maximum impact. The BIA is free to use and, at this stage, any responses are entirely confidential.
Participants in my research also thought B Corp certification provides an attainably high standard to aim for, which carries meaning and value. Firms that take the next step, submitting to an extensive validation process and changing their governance documents to achieve B Corp certification, reported some additional benefits.
Attracting, engaging and retaining talent is made easier, B Corps report. This is a key challenge for law firms. A large body of research connects meaningful and satisfying work with increased levels of organisational commitment, work engagement and higher performance. The recent challenging recruitment environment highlighted that the traditional motivations of predictable salary, pension and insurance are no longer enough to attract the best talent. B Corps intrinsically have a clear purpose and give employees the opportunity to address societal issues through their work, which is particularly attractive to millennials and Gen Z who constitute 59% of all lawyers.
B Corp certification provides a shorthand to communicate to customers the firm’s identity and values. A firm’s social and environmental values are a central part of many firms’ public image. Large budgets are dedicated to communicating their social and environmental activities. Participants in my study said that B Corp certification instantly communicates these values to customers and stakeholders. Law firms operate in a highly competitive market and B Corp certification helps firms differentiate themselves from competitors in the way they create value, and enhances their competitiveness. Research also indicates that consumers are more motivated to purchase from environmentally and socially responsible businesses.
Greenwashing
With much of the industry engaging in mainstream ESG efforts, there is a risk of firms making claims about their social and environmental behaviours that are misleading, leading to allegations of greenwashing. One explanation of inadvertent greenwashing is that sustainability strategy has not been anchored into the backbone of the business. B Corp certification requires a firm to amend its governing documents to include a ‘statement of interdependence’. This places sustainability at the heart of all decision-making and should help sift out the ‘good’ from ‘just good marketing’, making B Corp firms stand out from less authentic competitors. Those firms with B Corp certification speak more publicly about their sustainable practices and with more credibility.
The credibility of the B Corp brand is achieved through the rigorous validation process. This was reported as a pain point for all firms in my research and can take 12 months to complete – B Corp certification is not easy to obtain. The integrity of the brand and the efficacy of the BIA have been challenged with some controversial accreditations by B Corp, which include Nespresso and Brewdog. B Corp responded by reviewing the BIA and this year is likely to introduce a minimum score for each of the five impact areas assessed.
B Corps hold all stakeholders equal and, therefore, by design will necessitate firms reviewing their willingness to work for environmentally and socially contentious clients. This will and should preclude some firms from the B Corp community; however many firms already consider these types of instructions from a risk perspective on a case-by-case basis. Other certification schemes, for example ISO 14000 or ESG rating agencies such as Impactvise, are also available and may be more appropriate.
There is growing pressure on all businesses to be more socially and environmentally conscientious. There is more scrutiny and accountability than ever before. Many lawyers are now recognising that reforming their business models to align profit and societal and environmental impact is a key requirement for 21st-century business. B Corp provides a credible and tested business model which drives a more inclusive and sustainable economy through a certification process that identifies firms that make a profit and that also use their activities as a force for good.
Lindsay Bowskill, a solicitor, recently concluded a research dissertation on B Corp certification as part of Executive MBA studies
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