So, what is ESG and why is B Corp the right framework to use?

by | Nov 21, 2021 | B Corp, Purpose

Over the last 20 years, there has been a growing focus on how organizations can improve their performance and impact. This initially started with Corporate Social Responsibility (CSR) and a drive for ethically oriented business practices. That impact movement has matured into Environmental, Social and Governance (ESG), where organizations are purposeful and intentional around their strategic and operational business practices. 

Many industries and sectors are introducing ESG as a necessity, and it’s becoming more of a common requirement when companies or governmental organizations issue their RFPs. But what is it really? And why should you use the B Corp framework as a tool of choice to help with implementing it across your organization?

An ESG implementation includes:

Environmental: Carbon footprint and offsets, energy and water use, waste management and reduction, and supply chain practices.

Social: Justice, equity, diversity and inclusion (JEDI), employee satisfaction and fair compensation, working conditions and human rights, health and safety, customer satisfaction, and community involvement.

Governance: Shareholder and stakeholder engagement, internal codes of conduct and policies, board diversity, audit practices, ethical investing, and transparency.

Interest in ESG continues to grow with organizations like B Lab lobbying for changes in legal structures to help businesses be more accountable to their stakeholders, the environment and communities and ultimately develop a sustainable and inclusive economy.

B Corp as the ESG Framework

In 2006, B Lab was created as a non-profit organization to make it easier for purpose-driven companies to protect and increase their positive impact over time. Using the B Corp framework, purpose-driven companies started to measure what matters and demonstrate this through actions and transparency of business practices. 

Now, with over 4000 certified B Corps across the globe, and tens of thousands of other organizations using the framework, more and more of these businesses are learning how to meet and demonstrate the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose – the best possible approach to demonstrating commitment to purposeful business and ESG.

These organizations used B Lab’s 3rd party assessment process, the B Impact Assessment to start this journey in improving their business. The BIA is the most credible tool a company can use to measure its impact on its workers, community, environment, customers, and demonstrate governance and ethical business operations. 

Using Your Business as Force for Good

Certified B Corporations are businesses that are accelerating a global culture shift to redefine success in business and build a more inclusive and sustainable economy. To become a Certified B Corp you need to look at all aspects of your business using the assessment process. It takes commitment and a bit of time, but it ensures you follow through on best practices for how you run your company, treat your workers, help your community and the environment, as well as interact with your customers.

Using an ESG framework, like the B Impact Assessment, helps you be intentional about embedding purpose and values within your business. Using your business as a force for good brings clarity and a deeper engagement for all stakeholders, it also has additional benefits including:

Attracting and retaining great people: Companies that embed their purpose, engage with their community and include good social and environmental practices, attract the best people in support of their organization.

Benchmark performance: Using the B Impact Assessment to assess how you perform as a business helps you understand how to do better and to improve your business.

Access new partners and customers: A significantly growing number of businesses and customers are thinking about more than the price in their buying decisions and tens of thousands of other organizations that are looking toward a better social purpose in their purchasing.

Attract investors: Socially Responsible Investment (SRI) is growing exponentially, and traditional investment funds are changing their portfolios to include and sometimes require businesses with purpose. They recognize that by following good practices that care for people and the environment, companies reduce their overall risk and improve the likelihood of success.

Become a leader of change: Use your purpose to drive strategy, use your values to help make difficult decisions, and ensure you don’t compromise and focus on the people. Feel good about demonstrating that you’ve joined a movement that is changing the way business is operated and perceived with the goal of being good for people, good for the planet and good for purpose/profit.

As a Certified B Corp since 2015, Light Trail understands what it takes to provide the in-depth knowledge and expertise to guide and support companies through the assessment process. This is a great exercise for all organizations that aim to create better business practices; and for those that want to go all the way to certification, we’re here to help make sure you don’t miss anything and understand the practical things you need to do to earn the required points. We work with you on the most impactful areas of your business, involve the right people at the right times and integrate good business principles to improve your overall performance. Contact Light Trail Consulting and let us know how we can help, or book consulting time with us based on what you’d like to start working on.

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