Editor’s note: An earlier version of this article appeared in the June 2018 issue of ABC’s HerbalEGram newsletter.

Consumer demand for transparency surrounding product ingredients, sourcing, processing, and manufacturing is growing. Recent studies by Nielsen and Label Insights indicate that many consumers are now willing to pay more for products with ingredients they perceive as cleaner and that they will be loyal to brands that provide transparency about their supply chain.¹ Now, the movement is progressing a step further, with a growing number of consumers, especially younger ones, seeking out companies with high ethical standards and that support causes like fair trade, sustainability, social responsibility, and environmental stewardship.² Companies across the consumer packaged goods spectrum are responding by paying more attention to their ingredients, fixing problems in their supply chain, taking on social and environmental causes, and being more transparent in general.²

Cause-related initiatives are prevalent in the natural products industry, with many companies being among the first to establish employee-rights initiatives and address social and environmental issues. However, natural products brands face the challenge of communicating these efforts to their customers in a meaningful way. While many third-party certifications are now available, B Corporation (B Corp) certification is considered one of the higher standards because it requires biannual verification of multiple aspects of business operations, from employee rights and community support to environmental and legal performance, among others.

B Corp certification has a relatively high profile, and several well-known companies, such as Patagonia and Ben & Jerry’s, have the designation. According to B Corp statistics, more than 100 natural products companies in many different sectors also have the certification, including Dr. Bronner’s, Traditional Medicinals, KeHE Distributors, Seventh Generation, New Chapter, Garden of Life, and Pukka. Others are jumping on board, such as MegaFood brand supplements and Herb Pharm, both of which received the certification in 2018, and Bioforce USA, which represents numerous European natural products companies and is currently obtaining its own certification. (One Bioforce brand, the Italy-based personal care company Herbatint, is already B Corp certified.)

What Is a B Corp?

By definition, B Corporations are for-profit companies that are certified by the nonprofit organization B Lab for their standards of social and environmental performance, accountability, and transparency.³ Since its founding in 2006, B Lab says it has certified more than 2,500 B Corps from 50 countries and in more than 130 different industries.^3,4 B Lab founders Jay Coen Gilbert, Bart Houlahan, and Andrew Kassoy envisioned the organization as a way to redefine success in business and to help companies do well by doing good.⁵

The certification process involves a comprehensive “B Impact Assessment,” which measures the overall impact of a company on its stakeholders. The specifics of each assessment vary depending on the company’s size, sector, and primary location of operations.⁶ The candidate company must then follow up with a review of the assessment and provide supporting documentation.

To achieve B Corp status, companies need to score at least 80 points out of a possible 200 on the B Impact Assessment. Companies receive a score for their practices in five areas: environmental initiatives (e.g., use of renewable energy, emissions, water, and waste); worker treatment (e.g., compensation, benefits, and work environment); customer relations (e.g., products and services and serving those in need); community practices (e.g., job creation, diversity, and engagement); and governance (e.g., accountability and transparency practices).^7,8

Companies also pay a membership fee based on their annual revenues that helps support B Lab operations, such as improving the assessment tool and providing third-party auditing services. Once certified, companies are able to join the B Corp community, which includes opportunities to collaborate with other B Corps and play a role in policy and legislation in countries where B Corps are located.⁷

B Corp Status — A Natural Fit

Natural products companies typically have been ahead of the curve when it comes to supporting social and environmental causes and third-party certifications. In the 1990s, many companies adopted fair trade principles, and in the early 2000s, many also obtained organic certification. However, the means to certify a company’s commitment to sustainability and supply chain integrity on a broader basis was not available until B Corp certification was established.

B Corp certification was particularly appealing to herbal tea company Traditional Medicinals, which was one of the first natural products companies to receive the certification after its first assessment in 2010. “In 1974, Drake Sadler co-founded Traditional Medicinals and pioneered a new social business model in which the company viewed all its stakeholders equally,” said Blair Kellison, CEO of Traditional Medicinals (email, July 11, 2018). “Its stakeholders encompass herb growers, processors, employees, shareholders, retailers, and consumers. The company makes decisions with each of them in mind. About 35 years later, B [Lab] came along to certify and measure the activity of companies like [Traditional Medicinals], so we, of course, jumped on board among the first B Corps in order to demonstrate our social business model.”

Today, B Corporations are well-represented in the natural products industry because “it makes sense,” said Sara Newmark, vice president of social impact for MegaFood (email, May 21, 2018). “As a community, we are known for pushing the envelope and being thought leaders on ways of doing things. Organic [certification] came out of our industry, as did the Non-GMO Project. So you would expect natural products businesses to take the lead on B Corp [certification], and they have.”

Robert Craven, CEO of MegaFood, expressed similar thoughts. “Natural products industry companies were founded [by] passionate leaders with an inner calling to change the world,” he said (email, May 30, 2018). “Becoming a B Corp just standardizes what it means to be best for the world. Natural products companies are also continuously improving the assessment to keep pushing all B Corps to become better — we will certainly be one of the pioneers for improvements.”

A case in point is Herb Pharm, another newly certified company that has upheld rigorous standards for social and environmental responsibility since it was founded by herbalists Ed Smith and Sara Katz. “Caring about the planet has been in our DNA since Herb Pharm was founded in 1979,” CEO Tal Johnson was quoted as saying in an Herb Pharm press release from March 2018.⁹ “We farm organically, wildcraft responsibly, and protect at-risk herbs, butterflies, bees, wildlife, and the health of our neighboring waterways.”

The company decided to take the certification step this year to formalize and solidify these efforts. “When the idea to get certified came up, a board member asked, ‘Why? ... We’ve been doing things this way for years,’” Johnson explained (email, September 26, 2018). But, he added: “We decided to become a B Corp to institutionalize how we do business. Our corporate legal documents now give us permission to think and act beyond profit. Baking it into our structure makes it less likely to be overturned by some future owner or manager. B [Lab] calls it ‘mission lock.’ For us, it is a way to pour some concrete on Ed and Sara’s legacy.”

Similarly, Traditional Medicinals saw early on the complexities of the botanical supply chain, which set the stage for many of its initiatives, according to Josef Brinckmann, Traditional Medicinals’ research fellow for medicinal plants and the botanical supply chain. “When we made site visits and learned about the botanical supply chain, it was difficult to reconcile that a company could make products for health care and right livelihood, knowing that some ingredients were coming from marginalized people living in abject poverty and without health care,” Brinckmann said (oral communication, June 26, 2018). “It hung over our heads, so we felt a personal obligation to correct that. We didn’t know at the time [that] there would be a fair trade movement or a sustainability movement.”

Although B Corp certification resonates with many natural products companies, Pierce Sioussat, president and CEO of Bioforce USA, said he believes that many companies in the industry are still behind the curve, especially in areas like employee compensation, gender issues, and supply chain management (oral communication, June 4, 2018).

The sheer number of certifications a company can consider may be another reason that some industry companies are not pursuing B Corp status. “I think one of the challenges for this industry is that there are so many certifications with really good reasoning behind them, like certified organic and non-GMO. These certifications are relevant and important,” Sioussat said. But, he added: “I think in this era where people have begun to distrust companies, B Corp [certification] addresses broader issues and shows that a company is one you can feel good about doing business with.”

According to B Corp statistics, this latter concept is a valid notion. Compared to other non-third-party verified sustainable businesses, certified B Corporations are 68% more likely to donate at least a tenth of their profits to charity, 55% more likely to cover at least some health insurance costs for employees, 47% more likely to use on-site renewable energy, and 45% more likely to give bonuses to non-executive members.¹⁰

Ari Goldsmith, executive director of marketing for KeHE Distributors, a wholesale distributor of natural products that received its initial B Corp certification in February 2016, said she believes that B Corp certification is trending because of the changing consumer and retail environments.

“Consumers are looking for advanced transparency and want to know a company’s story, not just the product but the brand behind it,” Goldsmith said (oral communication, June 5, 2018). “In the past, sourcing and supply chain issues were quiet and underground. Now, customers want to understand how a product is made and who touched it.”

MegaFood’s Newmark is seeing similar trends. “We just completed a consumer brand study where transparency and advocacy were the most important reasons to believe in our brand. That is exactly on trend from what we hear in other sectors as well,” she explained. “Consumers want us to move beyond just quality and efficacy; they expect us to take action and make a difference.”

It Takes a Mission

For most companies, it starts with a mission supported at the top of the organization and filters down to business operations, processes, and people. MegaFood, for example, has a mission “to nourish a world in nutritional crisis” and has a vision of “a world without nutritional poverty.” The company believes it must take bold action to ensure that this vision becomes a reality, Newmark said. “We believe that it takes more than a product to cure this crisis. Our social impact aspiration is to transform ‘agri-culture’ by empowering communities, revolutionizing food systems, and committing to radical transparency,” she explained. “We have to tackle all aspects of human and planetary health to see our vision become reality.

“It starts at the top,” Newmark continued. “There needs to be leadership that believes a successful business means more than just healthy financial returns. And that does start with a clear mission, that North Star that everything else lines up to. At MegaFood, we all know that all of the actions should lead toward curing nutritional poverty in our lifetime. Knowing that, it’s not hard for us to make sure we make the right decisions.”

This has led MegaFood to create a supportive employee and community environment, including programs that give employees 20 work-hours each year to volunteer at nonprofit organizations and 12 weeks of paid family leave, as well as a company commitment to pay workers 20% above the living wage in New Hampshire, where the company is based.

For United Kingdom-based Pukka Herbs, it started with the company’s clear intention for how it wanted its business culture to influence the world, noted Sebastian Pole, co-founder and master herbsmith for the company (email, June 27, 2018). “For us, it’s embedded in our name. Pukka is a Hindi word meaning ‘authentic,’ and this is at the heart of everything we do,” he said. “Being a B Corp cements our ongoing commitment to using business as a force for good — and it means we can join with like-minded activists to create more coordinated momentum for positive progress.”

Part of Pukka’s mission is to drive conservation through commerce in a way that benefits people, plants, and the planet. The company also explores initiatives outside of B Corp certification to ensure that it fulfills this commitment. For example, Pole noted, all of Pukka’s herbal teas and supplements are made with pharmacopeial-grade herbs that are 100% certified organic, down to the organic string on the tea bags. The teas are certified Fair For Life (a standard for fair and ethical trade), and the company is also committed to Fair Wild, a standard for regulating sustainable collection of wild-harvested herbs.

Bioforce USA was inspired to pursue its B Corp certification by the efforts it saw from Herbatint, a founding B Corp company based in Italy. “We saw that what they were doing was consistent with what we do as a company, so we wanted to take up the mantle and move forward and promote value,” said Sioussat. “Like a lot of other B Corp companies, we were already doing a lot of these things, so we thought ‘Why not document and formalize it?’ It was kind of a no-brainer for us,” he said.

As a distributor, Bioforce USA has to consider its own “supply chain” — the branded products it chooses to represent. Sioussat said the company has specific criteria for these brands. “We want heritage brands that have been in the industry for a long period and are in alignment with concepts of sustainable agriculture and environmental responsibility,” he noted. “Each has a different way they get certified and express their responsibility as a company.”

Part of Bioforce’s B Impact Assessment was to document these criteria and show that their brands meet them. Key Bioforce brands, such as Herbatint and AnneMarie Börlind, have been recognized with a B Corp certification in their own right or the comparable Certified Sustainable Economic (CSE) designation.^11,12*

Another key goal for Bioforce USA is to support its employees and the local community. “Because we are based in a small rural community, I want our employees to be the fabric of that community,” Sioussat said.

Ten percent of Bioforce USA’s profits go to charitable social services and cultural institutions, according to Sioussat. The company also has a very specific compensation plan in which the minimum wage is the published living wage in its home state of New York, which is almost twice as much as the federal minimum wage. “We also have a policy to address income equality in which the highest paid person in the company cannot make more than 10 times that of the lowest paid person,” he said.

The Value of the Process

Those who have been through the B Corp certification process say it is both arduous and enlightening.

“The process took a full year to complete,” said Goldsmith of KeHE. “If our leadership had wanted a better dollar value, it might have stalled out, but our mission is to make a better company for all, and that pushed it to the finish line. Every team had to be part of the process and to align with the business.”

Newmark agreed. “It is not easy being a B! And it shouldn’t be,” she said. “But when you are done, you have an accurate and thorough look at your business practices. You know where you excel, and where there is room for improvement.”

Craven added: “The process was incredibly detailed for multiple departments, but [it was] worth it to really get to know where we measure up against some of the best companies out there. For us, the biggest challenge was obtaining the legal status change to B Corporation, a step that we underestimated in the approval process of our stakeholders.”

For KeHE, these challenges and miscalculations were an important learning experience that Goldsmith characterizes as defining moments for the company. “We did have to go back and change things,” she said. “I can’t say all the things we changed, but it changed how we operate. Now, it’s not just operations for operations’ sake. It was definitely a rigorous process, but we learned more and more as we moved forward.” After completing the initial steps of the process, Sioussat said he hired a dedicated employee to take the company through the documentation process. “If you are a small company, it’s a good idea to get someone to help do this. We are not big enough for a chief corporate responsibility officer, but we are all responsible to walk the walk.” However the process is structured, he added, “it is important to have someone who can focus on these tasks and knows the nuts and bolts of how your business operates.”

Craven added: “It takes one passionate leader and one passionate executor to get it done, with the help of the whole village of course. Find the right people in your organization who will cascade the passion and inspire others to come along with them.”

Working within the System

Herb Pharm scored a 92.7 on its impact assessment.¹⁵ The company’s farms are certified organic, salmon-safe, bee-friendly and both a Monarch Butterfly Waystation and a United Plant Savers’ Botanical Sanctuary. Its products also are non-GMO. However, the company realized it could do more to commit to these values.⁹

“What we didn’t expect is how much B Corp is helping us get better,” Johnson said. “The survey is thorough. We scored high in the environment section, but it’s helping us find ways to improve in other areas. We’re trying to be a better B Corp. We are also trying to help B Corp understand and appreciate our industry.”

The latter point seems particularly important for companies in the herbal products industry. Although B Corp assessment questions are meant to be broad and cover many industries, there are challenges that come up with respect to the specific practices of a given industry. “Some questions just didn’t fit our scenario,” noted Ben Couch, sustainability manager for Traditional Medicinals (oral communication, June 26, 2018). For example, he explained, companies get points for helping their producers conserve water. “Some of our highest-volume herbs grow wild, or in semi-arid or desert [climates], so these plants don’t use irrigation at all, but you don’t get any points for using less water in that case. But the great thing is that B Corp does allow you to submit questions and comments to help improve the assessment process.”

Companies also get points for working with local companies and women- or minority-owned businesses. “We commented early on that our herbs will never be local,” Brinckmann added, referring to Traditionals Medicinals’ location about 75 miles north of the San Francisco Bay. “If we sourced out of the Bay Area, we would be out of business. So we had to talk about provenance for quality and that we are supporting local communities where these herbs are grown and helping them keep traditions alive ... [and] have thriving local economies and sustainable herb collection.”

Couch noted that adequately assessing a program’s impact is another challenge of B Corp assessments. “B Corp normalizes practices and scores by asking questions [such as] ‘What percent of your purchase dollar does the practice take?’” he said. “These kinds of measuring tools and questions compel companies to look at how they can create programmatic impact and where to invest to make their resources create the most impact.”

Companies that want to build a model for something unique may not, at least initially, get a lot of credit, Couch added. “One of the challenges as an herbal company is that we have pharmacopeial standards, so sometimes that quality is only coming from a given supplier or product,” he said. “So, the leverage we have to implement improved practices is stymied by access to high-quality material.”

Why B Corp Certification Is Worth It

Companies that are B Corp certified believe the certification has multiple benefits, from helping to recruit top employees to promoting customer loyalty and increasing consumer confidence. While the dietary supplement category is a relatively new category for B Corporations, Newmark believes that having the certification helps distinguish MegaFood’s products in customers’ eyes.

“The supplement aisle can be overwhelming with choice,” Newmark said. “Our bottles are small, so the ability to communicate what we stand for in a short amount of time and space is important. That is what the ‘B’ does. It gives people trust that not only are we saying, but we are doing, good, and that someone else has come in and evaluated us against a standard. It helps with trust and transparency.”

The certification also helps a company prioritize activities and show progress, Sioussat noted. Companies have to operate within the confines of their financial capabilities. “You don’t have to be all things. But you can look at the assessment and where you are scoring well, and where you are not, and then move the needle,” he said.

Pukka Herbs’ Pole said: “We are due to re-certify in September this year [2018], and in preparation for this, and in the spirit of continual improvement, we have completed a project to understand and improve our carbon footprint from crop to cup.”

This year, the company also launched a volunteering program as part of its flexible engagement policy. “It empowers staff to take up to four volunteering days with a charity or responsible organization of their choice, which helps drive the Pukka mission in our local community,” Pole said.

The B Corp process also helps companies better articulate their mission to both internal and external stakeholders, said Couch. “B Corp gives companies the tools and motivation to build and demonstrate their own model and share how that might help inform or create systems for other companies. You can also go to the leadership conference and see how the movement is growing and what else can be done.”

B Corp certification also can help prepare companies for the cultural shift that is already in progress, Goldsmith said. It speaks volumes that more than half of US consumers now say they will pay more for products they know well, she said. “Millennials don’t have much money, but they are choosing to use it to support companies that they trust.” However, the story is not just about millennials, Goldsmith added; it is just more evident because they now have the most buying power.¹⁶

Craven added: “People want to work for companies that are mission-driven and always have all of their stakeholders in mind when making decisions. Quite frankly, they are demanding it, and it’s changing the course of how the world is doing business.”

Herb Pharm’s Johnson believes that becoming a B Corp is bigger than any one company and helps connect like-minded businesses. “B Corp certification is a movement of companies using business for good,” he said. “We can do more together than apart — in public policy and to encourage more companies to join in.”

Pole said: “Conscious consumerism is on the increase and for good reason. We are becoming more and more aware of our contribution to the planet, and the plants, animals, and people who inhabit it.” Ultimately, he added, “at Pukka, we believe that the health and wellbeing of the planet is intimately linked to our own; you simply can’t have one without the other. … Joining a movement like B Corp, in which business acts as a driver of positive change, helps us continuously strive to improve our impact.”

SIDEBAR: B Corporations and Benefit Corporations: What’s the Difference?

While there are now many certifications and labels to help companies show independent confirmation of specific initiatives that range from animal rights programs and marine stewardship to fair trade causes, the B Corp certification program is one of the most comprehensive. It is not, however, the only broad-based business certification program. It often is confused with a Benefit Corporation (a term recognized in 34 states in the United States, with six more states working on legislation¹⁷), which has legally binding requirements to support and establish certain levels of transparency and accountability.¹⁶

Both of these programs look at business as a force for change and good, and require companies to meet higher standards of transparency and accountability. However, there are some differences between the two. Benefit Corporation status was developed because some companies believed that B Corp certification would not provide the legal protection of a government-recognized standard.⁷ So, while any type of for-profit entity can become a B Corp, a Benefit Corporation is a corporation type that, in addition to providing value for its shareholders, has three legal attributes: accountability, transparency, and purpose.⁷

Benefit Corporations have to provide an annual report detailing their social and environmental performance to shareholders and the public and can be brought to court for failing to do so. B Corps, on the other hand, are encouraged but not required to provide such data annually. Traditional Medicinals carries both certifications, said Kellison, “to make our social mission official in our bylaws,” (email, July 11, 2018).

“One of the cool things about the B Corp standard is that in a state that has Benefit Corp legislation, a B Corp is obligated to become a Benefit Corporation under state law,” explained Brinckmann. The Benefit Corporation certification also provides an added measure of protection for a company’s social and sustainability objectives. Traditional Medicinals realized the risk of doing good when shareholders can sue a company for using profits on things not related to profitability. “If you want to invest profits in doing good, you have to state your goals and get them publically signed by your board and then show that you achieved these goals,” Brinckmann explained.

Some companies use the Benefit Corporation legal structure to help them meet the requirements for their B Corp certification.⁴ Conversely, Benefit Corporations can use the free B Impact Assessment Tool developed by B Lab as a guide to meet their statutory transparency requirements. Unlike B Corp candidates, Benefit Corporation candidates do not have to meet a specific score or have their performance audited by a third party.¹⁸

Attaining Benefit Corporation status typically costs less than B Corp certification. State filing fees for Benefit Corps range between $70 and $200, while B Corp certification fees are based on revenues and can cost between $500 and $50,000 annually.^18,19

References

1. 2016 Transparency ROI Study. Label Insights. Available at: www.labelinsight.com/transparency-roi-study. Accessed May 28, 2018.
2. It’s Clear Transparency is Winning in the U.S. Retail Market. The Nielsen Company LLC. Available at: www.nielsen.com/us/en/insights/reports/2017/transparency-is-winning-the-us-retail-market.html. Accessed May 28, 2018.
3. What are B Corps? B Corporation website. Available at: www.bcorporation.net/what-are-b-corps. Accessed June 4, 2018.
4. B Corporation History. B Corporation website. Available at: www.bcorporation.net/what-are-b-corps/the-non-profit-behind-b-corps/our-history. Accessed June 4, 2018.
5. About B Lab. B Corp website. Available at: www.bcorporation.net/what-are-b-corps/about-b-lab. Accessed June 7, 2018.
6. How to become a B Corp. Performance Requirements. BCorp website. Available at: www.bcorporation.net/performance-requirements. Accessed June 4, 2018.
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9. Herb Pharm Joins B Corporation Movement [press release]. March 8, 2018. Available at: www.bizjournals.com/portland/prnewswire/press_releases/Oregon/2018/03/08/SF33458. Accessed October 29, 2018.
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11. Herbatint website. Available at: https://usa.herbatint.com/en. Accessed June 7, 2018. AnneMarie Börlind website. Available at: www.boerlind.com/ab/us/company/sustainability/. Accessed June 7, 2018.
12. CSE Certified Sustainable Economics; Quality Standard for Certification of Sustainable Business Management. Society for Applied Economics and Living Sustainability website. Available at: https://gfaw.eu/wp-content/uploads/2017/10/en-5.0-Certified-Sustainable-Economics-Standard-1.pdf. Accessed June 11, 2018.
13. CSE: The Credible Way into Sustainability. Society for Applied Economics and Living Sustainability website. Available at: https://gfaw.eu/en/cse-information-for-enterprises/. Accessed June 11, 2018.
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16. State by State Status of Legislation. Benefit Corporation website. Available at: http://benefitcorp.net/policymakers/state-by-state-status. Accessed June 12, 2018.
17. Field S. The difference between Benefit Corps and Certified B Corps (and deciding what’s right for your business). US Small Business Administration website. Available at: www.sba.gov/blogs/difference-between-benefit-corps-and-certified-b-corps-and-deciding-whats-right-your-business. Accessed June 11, 2018.
18. Benefit Corporations and Certified B Corps. Benefit Corporation website. Available at: http://benefitcorp.net/businesses/benefit-corporations-and-certified-b-corps. Accessed June 11, 2018.