Should you get B Corp certification? Is there a benefit, and do customers care?

Recently MRCagney became the first ACE member to be B Corp Certified. We asked Managing Director Jenson Varghese how they achieved it and what it means. But first, some background on MRCagney and B Corp certification.

Jenson Varghese, Managing Director, MRCagney.

MRCagney is one of Australasia’s leading sustainable transport consultancies focusing on climate change and emissions reduction. The environment they operate in is rapidly changing. MRCagney has about 25 employees spread over the Auckland and Waikato regions. MRCagney went through a management buy-out in 2021, so it is now 100 per cent% Kiwi-owned and operating more like a new company in some ways.

B Corp Certification is a designation that a business meets high standards of verified performance, accountability, and transparency on factors from employee benefits and charitable giving to supply chain practices and input materials. To achieve certification, a company must:

• Demonstrate high social and environmental performance by achieving a B Impact Assessment score of 80 or above and passing a risk review. Multinational corporations must also meet baseline requirement standards.
• Make a legal commitment by changing their corporate governance structure to be accountable to all stakeholders, not just shareholders, and achieve benefit corporation status if available in their jurisdiction.
• Exhibit transparency by allowing information about their performance measured against B Lab’s standards to be publicly available on their B Corp profile on B Lab’s website.

So with this in mind, we had a great talk with Jensen Varghese about how they got there:

1. MRCagney in New Zealand decided to become B Corp certified. What drove that decision, and why B Corp?

B Corp looks at five pillars: your governance, workers, community, environment and customer model. It is looking at whether you are a business that cares about people, the environment and the community. For us, we consider ourselves a values-oriented firm, and for me personally, it was a way to benchmark ourselves against other firms. Are you actually doing good? Because we exist to do good but do we have evidence of that and can we test that evidence? Increasingly we were finding that our clients were also looking for this evidence in tender processes.

2. There are other certifications out there, whether it be Carbon Certification or Environmental Social Governance such as GRESB; what made you choose B Corp?

B Corp is well established in Australasia and 86 countries worldwide and provides industry benchmarks. It represented a good fit for us as a values-oriented firm and is becoming well recognised by clients and employees. We liked the holistic approach that B Corp took considering all five pillars, not simply focussing on just one element such as environmental outcomes.

3. What processes were involved for you to become B Corp certified?

The first step is a self-assessment; you can complete that within 30 minutes to get an initial idea of where you stand. To go through the whole process and become certified, you need to score 80 out of a possible 200. The average score for firms doing it the first time is 50. And then, you can start doing more work and identify areas of improvement to reach that score of 80 or over. After self-assessment, you go ahead to commit and sign up for the full certification process. B Corp then asks for more detail, and your submission gets fully assessed. This can take a bit of time and effort.

Did you get certified straight away, or did you need to more work?

We didn’t have to change a lot to meet the threshold. Getting the evidence was sometimes difficult if it was something we didn’t track. There are a lot of questions and evidence, but we didn’t have to create many new processes as we had most things in place. We did get an external advisor to assist us with some areas. Getting external advice to understand the questions was really helpful. Some things were easier to address. For example, showing that your staff have a superannuation programme is simple in New Zealand since we have Kiwi Saver. The bigger delay was at the B Corp end because it took six months from when we submitted to when they assessed it due to issues with Covid-19.

Where were the areas you were particularly strong?

We were benchmarked against our industry overseas, and in the areas of governance and employees we rated very highly. We were also well above the country average for all five pillars. In fact, our overall score of 113.9 is very high for a first-time score and overall is one of the highest in the Aotearoa.

What areas needed more improvement or more evidence?

Overall there wasn’t one pillar that stood out. But there were areas that we could improve on within all five pillars.

As part of being B Corp certified does it also mean you are carbon neutral or is it more around the governance? And did you require certification of being carbon neutral.

Being B Corp certified doesn’t mean you are carbon neutral. Carbon neutrality didn’t register highly for us as an issue because we are a SME consultancy service. So other than tracking any flights and transport movements, carbon neutrality of our activities wasn’t high on the priority. We are a sustainable transport consultancy, so our whole business is to create more sustainable cities with less emissions. The outputs of our work have a much larger, positive impact on our cities, and that was what was recognised in our submission.

Is this something other businesses should embark on, and what advice would you give them?

One of the reasons we are keen to promote being certified is to create more sustainable cities. MRCagney being a B Corp certified ACE member won’t make a massive difference because we are on the smaller side of an SME. If our industry collectively goes down this path then employees will be treated better and the environment will be better looked after. That is where we will start to see significant changes happening.

One reason to consider B Corp certification is for employee recruitment and retention. In the current market, labour is really tight, and employees overseas are joining companies because they are B Corp certified - it creates a point of difference for companies looking for new talent. I think employees will increasingly be looking for evidence that their employers care about their people, environment and communities. And B Corp is one of the most widely accepted certifications to prove that. You will also get some ideas about how better look after your staff through the process.

You don’t want to be one of the last companies to go down this path and be left behind. My expectation is that our clients will increasingly look for certifications such as B Corp in their procurement processes. You don’t want to be one of the last companies to go down this path and be left behind if this happens.

There is evidence that firms that get B Corp certification see a bigger increase in financial performance and satisfaction one year later. If you challenge yourself to be a better firm, then you will see the benefits of that. That’s why I think firms should consider it. Even if you don’t hit the mark the first time, you learn what you can chip away at next time.

What are some of the examples of initiatives you do for your employees?

We have an employee health and wellness allowance that can be used towards gym, yoga, running shoes or meditation apps. The other thing which is really interesting is we are transparent about our a lot of our processes and performance including financials, which is unusual with private companies. I think this transparency helps create an environment of trust which is very important.

What are examples of things you have done for the community?

We are involved with grassroots advocacy. For example, we supported Women in Urbanism when it was starting up. This included providing space for them build the concept and they are now a standalone entity. If we want to make a difference, we need to connect and engage with the community outside of getting paid to do it as a consultancy.

What about how you work with your customers?

A big part of the B Corp certification is the business impact of your services and who your customers are. We work primarily for the public sector, and the public sector are working primarily for the betterment of our communities. For example, our business model includes working with public transport agencies who provide transport to those who don’t have other transport options. We also try to ensure that the disabled community is considered in transport planning.

Obviously your business is very aligned to what B Corp recognises, but what about other businesses who are not working in this space?

I think it is well worth going through the process or at least just seeing where you stand. You go down different paths of explaining what you are doing and why it is making a difference. A whole range of organisations are certified so it is just about measuring how much good you are trying to do.

How much is involved with applying and going through the process?

The first stage is just a few hours. The next stage might have been 80 to 100 hours but it can vary depending on the size of the organisation and where they are on the journey.
I think it is important to get support and enthusiasm from leadership and staff when undertaking a B Corp certification. This will also require the support from your board which might take some time depending on your board set up. You can expect questions about whether it is the best use of company time. We were also asked if this was considered greenwashing. We took the approach of getting staff involved early, and it was easier because it aligned well with our values, but it can be challenging for some firms.
It was also something we chipped away at when there was capacity and time. So the opportunity cost can be small depending on how it is managed.

Would you recommend it to others?

If firms are thinking about it, then I am happy to talk through it and yes, I recommend it. As I said, even just the initial assessment can give you some ideas about how to be a better company.

Lastly, if you were challenging the industry to do one thing differently, what would it be?

In the current world we are in there is a lot of talk about sustainability, but as an industry we are sometimes inconsistent. Often sustainable projects are being delivered alongside ones that are incredibly unsustainable with negative impacts on the environment. As an industry, we need to get collectively better at pushing back on these projects. It is easier said than done, and it is tough at times, but I think we are all guilty of delivering poor outcomes for communities. So the industry must think about whether the projects we work on are actually going to leave a positive legacy for future generations. The negative impacts of some projects can be massive, and sometimes we need to be courageous and not do the projects at all.

• Connect with Jenson Varghese on LinkedIn
• Find out more about MRCagney