Why Your Agency Should Become a B Corp

The creative community typically leads cultural changes, so it’s no surprise that creative companies have been among the first to understand the potential value of B Corp designation. This intuitive, early understanding of corporate social responsibility trends has helped agencies attract, service and retain clients who need help attaining and benefiting from B Corp status.

This designation is something for both creative agencies and their clients to achieve. Below we provide further details on B Corp status and some factors to consider when pursuing it.

What Is a B Corporation?

A B Corp is formally defined as a for-profit company that vows to balance purpose with profit.

To become a certified B Corporation, a company must attain a minimum score on a comprehensive B Impact Assessment. This assessment focuses on the organization’s relationships with their employees, customers, environment and community. Once this designation is achieved, every business leadership decision must consider the environmental, social and governance (ESG) impact.

Organizations that become B Corps adopt formal legal resolutions to institutionalize “good” business practices. They pledge to formulate, track and achieve their stated goals.

Reasons for Achieving B Corp Status

When this designation first came into being, financial advisors either steered clear of it or warned of the cost. It appeared to be a marketing tool with no obvious financial benefit.

It is costly to become a B Corp and to maintain the designation. An agency with $20 million in revenue will likely pay $12,000 in annual fees (fees scale with revenue). That amount doesn’t include the cost of the required audits.

However, forward-thinking financial advisors are now seeing recognition of climate and social issues as a requirement for the continued health of a business. Shifting demographics and cultural changes necessitate different financial leadership and conscious capitalism.

There are various reasons to attain B Corp status. Here are a few for the creative industry to consider:

• Impact on sales revenue. When climate and social behavior matter to a customer, and a brand has a more intimate customer relationship, sales revenue is directly impacted by the publicity associated with the seller’s stance on ESG matters. When clients thrive, the agency thrives. Marketers must understand this complex relationship and B Corp assessment offers points for having an “ethical marketing policy” in place.
• Employee retention. There has never been a more critical time to attract and retain good talent. The cost of turnover is estimated to be anywhere from three months to one full year of an employee’s salary. When employees feel that their personal values are reflected in choices made by their leaders, they stay.
• Stakeholder support. Large public company board seats are being occupied by environmentally minded leaders. For many companies, attracting board members, shareholders and investors will require decision making that takes environmental and social issues into account. Creative agencies that make ESG factors a priority or that achieve B Corp status will be more likely to attract the business of those companies that want service providers to align with their values.

Creative agencies looking to achieve B Corp status can do so by defining and achieving measurable metrics.

Preparing for B Corp Status

Agencies need to understand the investment required for ESG initiatives and how to calculate the long-term return on investment in public commitments to customers, employees and communities. When preparing a plan to achieve B Corp status and other ESG initiatives, your forecasting should include the:

• Revenue impact of client attraction and retention
• Marketing expense associated with messaging to consumers and staff
• Anticipated cost savings achieved through potential local tax credits, reduction of staff turnover and reduced energy costs
• Cost of the initial impact planning and compliance (this may include B Corp certification costs)
• Planned cost of continued compliance and goal achievement
• Cost of data tracking and analysis
• Cost of annual audits (Audit standards are still evolving, which means companies must be ready to comply and provide data in a variety of ways. Organizations that measure their results will be required to provide evidence of progress.)

As more companies, investors and members of the public look to align their values with businesses that contribute to the greater good in a significant way, it would be wise to explore achieving B Corp status. Becoming a B Corp provides your current and potential clients with tangible proof that your agency walks the walk when it comes to environmental and social responsibility.

Armanino is proud to be a certified B Corp. For assistance with preparing and achieving your own sustainability efforts or goals, contact our experts.