Governance in the B Impact Assessment
This section of the B Impact Assessment (BIA) evaluates your business’ mission, ethics, and transparency. It rewards companies who regularly and formally consider, include, and legally protect their stakeholders when making company decisions.
Getting started with the governance section of the BIA
There are steps you can take to evaluate and improve your corporate governance. First, evaluate your mission, vision, and values and get feedback from all stakeholders, including employees and clients. As you go through that process, identify what steps you can take and what information you can share to better live up to your values. Finally, and this is required to certify as a B Corp, legally protect your stakeholders by either reincorporating as a public benefit corporation (PBC) or, if you’re an LLC, amending your articles of incorporation.
Mission, vision, and values
A big component of this section is transparency and corporate culture. What does your company stand for and what does it say it is? But the important answers won’t come from the founder’s original intentions or what the current executive team thinks it is, but rather what your stakeholders, primarily your employees and customers, think it is. Send out a simple survey and see how your answers align with those of your stakeholders and work to close the gap between intentions and perceptions.
The above survey is worthless, and potentially harmful, if action isn’t taken. Discuss the survey and identify the gaps. How transparent is our company and what could we do to increase it? Use the BIA as a best practices guide to think about what information you could share internally and externally. Think about your mission and your code of ethics and determine whether they need reworking. And most importantly, go through this exercise with the help of your stakeholders–the process has to be transparent.
This is a best-practice, but it’s also a non-negotiable. If you’re in a state where public benefit corporation legislation has been passed, any S Corp or C Corp will have to reincorporate as a PBC. LLCs aren’t off the hook either, as they have to amend their articles of incorporation to include specific language that protects all stakeholders. The main point of this exercise is to ensure that shareholders don’t legally have to be the deciding factor in company decisions like acquisitions, mergers, or sales.
We recommend all of our clients to Rockridge Venture Law, so if you have questions about this piece of the certification, we encourage you to set up a call with Kevin and his team.
Examples of companies with high governance scores
Governance is a great section to lay down a solid foundation for your business and we recommend going through and implementing as much of it as possible. If you need inspiration and examples,, check out B Lab’s Best For The World list, which recognizes the top 5% of all B Corps around the world. Here are a few of our local favorites:
Headquartered in Atlanta, Georgia, EnrichHer partners with corporate impact funds, foundations, and individual funders to connect companies led by women and founders of color to capital, coaching, and community. They earned almost 21 points in the governance section for their mission, ethics, and transparency.
First certified back in 2013, MightyBytes makes their stakeholders the focus of everything they do. As outlined on their social impact page, they are transparent with their business and their impact, which earned them 23 points in the governance section of the BIA.
What will my company gain from improving our corporate governance?
Not only will improving your governance structure get you started on your path to becoming B Corp Certified, but it will also help lay down a solid foundation for your business, give you guardrails as you grow, and provide legal protection that ensures you can always do right by your stakeholders.
A foundation to build on
When a contractor builds a house, the first thing they do is make space for and lay the foundation. They don’t put the frame up and then pour concrete through the top of the structure–the foundation must be put down first and built upon. The governance section works for your business in the same way that the concrete works for a building, it provides solid ground to build upon.
Guardrails for corporate decision making
I once heard the CEO of Ad Victoriam Solutions give an interview when he was asked about the benefits of the company’s B Corp certification. One quote stood out to me, “It provided a wonderful set of guardrails that kept us on the right track as we grew.” As anyone who has a grown a business will tell you, it can be difficult to balance the increase in sales with the needed increase in capacity. Locking in your mission, vision, and values force you, in a good way, to keep these things front of mind when times get tough.
Legal protection to do the right thing
For as long as capitalism has been around, it’s been focused on shareholder primacy, a theory made even more popular by Milton Friedman when he wrote his 1970 op-ed piece in the New York Times that declared “the social responsibility of business is to increase its profits.” By adopting the structure of a PBC or amending your LLC articles of incorporation, you are legally allowed to take your stakeholders, and not just your shareholders, into account when making decisions.