#209 - Breaking Down Sustainable Business Practices

January 27, 2022

#209 - Breaking Down Sustainable Business Practices
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What makes a sustainable business actually sustainable? There are many ways that a business can make an impact with seemingly standard business operations, and today we're breaking down the practices involved in this by leaning on an excellent impact analysis tool: the B Impact Assessment (BIA).


What makes a sustainable business actually sustainable? There are many ways that a business can make an impact with seemingly standard business operations, and today we're breaking down the practices involved in this by leaning on an excellent impact analysis tool: the B Impact Assessment (BIA). 

While the BIA process is extensive and rigorous, the results show major differentiators between those who are truly sustainable businesses and those who are not. Today we jump straight in with a quick explanation of how a company can use this to measure its impact on its workers, community, environment, and customer, with the aim of ultimately joining the Certified B Corporation community. 

Hear about the two levels of sustainable business practices before we dive into the four impact areas of governance, community, environment, and customers.

From transparency, civic engagement, and community partnership to energy and water usage, carbon footprints, and financials (and a whole lot more), this episode covers all the basics of how this assessment aids the progress of a business along the path to truly being a force for good.

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🗣 TOPICS DISCUSSED:

  • Looking at the B Impact Assessment's role in evaluating a company's sustainability 
  • How a business can become a certified member of the B Corp community
  • Hear about the two levels that sustainable business practices function in
  • The four areas that the BIA identifies: governance, community, environment, and customers
  • The governance concerns that need to be considered, from transparency to legal status
  • The requirements of civic engagement and partnership with the local community
  • Evaluations around the community impact of labor-management and financial choices
  • Hear about the environmental concerns of energy and resource uses and emissions
  • An example of product innovation by Pela, designed to reduce environmental impact
  • Assessing what sort of relationship the company keeps with its direct customers
  • Questions addressing economic and social issues through products or services
  • How the process involved in proper sustainable methodology is rigorous and extensive

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Transcript

Cory Ames  0:00  
What makes a sustainable business well, actually sustainable. That's is the subject of today's episode, where we're welcoming you back here on the social entrepreneurship and innovation podcast, to our introductory series on sustainable business. We're breaking down the practices that make a business sustainable. We've talked about why sustainable business matters what a sustainable business is. And now we're getting granular on the practices, policies and philosophies that actually make a sustainable business. Well, that so we'll dive in in just a second. But before we do, folks, I want to invite you to sign up for my better world weekly newsletter, weekly newsletter that I write, curate and publish myself send out every single Monday go to grow ensemble.com backslash newsletter to sign up be in that discussion with our community of folks at grow ensemble of what it takes to leave the world a better place than we found.

Let's break down the practices that make a business sustainable. To do so we're going to lean on an excellent tool for measuring the impact of a business the B impact assessment. The B impact assessment is a tool created by the nonprofit organization B Lab that allows businesses to put a number or an impact score as they call it behind their social and environmental impact. Using the tool businesses assess their current impact, see how they compare to other similar businesses and ultimately build a plan around improving the score that they received. If a business is so interested in once they've met the minimum required impact score, they can submit for certification to officially become a member of the certified B Corp community. So jumping back in here, what are the practices of a sustainable business? I see there are two levels here at a high level. A sustainable business measures their impact assesses where their greatest opportunity for improvement is they improve and then they repeat the corpse and other businesses use that B impact assessment to continuously go through the above four part exercise. And at the next level, there are specific policies and day to day practices that a sustainable business takes on. Again, using the B impact assessment as a guide here, we've identified four overarching impact areas governance, community, environment, and customers. Let's define each impact area and look at specific examples of practices and policies that would fall underneath each one.

First, there's governance. The governance impact area assesses the company's mission ethics transparency in internal or external accountability. assessment questions in this impact area include, does the company publicly share information about its social and environmental performance on an annual basis? Companies like Oliver Russell, Patagonia, all good products, Dr. Bronner's, they all produce annual impact reports sharing their improvements or shortcomings on various social and environmental business practices. Another question, separate from a mission statement. What is your company done to legally ensure that its social or environmental performance is a part of its decision making over time, regardless of company ownership, so if available in their state, province, or whatever, companies will adopt a benefit corporation legal status. This ensures that a company's social and environmental mission is preserved, regardless of the changes in ownership, if not incorporated as a benefit corporation, a company is at risk of legal threat from investors if their pursuit of some public good comes at the expense of financial performance. I'd recommend you read more on this with our posts. What is a B Corp at grow ensemble.com Or as well check out my friend Russ Stoddard posts. He's the founder of Oliver Russell. How do you tell a B Corp from a benefit Corp? One final example question here in the governance impact area, what information does the company make publicly available and transparent? So this question again focuses on transparency as it relates to social and environmental performance, but as well financial performance, or who or what entities possess ownership in a company, companies might choose to use an open book management style where all employees can visibly see the financial performance of the company, the incomes and expenses in salaries. This level of transparency and accountability is what ensures businesses that strive to be sustainable, like certified B Corporations are in fact walking the walk. Next, the community impact area. The community impact area assesses a business's social and economic impact on the community or communities in which it operates. Let's see assessment questions in this impact area include? How does your company take part in civic engagement? possible answers here are things like financial or in kind donations, community use of company facilities, advocacy for social environmental progress, pro bono work and more. Also, another question, what was the percentage of per capita worker time donated as volunteer community service? Or pro bono time in any specific reporting period? So this question asked companies to report on what percentage of total work time was allocated towards community service or pro bono time on a scale of zero 2% to 5%. Another example question in the community impact area? Well, what characteristics apply to the financial institution that provides the majority of your company's banking services? So there are plenty of ways in which a company can make an impact with seemingly standard business operations? This question on who a business banks with is a clear example of that the B impact assessment or its points for companies using banks that are certified CDFI Community Development Financial Institutions, credit unions or cooperative banks, or as well members of the Global Alliance for Banking on Values or of course certified corporations. A final example question here in the the community impact area, what are your company's policies regarding independent contractors that do not work for the company greater than 20 hours per week for longer than a six month period? So speaking to labor points, the assessment questions how IT company manages their relationships with part time Contractors? Are they paid a living wage can contractors submit feedback to the company? These points ensure that the contractors are treated fairly and respectfully moving on next to the environment in bacteria? So the environmental impact area assesses how a company manages their environmental impacts, as well as energy and resource uses. assessment questions in this area include, or your company's products or services or processes structured to restore or preserve the environment? One of the first questions asked in this section is whether or not the core of what the business does or sells is something that was constructed to restore or preserve the environment. Let's take a specific example. Pela manufacture the world's first compostable phone case, they made these cases out of an innovative flagstick material that's designed to compost in under six months from its end of life. This is an alternative to the conventional plastic phone cases that won't degrade or compost ever. So Pela manufacture their cases in this creative way as an alternative to the typical practices, the phone case marking. This is what makes Pela's model environmental business model. Another question in this section, how does your company manage its greenhouse gas emissions? This question asks, What's the company's carbon footprint in what are they doing about it? To achieve the highest score here companies need to be monitoring and recording their emissions, setting targets to reduce those emissions and ultimately achieving carbon neutrality, where the company is offsetting as much carbon output as they are producing. Companies will turn to organizations like climate neutral, or we are neutral to receive support with measuring, reducing and offsetting their carbon emissions. You might even begin to see the Climate Neutral label on products out in the world. As well. Similar questions are asked about a company's water usage or energy usage. Are they recording? Do they have plans and objectives to mitigate and reduce usage? Are their facilities and offices run off of renewable more sustainable energy sources? These are some of the additional things that are asked in this area. And finally, the impact area for customers. The customers impact area evaluates what sort of relationship that the company keeps with its direct customers. assessment questions in this area include, do any of your company's products or services addresses social or economic problem for your customers and or their beneficiaries. So similar to the environmental impact area, this section questions whether there's a direct social impact at the core of what the business offers to the market. These can be surfaces that offer clean water and electricity to those who have an access or services that improve financial outcomes for low income individuals or even products or services that have an educational component such as independent media like Grow Ensemble. So there are additional questions here as to how a company manages and monitors the outcomes of their customers? Do they measure customer satisfaction? Do they share that publicly? Do they monitor the impacts that their products have on their customers?

So, we've covered these four impact areas. These are all examples of sustainable business practices in practice. But what do these all matter? Right, we're just briefly summarizing all that's included in the B labs B impact assessment. It's quite extensive, and it can take companies really extended periods of time to even gather the information necessary to adequately answer the questions. Walking through a few of the examples of the sustainable business practices, is really an effort to show you the amount of rigor through which these types of businesses assess themselves. They work to mitigate and remove any negative impacts and of course, pursue a verifiably positive impact with their products in the operation of their business. Of course, these businesses aren't doing this because they have to, it's because they've committed to measurably using their businesses as a force forget, from the policies and business models to the overarching methodology and focus on continual improvement, we can see major differentiators between those who are truly sustainable businesses and those who are not. The B labs B impact assessment might not be the only means to measure and assess what makes for sustainable business practices. However, I do believe it's the best one that is currently available. If you'd like to read more about the B Corp certification, and all that's included, I recommend visiting the B Impact Assessment website directly or picking up a copy of the B Corp handbook written by Ryan Honeyman and Dr. Tiffany John. So with a clear understanding of what practices and standards a sustainable business adheres to, on a day to day basis. We'll talk next in the episode that come about where the greatest opportunity is, for businesses to be more sustainable. And as well, how from a consumer perspective, businesses can be pushed to make these changes faster.

Alright, y'all, that's a wrap on another episode of the social entrepreneurship and innovation podcast as always so grateful to have you listening in. If you love the show, please leave us a review on Apple podcasts or hit subscribe wherever it is that you get yours. And as well. I want to invite you to sign up for our Better World weekly newsletter. This is our weekly discussion with our community of social entrepreneurs and changemakers on all things building a better world is a newsletter I write and publish send out myself every single Monday go to grow ensembl.com backslash newsletter, to join in on that discussion, all things building a better world. Go to grow ensembl.com backslash newsletter to get the next one in your inbox. And finally, if you know of a company work within a company or run a company that might be interested in sponsoring the social entrepreneurship and innovation podcast, we always love starting conversations with potential partners who share our vision of building a better world together. Go to social entrepreneurship.fm backslash contact. There you can fill out a quick form, start that conversation with us. These sorts of partnerships fuel our mission to build a better world together. Alright, y'all, until next time