- In recent years, large companies such as Nespresso and Rituals have received B Corp certification for socially responsible business practices.
- This left smaller B Corp companies questioning: how much of a positive impact are these major players really making?
- B Corp founder B Lab is significantly tightening its standards, but insists this is not a response to the criticism. “We do this every three years, but this time we're making more fundamental changes.”
This article was originally published on: https://mena.nl/venture-capital/nespresso-en-rituals-die-b-corp-worden-dat-stemt-niet
Companies that claim to be ‘doing something’ about sustainability or diversity are often viewed with suspicion by the general public. Just look at a few studies from this year: nearly four in ten consumers in the Netherlands suspect companies of greenwashing — pretending to be environmentally responsible while doing relatively little in practice. More than half of Dutch consumers believe that claims about a product's sustainability are generally not credible.
This is hardly surprising. Companies making sustainability claims are constantly being exposed. Earlier this year, for example, retailer H&M was forced to stop using claims such as ‘conscious’ and ‘conscious choice’ after being reprimanded by the Dutch Authority for Consumers and Markets (ACM). According to the regulator, the company, which produces inexpensive clothing in low-wage countries, had made sustainability claims that were “unclear and insufficiently substantiated.”
Or take airlines, which lead customers to believe that planting a few trees can offset the CO2 emissions from their flights, when in reality you would need to plant a small forest to compensate for those emissions.
Companies looking to avoid falling into this greenwashing trap often turn to labels or certifications to demonstrate their commitment to responsible business practices. However, not all these symbols of good corporate behaviour enjoy consumers' trust, with many complaining about the proliferation of certification labels
B Corp certification enjoys widespread trust
For years, however, there was little debate about the credibility of one particular certification. The B Corp label — or, more accurately, certification — for socially responsible business practices enjoyed trust across the political spectrum. The late former US Secretary of State Madeleine Albright said in 2015: “The B Corp movement shows us that business, the engine of our economy, can be a driver of change and live up to society’s standards.”
Companies seeking B Corp certification must undergo an extremely rigorous process. They need to make parts of their supply chains more sustainable, demonstrate that they treat employees and customers well, and show that they regularly do business with local partners. In addition, they must include provisions in their articles of association stating that their purpose is not simply to maximise shareholder profits, but also to benefit society.
B Lab, the non-profit organisation behind the certification, applies strict assessment standards. It can take companies years to become B Corp certified. Of the 200,000 organisations that have created a profile on B Lab's website, only around 6,000 companies have managed to obtain certification so far. And that's despite B Lab having started in the United States back in 2006.
B Lab has been active in the Benelux for almost a decade. In the Netherlands, 177 companies have now earned the coveted B Corp certification, with retailer Dille & Kamille becoming the latest addition just last week. The company joins an impressive list of names, including modular smartphone brand Fairphone, cereal brand Holie, food brand Fairtrade Original and sustainable denim brand Mud Jeans. According to B Lab, the number of B Corp-certified companies in the Netherlands is growing by an average of 35 percent annually.
An entire network of more than thirty consultancy firms has even emerged to help aspiring B Corps prepare for certification. These consultants are allowed to call themselves B Leaders, although they operate independently of B Lab.
Cracks in B Corp's positive reputation
In recent years, however, cracks have begun to appear in the carefully built reputation of B Corp. While B Corp certification long seemed reserved for small and medium-sized businesses driven by idealistic values, it is increasingly being awarded to large corporations and multinationals. This has raised eyebrows among some critics.
For example, the Dutch division of dairy company Danone and personal care brand Rituals have both achieved B Corp status. In 2018, Rituals was heavily criticised by de Volkskrant for making environmental promises that were allegedly impossible to verify. Danone operates in the dairy industry, which contributes to the nitrogen emissions crisis — hardly sustainable. Certification was also awarded to Swapfiets, a subsidiary of Pon that leases bicycles and strongly promotes electric bikes. Adding an electric motor to a bicycle requires electricity, which in most situations leads to higher emissions.
The most controversial addition to the B Corp community is Nestlé subsidiary Nespresso, which has been allowed to call itself a B Corp since April of this year. The coffee company was previously linked to child labour in Guatemala. In August, Het Financieele Dagblad reported that thirty anonymous B Corp-certified companies had written a letter to B Lab requesting changes to its policies regarding such companies. “We fear that companies will do the bare minimum in order to greenwash themselves,” they wrote.
B Lab recently announced stricter certification standards. To achieve B Corp status, companies must score at least 80 out of 200 possible points, which can be earned by demonstrating sustainable and socially responsible business practices. According to B Lab, reaching 80 points is already a considerable achievement, as the average conventional company would score no more than 50 points.
No B Corp company has achieved the full 200 points. In the Netherlands, African Clean Energy, an energy company serving developing countries, comes closest with nearly 180 points. According to B Lab, B Corp-certified companies in the Benelux have an average score of 94.6 points.
Companies can earn the required 80 points across five categories: governance, workers, community, environment and customers. To become certified, a company does not need to perform equally well in every category. For example, weaker performance in employee policies can be compensated for by stronger environmental initiatives.
From 2024 onwards, however, these rules are set to change significantly. B Lab will introduce ten separate focus areas, including human rights and fair wages. Companies seeking certification will have to meet minimum standards in every area, rather than relying on strong performance in one category to compensate for weaknesses in another, while still achieving the required 80 points.
Companies could lose their certification
Although B Corp companies have paid for the entire certification process out of their own pockets, it is theoretically possible that some could lose their certification, according to B Lab. To make the transition somewhat easier, the organisation is introducing a transition period in 2023. If companies ultimately fail to meet the new standards, they risk losing their B Corp status.
“But we don't see companies losing their certification as a risk,” says Daan van Apeldoorn, spokesperson for B Lab Benelux, an enthusiastic man in his thirties with medium-length hair who wouldn't look out of place at Greenpeace. “We see it as an opportunity for companies to increase their impact. If they can no longer meet those standards, that's unfortunate.”
On a rainy Tuesday morning, Business Insider visits B Lab Europe's headquarters in Amsterdam. The organisation is based in SDG House, a shared office building next to the Tropenmuseum. Joining Van Apeldoorn is Tessa van Soest, who became director of B Lab Benelux earlier this year and previously worked as a sustainability manager at organisations including consultancy firm EY and Amsterdam Airport Schiphol.
If a company were to lose its certification — something neither of them expects — it would not be the first time in B Lab's history. Sometimes a B Corp company is acquired, while others simply cease operations. In some cases, a certified company suddenly no longer meets B Corp standards. This happened to beer brewer BrewDog earlier this month, after a BBC documentary revealed concerns about working conditions at the company.
Such incidents, as well as the controversy surrounding Nespresso, inevitably affect the reputation of B Corp certification. Nevertheless, Van Soest insists that B Lab is not tightening its standards in response to criticism from the companies that signed the previously mentioned letter.
“We update our standards every three years. This will be the seventh time we've revised them, so it's not something we've only just started doing. However, this time we're taking a more fundamental approach by grouping the areas we assess, requiring a minimum score across all ten categories, and making continuous improvement in performance mandatory for recertification.”
Nespresso as a B Corp? 'No company is perfect'
Van Soest doesn't find it surprising that companies like Nespresso can become B Corps: “We are striving for systemic change. To achieve that, we need smaller companies, but also larger players. Without major companies taking the lead, an industry won't transform, and we won't be able to accelerate that systemic change.”
“No company is perfect,” the director says. “If we only allowed perfect companies into our community, we would have no reason to exist. Because there is no such thing as a perfect company. There are companies that have come a long way, such as Triodos Bank. But even they still have areas where they can improve.”
However, there are certain industries that B Corp does not want to work with, Van Soest explains, such as the arms trade and fossil fuel industry. According to Van Soest, Nespresso falls into an intermediate category: companies that may generate some controversy but where B Corp believes it can help drive improvements within the industry. Examples of these “controversial” industries include gambling, charity lotteries and financial companies operating in tax havens. According to Van Soest, these businesses must meet additional, stricter requirements.
Large corporations, however, also bring in more money. According to Dutch newspaper Trouw, obtaining B Corp certification can cost large companies as much as €50,000, while smaller companies may pay less than €1,000. Nevertheless, Van Soest insists that B Lab is not driven by financial incentives.
“We are a non-profit organisation. We have very limited scope to make a profit, and any profit we generate must be reinvested in improving and growing our organisation. Certification is an intensive process that requires significant human resources, and that comes with costs.”
The director actually considers the model fair because fees are “revenue-based.”
“We make zero profit on small companies — in fact, we operate at a loss. Larger companies therefore pay a little more, but they also have greater financial capacity.”
Van Apeldoorn adds: “Our goal isn't to certify as many companies as possible. The fact that there are still only 6,000 B Corps after all these years says enough.”
But are these large corporations genuinely interested in the “systemic change” Van Soest talks about, or is the B Corp label simply an attractive marketing tool for them?
A 2021 study by Ghent University points to a “positive effect of B Corp certification on revenue growth.” In other words, companies can also use the certification to increase their earnings.
B Lab Benelux spokesperson Van Apeldoorn says he is not particularly concerned about companies pursuing B Corp certification for commercial reasons.
“I think it's a great thing if companies grow because they're doing more for the climate and have happier employees. If that encourages consumers to choose sustainable products more often, that's fantastic.”
“It might sound as though companies could easily make this decision for financial reasons,” Van Apeldoorn continues, “but that's certainly not the case, because they're required to amend their articles of association. A company solely focused on generating profits for its shareholders won't readily change its articles of association to a model that takes all stakeholders [in society, ed.] into account in its policies. After all, that also makes the company accountable to those stakeholders.”
Van Apeldoorn points to Rituals' B Corp certification.
“It took them five years to meet all the certification requirements.”
Nespresso, meanwhile, spent three years on the process, according to a spokesperson speaking to Business Insider.
The coffee company says it hopes that B Corp certification will allow it to join a “movement of like-minded organisations.”
“It means benchmarking our performance and drawing inspiration to accelerate our activities, drive broader transformation and increase our positive impact on the climate, communities and circularity.”
And what about the previously mentioned child labour in Guatemala?
The coffee company calls such practices “unacceptable” and says it takes immediate action whenever it receives indications of child labour.
“By joining the B Corp movement, we are formalising our commitment to making a positive impact on the world, including addressing the complex challenge of child labour in coffee-growing communities.”
Smaller B Corp companies are critical
Guido van Staveren van Dijk of B Corp-certified coffee brand Moyee Coffee was invited to an online session where B Corp brands could ask Nespresso questions. “It was smart of them to give potential critics a chance to speak. We welcomed them, but we also expressed our concerns,” he says.
Van Staveren van Dijk's concerns are mainly directed at Nespresso's parent company, Nestlé. The Swiss food giant has repeatedly made headlines for scandals. In 2017, for example, The Guardian revealed that Nestlé was extracting around 500 litres of groundwater per minute near an American city facing a shortage of safe drinking water, while paying barely anything in administrative fees.
Van Staveren van Dijk: “We therefore told Nespresso that we would be keeping a close eye on parent company Nestlé's planet-plundering business model.”
Entrepreneur Talitha Czaikowski of sustainable B Corp coffee brand Bocca Coffee believes that, ultimately, having Nespresso on board is a good thing:
“Should we deny them this opportunity if they have a plan in place for the next five years? Nespresso is now being closely scrutinised by the entire world. You could also refuse to let them in, but the reality is that we need companies like these to make a difference in the world.”
Valentijn van Santvoort of B Corp brand Holie is particularly critical of the fact that a company like Nespresso can become a B Corp.
“After all, it's a company whose product and business model are fundamentally polluting.”
Nevertheless, he believes that larger companies must also take responsibility.
“If that means B Lab needs to introduce stricter requirements to prevent corporate greenwashing, we fully support that.”
Van Staveren van Dijk is uncertain whether allowing larger companies into the B Corp community is a good thing.
“On the one hand, I want everyone to strive for positive impact and follow in the slipstream of the pioneers. On the other hand, there's a risk of erosion: companies that distort the truth and ride the growing wave of conscious consumers.”
According to Van Staveren van Dijk, B Corp started as a community of pioneers “and is now becoming mainstream.”
He argues that, for example, it is not always possible to sufficiently verify whether companies are as sustainable and socially responsible as they claim to be.
“That makes the risk of newcomers wanting to benefit from the network's existing reputation quite significant.”
Czaikowski also believes the B Corp model could be “more transparent.”
“We recently had two of our coffees independently assessed by an external organisation to determine how fair the prices we pay our farmers really are. Fortunately, we scored well, and we can now demonstrate that to consumers.”
“It would be great if B Corp required companies to commission these kinds of assessments. That way, consumers could see exactly what a company like Nespresso is doing well and where it is falling short.”
B Corp, but not quite there yet
While B Corp is tightening its standards for certified companies, an opposing trend is also emerging. Startups that have not yet obtained certification can pay B Lab to call themselves a so-called Pending B Corp. In the Netherlands, this costs €1,000, according to B Lab.
These companies still have a significant part of the certification process ahead of them, but they are already allowed to use a Pending B logo in their corporate communications. Business Insider spotted such a logo on the website of startup Bdeals. Against a dark background, the words 'Certified B Corporation' appear in white letters, with the word 'pending' written underneath in less noticeable red lettering. Another Pending B company, artificial grass manufacturer LimeGreen, prominently announced its pending status in a press release this summer.
It seems strange that companies can already enhance their image with a B Corp logo when they haven't even been certified yet. So why does B Lab allow this?
Van Soest explains: “It's an incentive for entrepreneurs who have only recently started their businesses to work towards becoming a B Corp. They cannot yet go through the regular certification process because they don't have data from previous financial years of operations. You should think of it as someone who is still in training but genuinely intends to succeed. I believe a very large proportion of Pending B Corps will eventually become certified B Corps.”
According to her, the financial investment required from companies is necessary to provide guidance and support to those with pending status. Van Soest explains that Pending B Corps are encouraged to structure their “articles of association and processes” in line with the B Corp philosophy.
There are currently fifteen Pending B Corps in the Netherlands, according to Van Apeldoorn. He points out that the pending logo is different from the official B Corp logo, although we wonder whether the average consumer would notice the distinction.
Van Apeldoorn emphasises that companies are not allowed to use this logo on their packaging or in social media communications. They may, however, display it on their websites, provided they include “clear explanations in accordance with strict guidelines.”
Nevertheless, we found no explanation accompanying the pending logo on the website of the previously mentioned startup.
Van Soest hopes to bring more companies from “new markets” into the B Corp community over the coming years.
“Think of companies from Ireland and, for example, Poland, where we currently have only a small community.”
She expects the number of B Corp companies to continue growing in the coming years, but emphasises once again:
“We are not a marketing and sales organisation, so growth is difficult to predict.”
Rituals was unavailable for comment, while Danone did not respond in detail to questions from the press. Instead, the company referred us to its own B Corp page, among other sources.