Companies become Certified B Corporations (CBCs) for many good reasons. By adhering to high social, environmental, and ethical business standards, companies can address poverty, climate change, and corruption. But the certification process can be so resource-draining that small and young firms may face losing up to half their annual revenue growth, according to an Academy of Management Discoveries article, “The Impact of B Lab Certification on Firm Growth.”
Changing business practices to comply with the criteria that B Lab sets out is not a trivial undertaking,” said Simon C. Parker of Western University. Parker coauthored the article with Edward N. Gamble of Montana State University, Peter W. Moroz of the University of Regina, and Oana Branzei of Western University.
“Many large firms have enough slack and enough personnel to delegate a lot of the audit compliance. I think it’s a resource problem for the smaller firms. In small and young firms, they simply don’t have any slack to manage changes like this. Most small and young companies are firefighting all the time. It’s a state of perpetual crisis management. If smaller companies do devote resources to this, it takes away from the top line. They can either be out there selling, or they can be out there complying. Compliance comes at a cost of sales,” Parker said.