B Corporation, Transparency and Validity
Dr Robert Howell 
Certified B Corporations state that they are businesses that meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose Certified B Corporations achieve a minimum verified score on the B Impact Assessment—a rigorous assessment of a company’s impact on its workers, customers, community, and environment—and make their B Impact Report transparent on bcorporation.net. Certified B Corporations also amend their legal governing documents to require their board of directors to balance profit and purpose. B Corp Certification is administered by the non-profit B Lab .
To be certified each company has to meet standards for social and environmental performance, accountability, and transparency. The standards are used by over 70,000 companies, but to be credited requires a score of at least 80 / 200. Over 3500 companies in 74 plus countries and 150 industries have reached this. 33 of these are New Zealand companies.
This New Zealand company was founded in 2008 by Mike Sutherland and Kirsty McKay when they bought an existing small brewery in Leigh. In 2016 they shifted to Matakana and also opened a restaurant. They were interested from the beginning in being a responsible company and had taken a number of initiatives to do that. They were the first New Zealand craft brewery to can beer. They adopted a zero waste goal for their brewery and Smoko Room. Their first location in Leigh had a limited solar energy system. The shift to their Matakana site enabled them to upgrade: they now have the largest solar power system in use by a New Zealand brewery. Their beer has no sugar, preservatives or colouring. All their beer is unpasteurised which means a shorter shelf life but more vibrant flavour.
They chose to use the B Corporation framework because they were looking for a method that enabled them to assess their aims in a more systematic and regular way. They have found that the B Corporation method useful for measuring their activity and impact. This was important for communicating with their team of 30 staff. It also led to comparing themselves with other breweries, especially in the USA, and hence identifying where and how they could do better. The section on governance was less important than the other categories. To get certification they had to answer a questionnaire of around 200 questions. Then they had to provide documentation and reassurance about a number of areas B Lab considered important. One example in a section on waste was about the spent grain from the brewery that is transported to local farms. It was not initially easy to prove the benefit of this and required letters from the farmers who used the waste. They have not yet a measure of their carbon footprint, but have been investigating ways of achieving this. Just very recently, they have introduced a system of using unsold bread to make beer, and the waste from this used in turn to make more bread. They will not make all their beer from bread but continue to support Gladfield Malt, a New Zealand owned family business in Canterbury who grow world class malts. Kirsty from Sawmill Brewery is not sure if they can measure the impact the bread beer has on their sustainability. But she thinks it brings food waste some much needed attention.
In Mahurangi Matters it was stated that Sawmill Brewery “has reached the highest standards in terms of environmental impact, transparency and accountability”.
Their rating is: Governance 6.7 ;
Community 18.3 ;
Overall total of 82.8.
Tim Brown is a New Zealander who teamed up with Joey Zwillinger, an engineer and renewables expert to produce comfortable and sustainable footwear. Brown received a research grant from the New Zealand wool industry and started in 2014. The company was launched in 2016.
They plan to eliminate their products’ carbon footprint. They measure the emissions of everything from their raw materials to their end of life. They reduce their impact by incorporating things like natural and recycled materials. They offset what emissions they have not eliminated with carbon offsets, emit no carbon in the first place. We can create a sustainable future, but only if we hold each other accountable.
They prioritise the use of natural materials such as wool, tree fibres, sugarcane, and castor bean oil, as well as recycled materials. They require supply chain certifications such as FSC for tree products and packaging, ZQ Merino for wool, and Bonsucro for sugarcane. They favour manufacturing facilities located in regions with a low carbon electricity grid. They minimise packaging through design.
They use a life cycle assessment (LCA) tool to estimate the carbon footprint of our products, identify hotspots, and drive emissions reductions. The LCA tool was created in collaboration with Clean Agency, a third-party environmental consulting firm. The average carbon footprint of all their products is 7.6.kg CO2e, compared to the average of 12.5 kg CO2e for all brand sneakers.
Because of my research into living wages, I asked Allbirds whether they pay a living wage throughout all their supply chain. They replied: “We are a certified B-Corporation which means we hold ourselves to the highest social and environmental standards for our company and our employees.” I emailed back to say I hope you do not mind if I ask you about the process you go through to ensure that a living wage is paid in your supply chain, and in particular how it is validated. On July 21, they said “We’d be more than happy to answer them, but for more detail I’ve queried this with our sustainability and supply chain managers to give you as much information as possible, so please bear with us as we gather the right information and get back to you.” Despite a reminder I have yet to receive a reply.
GoodOnYou is a sustainability ratings platform for fashion. They have a well described transparent system to evaluate the impact of brands on the environment, labour and animals. For the labour assessment they reference 67 certifications, accreditations, standards and guidelines when rating brands, including International Labour Organization Labour Standards. Regarding Allbirds for its labour performance, it gives it 2/5 stating that it is not good enough. There is no evidence it has a Code of Conduct. It sources its final stage of production from countries with extreme risk of labour abuse. There is no evidence it ensures payment of a living wage in its supply chain.
Allbirds received the following score from B Corporation:
Governance 15.4 ;
Community 19.6 ;
Overall total of 89.4
Eileen Fisher is an American designer and clothes maker. Her company started in 1984. It now has 65 stores in the US, Canada and the UK. She currently owns 60% of it with employees owning the rest. Her designs are characterised by simplicity and known for using non-traditional models in its print advertisements, including its own employees. They have a buyback and recycling facility for the goods they sell.
The company states that since 2014, they have been working to create a transparent supply chain that ensures sustainable practices from the production of their raw materials through their finished garments. So far, they have mapped all their garment factories; most of their textile mills, spinners and dyehouses; and a few farmers. Several of their most loved fabrics are completely traceable, including Organic Cotton Stretch Jersey, Merino and Washable Wool.
The company has 44 suppliers world wide with 9 each in the USA and China, 7 in Italy, 5 in Vietnam, 3 in Indonesia, 2 in Peru and Japan, and one each in Turkey, Spain, France, Canada, Australia and New Zealand. The New Zealand company is New Zealand Merino. In the New Zealand instance we know merino wool has a number of attractive natural properties. But public information about the New Zealand Merino meeting any labour and environmental standards is scarce.
The Eileen Fisher company states they utilise the services of independent, third party auditors in order to monitor and improve the conditions at their factories worldwide according to SA8000 protocol. They conduct the majority of their audits on an unannounced basis and change monitoring partners every few years to help ensure the integrity of their audit findings. Factory audits cover manager and worker interviews as well as health and safety walk-throughs. They include questions on human trafficking and slavery in their interviews when appropriate. As a member of Sustainable Apparel Coalition, they are able to collaborate with other brands on audits and training programs, as well as work together on remediation programs. Partnering in this way reduces audit fatigue on factories and leaves them with more resources to invest in empowering workers and educating managers. They also utilise cell phone surveys to elevate workers’ voices. This technology is used to promote fair wages, monitor working conditions, track social impact and engage with workers. Most importantly, it allows them to hear directly from the workers themselves.
They acknowledge audits worldwide have shortcomings, and they are not an exception. An audit provides a good snapshot of a factory at one moment in time. However, they believe it is by continuing to educate managers and train workers that they can make truly meaningful changes in their supply chain. Stable and enduring relationships give them the leverage to positively influence conditions in their factories. Fisher says the US-China trade war has made it more difficult for the company to manufacture products and do business in China. The company has had to scale back its production there as a result.
An article in the Economist (August 22, 2020) describes the difficulties for auditing supply chains in Xinjian in China in particular. The Xinjiang Production and Construction Corps (xpcc), a paramilitary-style business in western China retains a militia of 100,000. The militiamen and others help the xpcc furnish the world with a panoply of goods. About 400,000 xpcc farmers harvest a third of China’s cotton. Others are part of Xinjiang’s tomato-exporting business. Xinjiang is at the heart of China’s cotton, yarn and textile industry, the world’s biggest. The region supplies 84% of the country’s cotton.
America’s State Department says that it uses forced labour. In late July 2020 the US Treasury imposed sanctions, alleging a connection with human-rights abuses in Xinjiang where at least 1m Uighurs and members of other ethnic minorities have been held in detention camps. Some retailers, whose brands include Calvin Klein and Tommy Hilfiger, publicly said they would cut ties with Xinjiang, out of concern for labour practices. Supply-chain auditors for Western makers of electronics and footwear say there are numerous “red flags” indicating Uighurs may have been forcibly transferred to factories in other Chinese regions.
Auditing stopped when it began to be monitored by Xinjiang authorities. How can Western firms prove that their supply chains are free of forced labour when auditing in Xinjiang is taboo? And how do they ensure that overzealous scrutiny of their workplaces does not make life even worse for Uighurs? These are difficult questions for many overseas people doing business in China. Added to the Covid-19 experience which underlined how vulnerable many multinational companies are on China, a prudent company will seek a diversified, resilient and robust supply chain that is less reliant on China.
Eileen Fisher received the following score from B Corporation:
Governance 14.4 ;
Community 22.0 ;
Overall total of 96.2
The B Corporation website gave a breakdown of these categories. For Workers (27.5), compensation and wages and benefits scored 8.7, worker ownership 5.6 but human rights and labour policy only 0.1. This score for human rights did not seem right to be so low based on the evidence from their website material.
Validation and Transparency
There are two steps to establish whether a measure actually measures what it claims it measures: content and construct validity. To be a valid measure, both tests need to be passed. Content validity requires consideration at a conceptual level: does the measure make sense? Construct validity requires empirical considerations: is the application of the measure consistent with other empirical evidence?
Evaluation of B Corporation
It is not easy to decide from public information whether B Corporation standards are valid. Some samples of the questionnaire are available but these are only part of their full questionnaire which is not available. There is no public explanation of how the 80 score (above which a company can be certified) was reached – 40% is usually not a pass score. In 2019 the company with the highest score of 124 was the 3Sisters Sustainable Management.
What has to be done to reach a 190 or 200 score? Is there a true zero?
There are also questions to be asked about what are the components that make up the various categories of Governance, Workers, Community and Environment and how the scores are allocated within each category. Then how is the weighting is assigned between the categories: is a company that scores low on the environment but high on other impacts equal to a company that scores low on human rights for all of its stakeholders but high on other impacts? How is Eileen Fisher with a score of 96 better than Allbirds (89) and Sawmill Brewery with 82? It is not possible to understand the scoring methods of B Lab. Until B Corporation is transparent about its methodology there cannot be trust in the process or outcome.
B Corporation does not pass the content validation test, because it is not possible to know the conceptual basis of their model, and the scoring method. On the construct validation test, it does not pass because Allbirds does not treat all its workers in the supply chain properly.
The purpose, principles and broad strategy of B Corporation is to be lauded. There is no doubt that its methodology for evaluation of how companies need to change to meet these has helped a number work toward the fundamental transformation necessary for a broken world. The three companies described above are innovative and have many desirable features. However, the lack of a public validation of B Lab’s processes has meant that a full understanding and trust in its outcomes cannot be granted. In some matters – dealing with payment of a living wage – the evidence from outside sources challenges B Lab methodology. Claims about Sawmill Brewery’s environmental impact cannot be justified. It is also disconcerting that Sawmill Brewery cannot ascertain their carbon footprint from the material required by B Lab to decide their certification. Hence the aim of leading by example falls short. Pity, the world needs pathfinders and models.
 I chose this example because I live in the district. The second example I chose because a New Zealander is involved, my brother had bought a pair of their shoes and I was thinking of doing so too. The third case study, Eileen Fisher, was chosen at random from B Corporation’s website.
 Amended 2 September 2021 from an early version.
 Mahurangi Matters 5 May 2021.