Canadian credit unions seek proof that they are doing good with B Corporation status.
If a business wants to do good these days, it’s a three-step process: First, do good; second, tell people you’ve done good; and third, prove it.
There are major challenges in each step, but in many ways the biggest ones are in the last phase—having independent validation that you are on the right track and aren’t fooling yourself, or others.
People are naturally skeptical as we have all heard examples of companies that have been caught selling products that aren’t as sustainable or environmentally friendly as they claimed—from flushable wipes that now clog our city sewer systems to natural, spring water sold in plastic bottles that wind up as litter in our ditches or on our beaches.
The first part of the process—doing good—comes naturally to credit unions since their mission is to improve the lives of their members and their communities, not generate ever bigger profits for their shareholders. Unfortunately, they have had less success spreading the message about their good actions and have struggled to find a way to combat the skeptics.
Seeking B Corporation Status
But in recent years several Canadian credit unions feel they’ve found a way to prove that their good deeds and processes are indeed good and are being followed, by earning a designation as B Corporations. If you have a furrowed brow and just said: Who? What? You are not alone and you’re demonstrating just how hard it can be to succeed in step three of the doing-good process.
The B Corp designation is bestowed on a business by an American non-profit, B Lab. It means the business has achieved at least 80 out of 200 points on a detailed assessment that asks tough, specific questions about performance in five key areas: governance, workers, community, environment and customers.
The assessment is available free online and more than 50,000 companies have done it, with the average score being 50. So far, more than 3,928 companies in 74 countries and 150 industries have hit the 80-point pass mark and been designated as B Corps, including just over 300 in Canada. More than half of all B Corps are located in the U.S.
But at least another 4,000 companies say they have passed the test and are awaiting formal review as B Lab has been swamped by its growth over the past year and approval is taking time. B Lab currently says it may take up to seven months for it to even look at a company’s answers and several months after that to complete the evaluation and give a final score.
Among the companies that are B Corps are Patagonia, Ben & Jerry’s, Business Development Bank of Canada and Danone North America. Annual certification fees start at $1,000 for businesses with sales less than $150,000 and go up to $50,000 for those between $750 million and $1 billion.
So far eight Canadian credit unions have become certified:
- Assiniboine Credit Union,
- Coast Capital Savings,
- DUCA Financial Services,
- Kindred Credit Union,
- Libro Credit Union,
- NBTA Credit Union,
- Omista Credit Union, and
- PenFinancial Credit Union.
There is another member we should designate with an asterisk. Vancity Community Investment Bank, a subsidiary of Vancity that is focused on social-purpose investing, has become certified. The credit union itself hasn’t and has no plans to, since it is a member of the Global Alliance for Banking on Values (GABV) and intends to keep its focus there.
A Natural Extension of Credit Union Values
Being a B Corp “feels like a natural extension of who we are and the way that we want to live our values,” says Rebecca Smith, VP/engagement and values at $1.6 billion Kindred Credit Union based in Kitchener, Ontario with 25,000 members. “We want to have evidence for ourselves and for others that we are who we say we are.”
Kindred CU is also a member of the GABV and views these relationships as complementary.
“It is nice to have a Global Alliance that is doing a deep dive around changing finance for good and is also aware of other issues on our balance sheet,” says Ben Janzen, director/values integration at Kindred CU. “B Corp is the wide and GABV is the deep. They both have scorecards, but they are focused on different elements of the business.”
Keith Taylor, executive director of the $5 billion/80,000-member DUCA Impact Lab, Toronto, which was the first credit union to become a B Corp in 2015, says its original goal was benchmarking. “We wanted to know where we stood, what elements of strength we had in our social responsibility work relative to our peers that really prioritized this, and what gaps we had.”
That is a common reason to look at the B Corp designation.
“We were trying to find ways to more clearly articulate the impact that we were having,” says Liz Arkinstall, manager/corporate social responsibility, at $6.1 billion/108,000-member Libro CU, based in London, Ontario. “It’s not just, we think we are doing good things, we actually are using a methodical system that is assessing the company.”
Taylor says the in-depth assessment “gives you a sense of the range of possibilities and spurs some good conversations about what to do.”
He says becoming a B Corp was a big step in DUCA’s efforts to articulate and define its purpose. “That was a big step forward and I think as we go down that path more we are going to be focused on our social responsibility as a differentiator and on some of the unique things we do in that portfolio.”
He notes that credit unions have not done a good job of highlighting how they operate differently than the big banks, for example, by focusing on the local business lending that credit unions do. “We should consider that difference a strategic asset and cultivate it.”
Inspiring Important Conversations
“B Corp Certification was an opportunity to step back and use a globally accepted framework to do a self-assessment and say, ‘How are we doing?’,” says Kevin Sitka, president/CEO at $5.4 billion/125,000-member Assiniboine Credit Union in Manitoba. “Where are we really strong, and where could we continue to evolve? This framework is incredibly comprehensive and robust.”
Assiniboine tallied a mark of 166 on its assessment. “Getting the top score in Canada, one of the highest in the world, really affirmed that ACU has been living its values really well in all areas of the organization,” Sitka says. “This is the cumulative result of 78 years of people here in Manitoba deciding this credit union is going to be meaningfully different.”
He says that in one sense the desire to rate entire organizations is just a natural outgrowth of a movement that has seen the rise of ethical product certifications including Fairtrade coffee, LEED-certified buildings, Rainforest Alliance Certified paper and Ocean Wise seafood.
Libro scored 126 when it was first certified three years ago and is just wrapping up its assessment for recertification, which has to be done every three years. It has changed its approach to getting the information it needs to submit. First time around the process was fairly centralized, but now Arkinstall feels one of the advantages of relying on various departments to gather the data is that it increases engagement in the project and keeps employees thinking about it during their regular routines.
Arkinstall says being involved with B Lab offers a lot of ongoing benefits and a valuable community to discuss issues as they develop, such as Black Lives Matter over the past year. “B Lab is really nudging along conversations, whether it’s on diversity, equity, inclusion, or as things happen in the world, you receive resources,” she says.
The idea behind B Corp certification was developed by three friends from Stanford University who realized a few years into their careers that they were dissatisfied with focusing on the bottom line and were looking for a way to identify businesses that were focused on doing good.
In his book, Better Business: How the B Corp Movement is Remaking Capitalism, professor Christopher Marquis of Cornell University looks at their efforts to identify businesses focused on the triple bottom line—people, planet and profits. In 2006 the friends unveiled B Lab, a non-profit “dedicated to redefining business as a competition to be not only the “best in the world, but best for the world” and a year later designated the first B Corporations.
The Legal Requirements
B Corp says designated companies are “legally required to consider the impact of their decisions on their workers, customers, suppliers, community and the environment.” On its website, it explains the full process and three steps involved: Taking the assessment; making their B Impact report transparent on bcorporation.net; and amending their legal governing documents to require their board of directors to balance profit and purpose.
That last element turned out not to be a simple one for credit unions and agreeing on an approach took five years of negotiations, led by a Canadian Credit Union Association committee. B Lab pushes corporations to amend their articles of incorporation to ensure directors have to consider all the impacts of their decisions, or to become benefit corporations, a new legal designation that achieves that purpose. British Columbia is the only province that has passed legislation establishing benefit corporations, but 35 U.S. states now offer that option.
But the credit unions argued the co-operative principles they follow and their ownership structure with members in control made legal changes unnecessary and would discourage some from joining. After years of discussions back and forth, they agreed to language that they must include in their bylaws that state the purpose of the credit union is to make a positive impact on society and the environment and their directors must consider all stakeholders when making decisions. Many of the eight passed the bylaw changes this spring during their virtual annual general meetings.
American credit unions are not eligible because they are non-profits and have a different legal status that doesn’t permit the new purpose. A few small American banks have become B Corps.
The reason that B Corp insists on including legal changes to lock organizations into their promises became clear in March as Danone, which has 32 of its subsidiaries accredited as B Corps, sacked its CEO Emmanuel Faber, the man who had led to the push for it to do business for good. A group of hedge funds that owned a small slice of the stock persuaded the board that Faber’s plans to rebuild after the pandemic were wrong. Its interim CEO insists Danone will remain committed to the B Corp pledge, but critics are watching.
Energizing Staff and Attracting Employees
Several credit unions say that one of the benefits of becoming a B Corp is that it energizes their staff and appeals to younger potential employees. Companies can post their openings on a B Corp website, bwork.com, that offers jobs at organizations around the world that have been certified.
“It can become a differentiator in a market where we know that people, particularly younger people, increasingly want to work at a place that is committed to a purpose, that is engaged in the world in a different way than traditional business,” says Sitka of Assiniboine CU.
“Our work force is young, values-focused, and wants to work for companies that share their values,” says Maureen Young, director/social purpose office, $21 billion/595,000-member Coast Capital Savings. She notes that an internal B Corp event held last year attracted wide-spread interest from staff.
“The B Corp movement is an evolution of the credit union movement, it’s a natural fit,” Young says.
More and more B Corps are using its logo in their social media and other marketing efforts.
“We use the logo and information in our newsletters, on our business cards, wherever we can,” says Frank Chisholm, director/brand and marketing at Kindred CU.
Spreading the B Corp Message
Some credit unions are also making efforts to spread the B Corp message in their communities and to their suppliers. Arkinstall says that Libro CU encouraged a supplier of marketing material to become more environmentally friendly and in the end, it decided to join the trend and become a B Corp.
Young says Coast Capital has added wording to its supplier agreements encouraging them to follow good practices.
Assiniboine CU has gone further into the community than the others. It has partnered with local business networks to explain the business case for certification and encourage others to join. In fact, Sitka says one of the considerations Assiniboine had when becoming a B Corp was the opportunity that “we could mobilize a movement here in Manitoba of companies using business as a force for good.”
“We want this to mean something. We want to ensure that when people see the certification in our marketing, they know there is a rigour behind it, and they know it has integrity. We want people to trust that when they see the certification, they have full confidence that it is thorough and it is real.”
Young says the assessment process can help credit unions improve their planning: “You can look at your score, layer on your strategy and focus and you’ve got a blueprint for closing the gap. It becomes a great tool building your roadmap year-on-year and thinking about where you want to dial up.”
She notes that the assessment is constantly changing and being upgraded as some actions become expected, not remarkable. “You could do the exact same thing today that you did three years ago, but you could score a lower result because of that shift,” she says.
So, the path to doing good doesn’t get easier, even if you do find a way to demonstrate that you are on the right path. cues icon
Art Chamberlain is a freelance writer based in Campbellford, Ontario, who has written about the sector for more than a decade and has been a member for more than 30 years.