By Sarah Binder
CEDAR RAPIDS — A local company has found a new way to document its sustainability efforts.
Eco Lips, the organic lip balm company Steve Shriver and his wife founded in their basement, recently earned certification as a B corporation. The Cedar Rapids-based company produces the lip balm at its offices in the Cherry Building, 329 10th Ave. SE.
Short for “benefit corporation,” a B corporation is a relatively new way to certify a business. Instead of being responsible to shareholders, where it is legally obligated to prioritize profits over all else, B corporations work to create a positive impact on society and prioritize transparency, accountability and performance.
In 12 states, B corporation is a legal designation like C corporation, S corporation or LLC. In 20 other states, including Iowa, legislation to legalize B corporations has been proposed but not yet passed. For more information on how legislation regarding B corporations is progressing in each state, visit www.benefitcorp.net.
Certified B corporations are different than from legally-recognized B corporations, although the two share similar philosophies and are often referred to simply as “B corps.”
If a business is a certified B corporation, it has earned that designation from B Lab, an independent nonprofit designed to promote and support B corporations. A business can earn the certification from B Lab (as Eco Lips did) even if it is located in a state that does not have B corporation as a legal designation. There are fewer than 700 certified B corporations globally.
According to the B Lab website, “B corp certification is to sustainable business what fair trade certification is to coffee or USDA Organic certification is to milk.”
Eco Lips follows the ‘triple bottom line’ philosophy of looking out for its product, people and the planet, but Mr. Shriver said as an entrepreneur growing a young company, it can be difficult to manage environmental and social considerations.
“The first thing I noticed about B corps is it provides that framework,” he said.
Many businesses with a reputation for corporate responsibility are certified B corporations, including Patagonia, Ben & Jerry’s, Etsy and Method and Mr. Shriver said seeing some of his idols on the list encouraged him to start the application process.
“It looked like the modern-day Better Business Bureau,” he said, noting that while many companies talk about being sustainable, continue to conduct business as usual. “This seems to be a legitimate and credible third party that we wanted to be associated with.”
The first step to becoming certified is completing an online questionnaire at B Lab’s website, www.bcorporation.net. The self-assessment analyzes a company’s governance, treatment of employees, community impact, environmental impact and business model. applicants answer questions about topics such as monthly energy and water usage, whether part-time employees qualify for benefits and what the multiplier is between the lowest- and highest-paid employees.
A consultant with B Lab went through the questionnaire in detail with Mr. Shriver by phone, which changed the company’s score slightly. For example, because sourcing organic and fair trade raw materials for its product is such a large part of how Eco Lips produces lip balm, that question was weighted more heavily after speaking with the consultant.
After the initial consultation, Eco Lips had to make some changes to its governance documents. For example, it is now written into the company’s bylaws that if it is ever sold, the new owners must maintain the philosophies of the B corporation.
“It’s really trying to ingrain it into the DNA of the business,” Mr. Shriver said.
Eco Lips then had to send supporting documents to B Lab to verify the claims made in the self-assessment and discuss those with a consultant before officially earning certification as a B corporation. The entire process took about six weeks, Mr. Shriver said.
Going through the process helped them formalize the company’s commitment to “doing good,” he said. For example, Mr. Shriver said Eco Lips previously had a loosely-stated commitment to using regional suppliers. While going through the B Lab application process, that idea was formalized into a written policy, along with others like it.
While Eco Lips does not pursue environmentally- and socially-responsible actions to earn points on a checklist, Mr. Shriver said having a quantifiable way to score the company is helpful.
“If you don’t measure it, how do you know if you’re improving?” he said.
Eco Lips is one of two certified B corporations in Iowa. The other, the National Cooperative Grocer’s Association (NCGA) in Iowa City, has had the designation since December. NCGA is a cooperative that provides business services to natural food co-op grocery stores in 36 states.
The ideas behind a B corporation are a natural fit for a cooperative business model and what many of the client stores NCGA works with already strive for, said Robynn Shrader, CEO of NCGA.
The process took about a year for NCGA, she said, because the company had never changed its articles of incorporation before and allowed its members to vote on the issue. Since earning the certificate, NCGA has had a greater affinity with many of its natural food store clients who are also pursuing B corporation status, she said.
In addition to helping them manage the company and work with clients, Ms. Shrader said the B corporation certification sends a strong message to customers that it’s “not just business as usual.”
