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B the Change You Want to See

Companies go through a rigorous process to become certified as a B Corporation, but a number of local business leaders say it's worth the effort.

by John Stowell

To the customer, it might be a certain vibe you feel when you walk in the door. There’s just something a little different about this place. It might be intangible, but you can feel it.

To the employee, it might be a warm feeling of pride that you’re not just supporting your family but you’re advancing a cause. That feeling of nobility may have attracted you to this job in the first place. It’s definitely keeping you there.

This is the kind of capitalism J.D. Rockefeller, J.P. Morgan, and Jay Gould wouldn’t have understood. America’s robber barons—who admittedly helped build this country into the economic powerhouse it is today—had only one goal: Make money by any means necessary.

Fast forward to today, and the scandals involving Sam Brinkman-Fried and Martin Shkreli are fresh in our heads. Theranos founder Elizabeth Holmes sits in a Texas federal prison. But there is another way to run a railroad: the B Corporation. It’s still capitalism, but with a sense of social awareness. It’s founded on the premise that you can make money while still making a difference. Or, perhaps put a better way, you will make money because you make a difference.

“It’s good for business because it’s a response to where the market is going, particularly with millennials and the Gen Z consumer,” notes Xavier University Assistant Business Professor Matt Regele. He teaches a social entrepreneurship undergraduate course and sees this attraction to socially responsible businesses amongst his own students, who are just joining that 18-49 demographic age group so critical to business sustainability and success.

But what is a socially responsible business? Who means it, and who’s greenwashing? And can you prove it?

Since its founding in 2006, B Lab, an independent nonprofit organization based in Pennsylvania, has certified more than 7,000 companies worldwide as B Corporations, meaning they’ve undergone a stringent third-party analysis of their social and environmental DNA and have documented their adherence to “transforming the global economy to benefit all people, communities, and the planet.” Companies who attain B Corp status must demonstrate business transparency, meet specific legal commitments, and sometimes even amend their corporate governance structure.

Sarah Ernschwender

It takes time and patience to be certified as a B Corp (B stands for benefit), so you’d think this process is mostly for large businesses. Indeed, Patagonia, Ben & Jerry’s, and Allbirds are large well-known companies who have marketed their environmental and social ethic for years.

Tier1 Performance has been a certified B Corp since 2018, and the Covington firm just completed its recertification process late last year. Recertification, which occurs every three years, is just as rigorous; your score is based on the progress you’ve made. You can always lose your certification.

Tier1 bills itself as a “strategy activation firm” that helps companies and their employees navigate big changes such as mergers and acquisitions, new products and technologies, and culture issues. Founded in 2002, the business has exploded from three friends combining their consulting businesses around a dining room table to a national company with more than 350 employees and a list of Fortune 500 clients.

“From the beginning, co-founders Greg Harmeyer, Kevin Moore, and Norm Desmarais hoped to create a company where people wanted to work,” says Sarah Ernschwender, Tier1’s director of marketing. “When we applied for B Corp, we thought what we’d established as our culture was a fit. We didn’t want to change anything or who we were based on just getting the certification.”

The internal culture at Tier1, she says, reflects the business counsel they provide to their customers. It’s focused on employee engagement, retention, and wellness. Trust, transparency, mental health and stress, and diversity and inclusion are as important as pay and benefits.

That closely mirrors the B Lab workplace criteria for certification. Companies that apply for B Corp certification often focus on one of the five impact areas more than the others: governance, community, customers, workers, and environment. But becoming a B Corp isn’t just for the big guys. According to B Lab, the bulk of companies it’s certified over the last two decades have been small to medium-sized companies with under 200 employees.

B Lab didn’t exist 30 years ago when Sandra Gross was on a mission to find healthy food for her three young daughters in a sea of preservatives, multisyllabic chemicals, and sugar. Years later, she met a kindred spirit in Frannie Kroner, a local chef with a dream to create a menu from locally sourced food and, as she puts it, “disrupt the culture and business ethos of the industry.”

They opened the Sleepy Bee Café in Oakley in 2013.

Kroner says years in the kitchen as a junior chef opened her eyes to a culture of aggression and misogyny that was demeaning and deflating. Creativity was discouraged. And as a customer, Gross adds, that was reflected in the product. Restaurants opted for the cheapest ingredients purchased in volume, brushing aside healthy alternatives from local sources.

“Maple syrup,” Gross recalls in bewilderment. “I remember going to restaurants here in Cincinnati and there was no real maple syrup on the table. Can you believe that? We live in Ohio, and there are lots and lots of maple trees but no maple syrup.” Check out the label on Mrs. Butterworth’s. You’ll see what she means.

Gross and Kroner opened Sleepy Bee with the promise of using only healthy, locally sourced ingredients, using their restaurant as a platform for educating their customers and creating a unique business model they call hexanomics: six pillars on which the business measures its purpose and progress. “The pillars are like cells in a beehive, and that’s the lens we use to make decisions,” says Gross. “It’s a high bar that focuses on our customers, the environment, our workers, and our governance. It’s a high bar, but we want it to be.”

And while the company may not fit B Lab’s criteria like a glove, the Sleepy Bee hive is built with the same material. And its hive is thriving. There are now Sleepy Bee locations in College Hill, Blue Ash, and downtown in addition to Oakley.

MadTree plans to set goals in its water and energy usage, recycling, and carbon footprint with the ultimate goal of becoming a “zero waste” brewer.

Rhiannon Hoeweler has no illusions that people visit MadTree Brewing for its devotion to the environment rather than the beer. But when you walk into the company’s cavernous Oakley taproom or its greenhouse-like Alcove Kitchen & Bar in Over-the-Rhine, you know you’re entering an unconventional space. They just feel different—everything from their 300-square-foot “living wall” and the “Toss a Buck” for the environment netting that hangs from the rafters in Oakley to the abundant foliage and sunlight-happy glass ceilings that brighten the Alcove.

MadTree, Hoeweler says, was founded on the premise of producing both a line of great beers but also on a commitment to donate one percent of its proceeds annually to environmental causes. “We don’t hit you over the head with it, but it’s there,” she says. “The promise is even in our name.”

As the brewery’s vice president of experience and impact, Hoeweler has been at the forefront of MadTree’s efforts to gain B Corp certification. The process began in July 2022, and Hoeweler has her fingers crossed that she’ll get good news as early as this fall.

The process itself is somewhat mysterious, she notes. It starts with what B Lab calls “scoping and discovery,” requiring applicants to respond to a lengthy questionnaire that includes a long list of environmental and social metrics. Those metrics typically cover community engagement, philanthropic commitments, and employee well-being.

“For six months after we submitted our paperwork, we heard nothing,” Hoeweler recalls. The silence would try anyone’s patience but, since February, she says, the phone contact has been regular. There are more questions, more data requests, and still more questions. She hasn’t met anyone from B Lab and, as far as she knows, they haven’t bought a Happy Amber at the bar. But, she says, the voices on the other end of the line are very thorough.

“It took us two and half years from when we applied to gaining approval,” Kroner says in agreement. “It seemed like every time you answered a question, you got 50 more. But they were good questions, and they always made us think.”

Self-evaluation is clearly a benefit of submitting to the B Lab process. It’s a supercharged SWOT analysis that does indeed inspire a close examination of each company’s business priorities. It starts, says Ernschwender, with a fundamental question: Should we put the time and energy into tracking everything B Lab wants just to earn points? The goal is to score at least 80 points out of a maximum score of 200. For context, Patagonia’s score is 152, placing it in the top 2 percent worldwide.

Tier1 was already tracking vital employee data that was at the heart of their application, Ernschwender notes, and made just one minor change to their paid holiday schedule. While that did score “B points,” she maintains the main benefit was that it flagged an old policy that no longer reflected the company’s growth into other, more diverse markets.

MadTree’s application, in addition to touting its environmental cred, provided extensive data on both community engagement and employees. While the company distributes its beer from Tennessee to Cleveland, the charitable work, nonprofit partnerships, and employee volunteerism is focused entirely on the Cincinnati region. That, Hoeweler says confidently, doesn’t just appeal to B Lab—it made the comeback from the pandemic possible.

MadTree requires its employees to work at least 16 hours a year for a local charitable organization. Hoeweler says that work attracts a certain type of employee to the company—one with the ethical standards and community commitment that MadTree wants to project to its customers. It’s all intertwined, she says.

“So when we started reopening after the pandemic and filling positions at Alcove, we marketed that commitment to prospective employees,” she says, “and we had people crying during their interviews who couldn’t believe we would pay them for making their neighborhoods better.”

MadTree, she notes with pride, had 100 people hired even before the Alcove opened its doors to the public.

The brewer also plans to use the B Corp process to further lighten its environmental footprint. “Just like everything else, you’re trying to get better because, if you’re not, you’re getting worse,” says Hoeweler. The B Corp application, she says, inspired a thoughtful review of the company’s supply chain and has inspired them to use their size to reduce the carbon footprint among their hops, canning, packaging, and transportation suppliers.

Unlike Tier1, which didn’t use the B Corp process to set goals, MadTree plans to set goals in its water and energy usage, recycling, and carbon footprint with the ultimate goal of becoming a “zero waste” brewer.

MadTree VP Rhiannon Hoeweler says potential employees have been known to cry during job interviews because “they couldn’t believe we would pay them for making their neighborhoods better.”

The question remains whether B Corp status provides a company with a market share advantage in its industry. “We’re figuring that out right now,” says Gross, laughing. “For the market in Cincinnati, it’s a new idea, but it’s the way we want to run Sleepy Bee. Yes, we would like everyone to get it as soon as they walk in the door but I do think they feel the energy. You feel cared for and that the food is cared for.”

Kroner gives voice to Cincinnati modesty, noting “we’ve been historically bad at marketing that stuff.” She’s much more comfortable talking about her new energy efficient all-electric stove that was just installed in its College Hill location. But, she says, certification as a B Corp has them talking about how to use this new status to attract customers and forge new partnerships.

Ernschwender agrees that B Corp certification seems to be more important to employees than to customers. She says it’s a source of pride and verification that they’re valued. There is less turnover, but she believes it’s because of how employees are treated and not because they work for a B Corp. Still, she says, when Tier1 interviews applicants for open positions, it doesn’t tout its B Corp status.

Similarly, they don’t flash the B card when competing for a new client. While the B Corp logo is on all its marketing products and website, says Ernschwender, it’s not in the sales pitch. Interestingly, Tier1 has been a B Corp since 2018, but this was the first year a potential customer has specifically asked for a copy of their B Corp certificate.

There has, in the last few years, been some pushback from customers and investors on the trend, especially by S&P 500 stakeholders, to inject greater environmental and social justice weight into their business practices. Shareholder groups have proposed at annual meetings to quash or modify certain DEI (diversity, equity, and inclusion) and ESG (environmental, social, and governance) initiatives, while other investors like BlackRock and Vanguard often push corporations to go farther. The Harvard Law School on Corporate Governance reports that the 2023 proxy season revealed faltering support for both ends of the spectrum.

Matt Regele

On the customer side, while boycotts have grabbed headlines and, in some cases, adversely impacted market share, Xavier’s Regele notes, it’s still unclear if this is a temporary blip or if brands might suffer long-term damage. Anheuser-Busch, for example, saw sales of Bud Light drop 28.5 percent and its stock price fall 15 percent in the wake of the Dylan Mulvaney campaign. Analysts at Evercore ISI told their clients in late June that the reputational damage amongst its customers that “Bud Light volumes continue to weaken” and that the company and its distributors may “have to make structural changes to reduce their cost basis if trends don’t improve.” Anheuser-Busch followed with a new feel-good ad campaign designed to highlight its everyday workers.

Tier1, MadTree, and Sleepy Bee have avoided any type of backlash. Keeping their commitment under the radar—Cincinnati modest—no doubt helps. So does the focus on volunteerism, philanthropy, employee relations, and the environment instead of the white-hot social issues of the day. “Who doesn’t want more trees?” Hoeweler asks, noting MadTree planted more than 5,000 trees last year. “If you’re against trees, well, that’s a whole other conversation.”

Kroner says she’d rather cook than talk politics, which she calls “exhausting,” and says Sleepy Bee’s diversity efforts are more focused on employees or, as she calls them, “team members.” The B Corp process, she says has helped Sleepy Bee further engage cooks, cashiers, and wait staff into what she calls “communal decision making.” That, in turn, makes for a happy workforce and a happy customer.

MadTree wants that B Corp label to stand above the crowd. “There are more than 9,000 craft breweries in the country right now,” says Hoeweler, “and this is a way we differentiate.” The brewery is filling up with what appears to be Zoomers—the Gen Z crowd Regele teaches and the demographic that’s pumping billions of dollars into the economy. They seem happy sipping their suds under a ceiling of cascading ferns.

Will the beer at MadTree taste better if there’s a B Corp logo on its can? Will you notice the eggs and bacon taste fresher because they come from a local farm (you will notice it’s real maple syrup)? Will you go to Sleepy Bee because the B stands for “benefit?”

“I put it this way,” says Hoeweler. “Do you feel better being here with a green wall behind you? Probably. You feel better in open spaces. It’s that warm welcome. A vibe. It’s an added value that I believe brings customers here.”