Sustainably certified! Processes, impact and alternatives

Sustainability standards and regulations are pushing businesses into a more green direction today. By obtaining a certain type of certificate, businesses will create specific advantages that are discussed in more detail in this article. Depending on the industry, business model and company’s problem areas, there are various certificates where it is suitable to enter the certification process. In this chapter, we will explore some of the most known certifications, namely B Corps, LEED, and the Common Good Balance Sheet (Gemeinwohl-Bilanz). We have chosen these three certifications, since they have unique approaches and focus on different industries and areas.

B Corp Certificates

B Corps are certificates that highlight businesses that are trying to minimize their harmful impact on the environment. The certificate is not awarded to individual products or divisions, but measures the company’s overall social, ecological and economic performance, focusing above all on public transparency and legal accountability. B Lab is a nonprofit network known for building the B Corp movement. It creates the standards and policies for the certification and conducts the assessment of companies applying to become B Corp certified.

Highlighted by the graphic, B Corp certifications are rising in popularity. The rate of new certification being awarded slowed down in the last couple of years. However, this is not due to a lack of interest from companies applying. Because B Corp developed new requirements for the certification process, which are more intensive and time-consuming to verify, the rate of new certifications slowed a bit. At the end of 2022, there were already more than 6,000 B Corp certified companies. Besides other reasons why B Corp is so desirable, the benchmarking aspect for one’s company is a major trigger. It actuates the long-term sustainable transformation and identifies levers that can be improved. So B Corp is also very much about the time after certification and what happens then.

To make sure that these unique factors actually become reality, the overall process of getting the certification is detailed, extensive, and time-consuming. To find out more about the certification process, take a look here.

The B Corp certification process begins with an online assessment that evaluates a company’s performance across five key impact areas: governance, workers, customers, community, and environment. The assessment evaluates a wide range of factors, including the company’s mission, governance structure, employee benefits, supply chain practices, environmental footprint, and transparency.

Once a company completes the assessment, it must achieve a minimum score to be eligible for certification. Companies that meet the eligibility criteria are then subject to a verification process, which includes a review of supporting documentation and an on-site evaluation by a B Lab representative.

During the verification process, the company must demonstrate that it meets the highest standards of social and environmental performance, accountability, and transparency. The transparency is not only focused on internal policies. Your company must exhibit transparency by allowing information about their performance measured against B Lab’s standards to be publicly available on their B Corp profile on B Lab’s website. If the company passes the verification process, it is awarded B Corp certification and is allowed to use the B Corp logo in its marketing materials and join the international B Corp Community.

To maintain its certification, a B Corp must recertify every three years and demonstrate continued improvement in its social and environmental performance. This process ensures that B Corps are held accountable for their impact and that they continue to meet the highest standards of social and environmental responsibility.

Other than caring for the environment, companies apply for the B Corp certification to stand out from their competitors and demonstrate their sustainability measures and actions. The certification can help attract investors, allow access to like-minded network societies, and provide a clear indication of the company’s social and environmental responsibilities. Below you will find a visual representation of the major benefits and criticism of B Corps.

Moreover, neosfer was awarded the B Corp certification this year. And, as we at neosfer went through the whole process of becoming B Corp certified, we recognized that the organization is aware of the criticism. Therefore, they are actively working to close the gaps, improve transparency and accountability. You can read more about their acknowledgement of improvement opportunities here.

Leadership in Energy and Environmental Design Certificates (LEED)

B Corp focuses on a company overall, while also still assessing the individual pieces that comprise the  company. However, there are also certifications that focus on particular parts of a business and are more industry specific. Leadership in Energy and Environmental Design (LEED) is the type of certificate that focuses on sustainable building design and construction. They have been developed by the U.S. Green Building Council. Buildings can earn LEED certifications by meeting certain criteria and standards.

By 2019, there have been around 90,000 LEED certifications awarded across 165 countries. Most commonly, LEED-certified buildings have reduced CO2 emission by 34%, 25% in energy consumption, and 11% in water use in comparison to non-certified buildings. Furthermore, they have an impact on reducing tons of waste. Additionally, LEED certificated buildings have been found to contribute to 50% fewer greenhouse gas emissions than conventionally constructed buildings. This is due to lower water consumption, while also seeing 48% fewer GHG emissions due to reduced solid waste, and 5% fewer GHG emissions due to more sustainable transportation options. Even though LEED certificates are the most common ones for buildings, they are still more popular in the U.S. compared to Europe.

One of the primary benefits of LEED certification is improved health and indoor air quality. The certificate does this by imposing tighter guidelines on how buildings are designed and the materials that must be used.  LEED-certified buildings must use green materials and promote natural light and ventilation, which can reduce exposure to toxins and improve air quality.

LEED-certified buildings also provide financial benefits. They have consistently achieved higher rents than non-LEED counterparts, averaging 11.1% higher rents than non-LEED certified buildings. Occupancy rates for LEED-certified assets have also increased from 90% to 92% since 2020, while non-LEED occupancy has fallen from 90% to 88% over the same period. In addition to financial benefits, LEED certification can also help businesses meet their environmental, social, and governance (ESG) goals.

However, there is also criticism: Its rewards are self-serving, and used more often by a narrow group of elite users rather than a broad population. LEED certification is overly complicated, time-consuming and expensive, adding $150,000 in taxpayer borne costs for new Federal buildings in the U.S.

Economy for the Common Good

The Common Good Balance Sheet (Gemeinwohl-Bilanz) is a sustainability assessment tool developed by the Common Good Economy (Gemeinwohl-Ökonomie), which assesses a company’s performance based on its contribution to the common good, using a set of criteria that go beyond financial indicators. This tool is developed through a participatory and transparent process, involving not only the company being assessed but also its stakeholders. The Common Good Balance Sheet is the core of the overall report that will be published by companies that go through the whole process.

Talking about the process, it begins with a workshop, where the company and its stakeholders discuss the criteria for the Common Good Matrix (Gemeinwohl-Matrix), and how these criteria apply to the company’s activities. Once the criteria have been established, the company conducts a self-assessment of its performance, using the Common Good Matrix to evaluate its impacts on human dignity, solidarity, ecological sustainability, and social justice. In the graphic below, you see all the relevant topics that need to be evaluated.

An external auditor verifies this assessment, before moving forward with the overall process.

The results of the assessment are then compiled into the Common Good Balance Sheet, which is a comprehensive report on the company’s performance in relation to the common good. The report includes an overview of the company’s activities, as well as its strengths and weaknesses in relation to the criteria of the Common Good Matrix. The report also includes a set of recommendations for how the company can improve its performance in weak areas.

The Common Good Balance Sheet is a dynamic tool, which means that companies are encouraged to update their assessment regularly and to develop strategies for improvement based on their findings. This approach allows companies to track their progress over time, and to continually strive for improvement in their contribution to the common good. As you can see, the overall process is more of a continuous loop that should be reevaluated over time, similar to the recertification process of B Corp. This loop is visible in the graphic below.

However, we need to point out that the overall process is quite complex and time-consuming. Because of the level of detail the Matrix will induce, data collection and analysis is required, and continuous collection needs to be established, which can be a challenge.

Publishing the Common Good Balance Sheet has a positive impact on the company that releases it. Firstly, it allows the company to take a holistic approach to sustainability, which can lead to a more sustainable business model. Secondly, it demonstrates the company’s commitment to the common good, which can help to build trust between the company and its stakeholders. Thirdly, it can promote transparency and accountability in business, which can contribute to a more responsible and ethical approach to business.

The advantages and disadvantages of sustainability certifications can vary depending on the specific certification and its purpose. These certificates can provide many benefits to companies that prioritise social and environmental responsibility.

1% for the Planet

“1% for the Planet” is a thriving and expanding global network of over 3,419 businesses and a growing community of individual members.

You can understand the certification as a community of businesses and individuals committed to supporting environmental solutions. Members donate at least 1% of their annual sales or salary directly to approved environmental partners. Business members can donate through a combination of monetary, and promotional support, while individual members can donate through monetary and volunteer support.

They support thousands of nonprofit partners in 64 countries worldwide. Since 2002, their members have generously donated over $435 million to environmental nonprofits, making a significant impact on preserving and protecting our planet.

The major pros are global recognition and an engaged community. The company can license the label to use 1% of the Planet Logo on products and branding materials. With a network of over 3,400 environmental organizations, “1% for the Planet” members can take advantage of one of the largest sustainability networks out there.

Through the certification process, members provide annual documentation of their contributions, including monetary, and volunteering support to approved partners. Third-party certification verifies members’ commitment to the planet, and the logo serves as a trusted seal of approval without the risk of greenwashing. The logo is featured on millions of products and services worldwide, making it a globally recognized symbol.

GoodWell certification

GoodWell is a public benefit corporation that strengthens employee satisfaction by certifying fair, equitable, and humane workplace practices. The initiative began with the goal to bring positive changes for workers around the world. Today, GoodWell is focused on supporting companies that promote positive social and environmental change around the world.

The GoodWell certification process involves a proprietary eNPS (Employer Net Promoter Score) survey that objectively identifies employee engagement through qualitative and open-ended questions that invite candid feedback. GoodWell’s team then assesses both data sets to identify potential issues and best practices.

Using the quantitative data, GoodWell segments it by a factor most helpful for the certifying organization (i.e., gender, department, age, etc.) to reveal segments with lower rates of employee engagement relative to the company’s average. The machine learning, natural language processing, and sentiment analysis then evaluate the subjective feedback.

The employees’ feedback is grouped into 13 general themes, such as compensation, benefits, workplace communication, and shared values. The survey also tracks “red flag” themes related to unethical behavior and harassment, providing leadership with insights to identify potential issues early and correct them.

The most important metrics that will be assessed are listed below:

• eNPS
• CEO to average worker pay
• Exec team to average worker pay
• Gender pay gaps
• Racial pay gaps
• Safety – injuries per 200k hours worked
• Use of underage workers
• Use of part-time workers
• Workers making below poverty wage
• Employee attrition
• Benefits participation

B1G1

Buy one give one (B1G1) is awarding the Member Gratitude Certificate. The global initiative enables businesses to make a positive impact on the world. Their mission is to create a world full of giving, focusing on impact, habit creation of giving, and B2B connections. The purpose of the certificate is to acknowledge and celebrate the contributions of businesses toward creating a better world. Companies can donate as much as they want, starting from 1 cent. The focus is on charitable giving.

There is a high community involvement, free choice of the amount invested, and a right on the license to put the B1G1 logo on products and branding materials. The Member Gratitude Certificate serves as a symbol of appreciation and recognition for businesses that are committed to making a difference in the world through their giving activities. It also provides a way for B1G1 to showcase the collective impact of its business members and inspire others to join the movement. If you would like to become B1G1 certified, you should follow the steps listed here.

The metrics used for the certificate are based on the charitable giving activities of the businesses. Those are the number of projects supported, the total amount donated, and the impact created in terms of lives changed and communities transformed. These metrics are tracked through the B1G1 giving platform, which enables businesses to select from a range of high-impact projects and make micro-donations regularly. These purposes would cover education, environment, food, health, shelter, income generation, human rights, and life enhancement.

Fair Trade

FairTrade is a certification awarded to products that meet the standards of fair trade USA, a non-profit organization dedicated to promoting sustainable livelihoods for farmers and workers in developing countries. It is an award-winning, rigorous, and globally recognized sustainable sourcing model that improves livelihoods, protects the environment, and builds resilient, transparent supply chains. The purpose of the fair trade certificate is to provide consumers with a way to support fair trade practices and ensure that the products they buy are ethically sourced. Since 1998,  partnerships  expanded gradually to include more than 1,500 responsible businesses.

To become FairTrade certified, there are certain economic, environmental, and social requirements. This includes paying minimum prices, in which investment for the high-quality, sustainably produced product is included. Products must meet rigorous social, environmental, and economic standards. Special focus is on safe working conditions, environmental protection and sustainable livehoods. Companies pay an additional sum of money that is returned to the certifying entity, called community development funds. These funds allow farmers and workers to invest in development projects that address their community’s greatest needs, such as water, education, housing, and healthcare.

Scrutiny of sustainability certifications

Next to its growing popularity, certification scrutiny has been growing accordingly.  Legitimacy and effectiveness have been under questioning. It is key to examine the credibility and reliability of these certificates. Common areas of scrutiny today are greenwashing, verification, and enforcement, and the limited scope of addressing sustainability issues.

Greenwashing

One of the main concerns with sustainability certificates is the potential for greenwashing. This is a practice of making misleading claims about the company’s social and environmental performance. This brings into question how rigorous standards for awarding certifications really are. Greenwashing is stating to be environmentally conscious for marketing purposes, but actually not making any remarkable sustainable efforts. Sustainability certifications can be misused for greenwashing if they lack transparency or rely on self-certification without adequate verification. This allows companies to claim sustainable practices without making meaningful changes to their operations, resulting in misleading claims. Greenwashing not only harms the environment, but also erodes consumer trust in sustainability efforts. As such, it is important to select certifications that have a rigorous evaluation process and are widely recognized for their integrity.

The best way to avoid greenwashing is to be transparent with customers about your practices and have statistical data which would serve as backup for every piece of information provided. Exactly that is the tactic that reliable and effective certifications implement.

Verification and enforcement

Verification and enforcement can be a significant challenge for some sustainability certificates, as it requires a rigorous and transparent process to ensure that certified companies are meeting the required standards. This can be particularly difficult for certificates that rely on self-reporting and self-certification, as there is a risk of inaccurate or misleading information being provided. Even certificates that involve third-party verification can face challenges in terms of monitoring and enforcement, as the resources required to conduct ongoing audits and investigations can be significant. In addition, there is also the risk of certification bodies being influenced by the companies they certify, which can compromise the integrity of the certification process. To address these challenges, certification bodies must ensure that they have robust verification and enforcement mechanisms in place, including regular audits, investigations, and a commitment to transparency and accountability.

Limited scope and missing long-term vision

Limited scope and a missing long-term vision are pressing challenges for some sustainability certifications. Certifications that focus on a single issue or a narrow set of criteria may fail to address broader sustainability concerns, such as social justice, ecological sustainability, or democratic participation. This can result in a certification that is not aligned with the overall goals of sustainability, and may even contribute to greenwashing. Additionally, some certifications may have a limited scope in terms of geography or sector, which can exclude important stakeholders or overlook sustainability issues that are relevant in other regions or industries.

Another challenge is the lack of a long-term vision. Some certifications may have a short-term focus on immediate impacts and fail to address longer-term sustainability challenges, such as climate change, resource depletion, or social inequality. This can lead to a false sense of accomplishment and a failure to address systemic sustainability issues.

To address these challenges, sustainability certifications must have a comprehensive and holistic approach that considers the broader context of sustainability challenges and takes a long-term view. Certifications must be adaptable to different sectors and geographies, and engage a diverse range of stakeholders in the certification process. Transparency is a crucial part of becoming sustainably certified, however, once obtained, companies should be obliged worldwide to continue reporting on their practices. Today, multiple countries have rules and regulations, stating that sustainability reporting is mandatory on a yearly basis. This should also be important when you choose your certification, and must be kept in mind.

Alternatives for sustainability certificates

Still not convinced of the impact sustainability certifications can have? Then there are various alternatives that highlight your sustainable consciousness, while not being a certificate. Alternative approaches such as International Organization for Standardization (ISO standards), Carbon Disclosure Project (CDP), and Sustainability Accounting Standard Boards (SASB) have emerged.

ISO standards

The ISO 14000 family includes standards dealing with environmental management systems. Today, there are more than 300,000 certifications of ISO 14001 around 171 countries. ISO 14000 includes environmental labeling, performance evaluation, life cycle analysis, communication, and auditing. This standard is the most relevant one, and the most certified for environmental self-regulation with the goal of creating environmental management systems in organizations.

Ultimately, the ISO 14000 standard provides a framework for companies to establish and maintain an environmental management system (EMS). This system allows companies to systematically identify and manage their environmental impacts, reduce waste and pollution, and improve their overall environmental performance. The standard also helps companies to comply with environmental regulations, increase stakeholder confidence, and enhance their reputation. By implementing the ISO 14000 standard, companies can demonstrate their commitment to sustainability, reduce their environmental impact, and gain a competitive advantage.

However, it does not indicate superior environmental performance today. Additionally, multiple stakeholders were excluded from standards development. There were critics about its purpose and concerns about the commercialization of the certificate.

CDP

The Carbon Disclosure Project (CDP) was launched in 2000, with the goal of collecting climate-related data from firms and publishing them to find the right climate management decisions for the future. Such disclosure contains greenhouse emissions data, emission reduction targets, climate change risk and management strategies and opportunities for improvement. This disclosure can affect business-related decisions. Investors are participating in the information that will be sent out within the disclosure. Moreover, once published, investors can play a role in the changes and implementation of new strategies. Since, this disclosure is the only carbon-related one, and not mandatory, including a voluntary decision on what data will be included in it, it is not possible to substitute certificates fully.

SASB

Sustainability Accounting Standards Board (SASB) Standards provide sustainability disclosures about risks and opportunities. SASB is a non-profit organization that provides industry-specific sustainability accounting standards for use by publicly listed companies in their annual financial filings. While some stock exchanges and regulators require or encourage companies to report on sustainability, the use of SASB Standards is entirely voluntary. However, many companies choose to adopt SASB Standards as a way to improve their sustainability performance, enhance stakeholder engagement, and meet the growing demand for sustainability information among investors and consumers. Furthermore, the adoption of SASB Standards can help companies to identify and manage sustainability risks, improve their overall sustainability performance, and enhance their reputation.

The article discusses three sustainability certifications – B Corp Certificates, Leadership in Energy and Environmental Design (LEED), and Economy for the Common Good – that evaluate a company’s social, environmental, and economic performance. B Corps focus on a company’s overall impact and measures its social and environmental responsibility. LEED certification evaluates sustainable building design and construction, while the Economy for the Common Good assesses a company’s performance based on its contribution to the common good beyond financial indicators.

The article notes the certification process for each and highlights the benefits and criticisms. For example, B Corps certification can help companies stand out from their competitors and attract investors. While acting as an internal benchmarking tool for further improvement on the most relevant KPIs and an identification tool for important levers. LEED certification can improve indoor air quality and offer financial benefit. The Economy for the Common Good can promote transparency and accountability and demonstrate a company’s commitment to the common good. Even though there can be criticism for every of the certifications, it is also clearly visible that the organizations behind the certificates are actively working to close relevant gaps.

However, if you are not convinced by all the certifications mentioned, there are also alternatives that we highlighted. ISO standards, Carbon Disclosure Project (CDP), and Sustainability Accounting Standard Boards (SASB) are alternatives to sustainability certifications that can highlight a company’s sustainable practices. ISO 14000 provides a framework for companies to establish an environmental management system, reduce their environmental impact, and comply with environmental regulations. The Carbon Disclosure Project collects climate-related data from firms and publishes them to support climate management decisions, while SASB provides sustainability disclosures about risks and opportunities. Companies can voluntarily adopt SASB standards to improve their sustainability performance, meet the growing demand for sustainability information, and enhance their reputation.