B Corp Businesses Show Strong Financial and Branding Performance

A Helio-powered dive into the financial performance and customer feedback for Certified B Corps.

Customers and shareholders are increasingly demanding that businesses take more accountability for their impact on the community, environment, and employees beyond just maximizing financial returns. From the growth in ESG investing to the commitment from large car manufacturers to produce electric vehicles, businesses are making changes in response to this trend.

Founded in 2006, B Labs is a resource to help companies navigate these changes and signal to customers and shareholders that they are proactively considering their holistic impact. Through B Labs, businesses can apply to become a Certified B Corporation, which requires that they must “meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose…and build a more inclusive and sustainable economy.” Today, there are over 3,500 B Corps in 70 different countries, from large businesses like Patagonia and Danone to smaller local companies.

At CircleUp, we wanted to understand potential implications of B Corp certification, which requires a business to pass rigorous standards — a potential signal for a well-run and well-managed organization. We hypothesize that B Corp certification helps companies attract investors, employees, and customers, providing a competitive advantage over non-certified brands. All this in mind, we wanted to see if B Corp certification correlates with financial performance.

Additionally, the B Corp certification is often displayed front and center on businesses’ websites, packaging, and marketing materials to signal to customers a commitment to social and environmental performance. We were curious to test if customers actually notice. If so, what are they saying about B Corp brands?

Leveraging Helio, our proprietary data aggregation and machine learning platform, we took a data-driven approach to put these questions to the test.

Does B Corp certification correlate with financial performance?

Because we currently use Helio to understand the CPG universe, we focused only on CPG brands. To make the sets of brands easier to compare, we zoomed in further, limiting each group to Food or Non-Alcoholic Beverage brands.

To understand the financial performance of B Corp brands, we began by comparing a set of Certified B Corps to the following sets of brands:

• A sample of promising emerging CPG brands¹ identified through Helio and the CircleUp network, to understand B Corp brands’ performance relative to smaller, insurgent brands.
• All brands with retail sales data, to get a sense of B Corp brands’ performance against the “average” brand on shelf.

We started by looking at the average Trailing 12 Month sales of brands in each group. Certified B Corps are slightly bigger on average than brands in the Comparable Emerging Brands set and were roughly double the size of the average in the Food and Non-Alcoholic Beverage categories in 2018. We hypothesize that brands seek B Corp certification after they’ve established traction in the market.

We can also see interesting growth trends; it appears that B Corps grew faster on average than companies in the other two groups.

Source: CircleUp Helio & NielsenIQ

Understanding performance of top companies

As a platform for venture investors, CircleUp is interested in identifying top-performing brands which can grow much faster than the average. To isolate the performance of the most exciting brands in each group, we zoom in to examine the performance of the top quartiles of each brand group.

To construct the quartiles, we took the top 25% of companies in each group by absolute sales growth over the three year period 2018-2021. We then index the data to the start of 2018 and see the average sales growth for these top quartiles by brand group:

Source: CircleUp Helio & NielsenIQ

We can see that the top quartile of B Corp Brands has grown faster than the top quartile of each other group. The comparable emerging brands that CircleUp identified using Helio are growing slightly slower. The category average is growing significantly slower than both B Corp brands and its comparable brands.

As an additional comparison, we can add the top quartile of growth from a set of the 15 biggest Food and Non-Alcoholic Beverage brands by sales, to understand how these companies are growing relative to industry giants.  Here, we can see that Certified B Corps are growing at a much faster rate than the largest incumbents. So, the top B Corps have favorable growth profiles when compared to both other emerging, disruptive brands and massive incumbent brands

Source: CircleUp Helio & NielsenIQ

The CAGR table below summarizes growth rates for the top quartile brands in each group.

CAGR for Top Quartile of Brands by Group

Brands that choose to become Certified B Corps don’t sacrifice the potential for explosive financial growth. This analysis indicates that a portfolio of Certified B Corp Food and Beverage brands grew faster than the category average, a sample of emerging CPG brands, and large incumbent brands.

Similar to a venture portfolio, much of the growth is driven by a small handful of runaway winners. Below is a selection of top-performing Certified B Corps and their respective CAGRs over the period:

What do customers have to say about B Corp brands?

On the B Corp website, one of the main benefits listed for certification is the ability for brands to “Amplify Voice.” Specifically, B Corp notes that getting certified “helps [companies] stand out and stand by [their] mission. The B Corp seal on a product, website, sales materials or business card instantly communicates that a company is a verified leader when it comes to positive impact and empowers individuals to confidently vote with their dollars.”

We wanted to test what customers were saying when they were “voting with their dollars.” To do this we looked at the review text left by customers of both B Corp and non-B Corp brands. Through natural language processing we identified the terms that customers used disproportionately in B Corp reviews relative to reviews of other brands.

 Source: CircleUp Helio

We found that many of the terms customers use disproportionately in reviews of B Corp brands’ products vs. those of other emerging CPG brands relate to the brands’ operating principles. Customers mention “organic”, “ethical bean”, “quality”, “fair trade”, and “vegan” disproportionately, which relate to how brands impact their customers, partners, and the world.

Notably, customers don’t mention the B Corp certification itself frequently enough to be significant in this analysis (only 11 reviews mentioned it out of more than 17,000 reviews analyzed, or <.06%). We conducted this analysis on reviews from third party platforms where brand messages are generally harder to convey than a brand’s own website. Therefore, B Corp branding might not be as front and center for customers at the point of purchase. It is quite possible that the brands’ most loyal customers, who are most closely aligned with the mission, buy directly from the brands’ websites and so aren’t accounted for here.

This analysis has only scratched the surface on Helio’s potential. By leveraging our proprietary entity resolution technology, we have created a platform that links together offline sales and distribution growth, social media activity, web traffic growth, customer reviews, and much more for over 1 million consumer brands. Through this, we believe Helio is uniquely positioned to increase the speed, quality, and objectivity of decision making in the private company landscape from sourcing and diligence to strategic planning and value creation.

¹Brands founded in the last 10 years that have top 25% of growth potential according to CircleUp’s growth prediction model.