The B Movement in East Africa : A shift in the culture of business

According to Friedman, business had no role to play in addressing social and environmental challenges. And true to the fact, capitalism delivered what it promised: it provided unprecedented wealth and prosperity around the world. But it also led to negative effects – wealth inequality1 creating limited access to basic services for those who cannot afford, skewed tax systems, environmental degradation, political instability, just to name a few (Pimentel 2018).

For businesses to make a cultural shift in how they work, there is a need to bring in all stakeholders to create a supporting ecosystem where: 2 • investors follow a similar investment as impact investors, 3 where they consider financial, social and environmental returns when making investment decisions • legal corporate structures are in place that legally bind companies to consider all stakeholders in decisionmaking and bind corporate mission, even if there is a change in ownership • consumers buy goods and services that are values-aligned (Knowles 2016) • constructive collaboration happens among business, civic organisations, academic institutions and governments to enable knowledge sharing, and independent checks and balance • like financial reporting, a set of agreed standards is in place that enables companies to measure, manage, improve and report on their social and environmental performance 4 • media coverage highlights good companies, not only financial performance and CSR initiatives.
This does not mean that business is the only solution to current social and environmental challenges, rather it is recognising that business can be a significant contributor to creating and scaling solutions. Furthermore, that business has a necessary role to play because government and nonprofits are, like business, necessary and also insufficient to solve our most challenging problems alone.
2.Global Reporting Initiative defines impact as the effect an organisation has on the economy, the environment and/or society, which, in turn, can indicate its contribution (positive or negative) to sustainable development -https://www. globalreporting.org/standards/questions-and-feedback/materiality-and-topicboundary/ 3.The Global Impact Investing Network (GIIN) defines impact investments as investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return. Impact investments target a range of returns from below market-to-market rate, depending on investors' strategic goals.
4.The triple bottom line approach requires companies to keep accounts profits and create a value system for impact on people and planet as well. Organisations such as Sustainability Accounting Standards Board and Global Reporting Initiative have provided indicators to support companies.
B Lab, a global non-profit, is working to accelerate the business culture shift towards positive impact and make this shift meaningful and lasting. The organisation does this by creating a supportive ecosystem to support businesses as a force for good.
These include the following: • administration of the B Impact Assessment (BIA) tool used by companies and investors to measure and manage impact • certification of high-impact business as Certified B Corporations (B Corps) • advocacy for governance structures that promote creation of a solid foundation for long-term mission alignment and value creation through benefit corporation.
For this to be truly global, B Lab works with regional partners based in North and South America, Europe, Australia and Africa. In partnership with the UK's Department for International Development (DFID), B Lab East Africa 5 was established in 2017 to support this system shift in the region. An overview of how the work that B Lab does globally and in East Africa ties to the global shift in business culture is given below.

The B Impact Assessment platform
The BIA is a comprehensive measurement and management tool focused on a business's positive impact on society and the environment. By completing a set of questions that reflect impact indicators, best practices and outcomes, 6 a company receives a score on a 200-point scale: such score is representative of the business's overall impact on its employees, communities and the environment.
Although questions are designed to be universally applicable for the purposes of standardisation, they are also designed to allow for local context in how a company completes the assessment. The BIA is customised to a company based on size (number of employees), sector and geographic market (region where the company has the majority of its operations) 7 ( Figure 1).
The BIA is defined as follows: • Positive impact oriented: All indicators represent the positive impact of a company and are intended to exceed universal business norms. There are no negative points in the assessment. 8 • Comprehensive: The assessment takes a holistic view of business impact by including indicators and best practices 5.B Lab East Africa covers Kenya, Uganda, Rwanda, Burundi, Ethiopia, South Sudan and Sudan.
6.Outcome, as it relates to business, is viewed as a change that is caused by an action or activity. This change can be for an individual or a group of individuals (who could constitute an organisation), but it must be as a result of an activity conducted by the business -www.socialvalueselfassessmenttool.org 7.There are currently over 70 version of the BIA, determined by the tracks.
8.Because there are no negative points in the assessment, the weighted questions do not include questions about negative impacts or legal compliance. A separate unweighted disclosure questionnaire is included in the BIA to examine a business's negative attributes and negative outcomes. Seen as philanthropic and opt in, companies with CSR initiatives often undertake different causes to help society or environment based on activities not core to the company. A major criticism of this approach is that it does not tie into the long-term goals of a company and can lead a company to taking too narrow approach in external engagement, coming across as public relations initiative that is disingenuous (Browne & Nutall 2015).
Triple Bottom Line (TBL) In 1990s, John Elkington and others took a different approach. They proposed that companies need to have a TBL approach in how they operated and reported on their performance. TBL approach suggests that companies not only look at profit but also account for how their activities affect people and planet (Henriques 2013). The TBL approach is vested in the concept that only when companies measure and account for all areas they impact 2 they can operate responsibly (Brusseau 2013).
Stakeholder Theory This theory suggests that companies should consider all those who are impacted by their work. In its purest form, a drawback to the theory holds that all stakeholders have a right in participating in the business. This is not practical for a company to execute to survive by waiting on feedback from the community on each activity (Brusseau 2013;Phillips 2012).
affecting all stakeholders and encompassing all aspects of a business's operations and business model. • Objective: All weighted questions in the assessment are specific and verifiable -questions are intended to be supported by documentable evidence for each indicator to maintain the rigour and value of the assessment. The BIA also relies on relevant third-party certifications (Fair Trade, USDA Organic, Cradle-to-Cradle, LEED, etc.) (see Appendix 4) to leverage third-party expertise and verification, and is intended to complement rather than substitute other certification and impact measurement frameworks. 9 • Standardised: To provide a comparable measure across all types of businesses, the assessment has identical structures for all businesses, with the same stakeholders and dimensions of impact influencing those stakeholders (referred to as 'goals').

B Impact score and structure
All versions of the BIA are divided into three distinct sections: • Operational Impact: It evaluates the operational impact of the company on its stakeholders, as it is managed and operated on a day-to-day basis. All company activities have an impact on stakeholders, and this section offers a holistic measure of operational impact. • Impact Business Model: It evaluates the specific business models designed to create positive social and/or environmental impact beyond the basic operational impact of the business. Impact business models are marked by more intensive, generally intentional, systems of measurement and management.
9.Appendix 4 offers an overview of the BIA and how it relates to other impact measurement tools.
• Disclosure Questionnaire: It is an unscored section of the assessment that includes questions about negative practices or outcomes or legal compliance of a business operation. The first two sections make up the scored portion of the impact assessment. A company can score up to 200 points in these two sections ( Figure 2). 10 Within these two scored sections, there are four distinct impact areas: • Governance: The extent to which social and environmental considerations are ingrained into the business, financial responsibility and oversight, transparency, and the prevention of negative outcomes. • Workers: The company's contribution to the financial, social, physical and professional well-being of its employees. • Community: The company's contribution to the economic and social well-being of the communities in the area in

10.
To learn more about how the scores are determined and allocated in the assessment, visit https://bimpactassessment.net/how-it-works/frequently-askedquestions/the-b-impact-score.

Sector (industry): Manufacturing, Service, Wholesale/Retail, Agriculture
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It is okay if the descripƟon does not perfectly fit. If your business operates in mulƟple industries, please select the industry that represets the largest operaƟng acƟvity of the business in terms of overall revenue. which it operates, including job creation and inclusivity, civic engagement and philanthropy, and collaboration with other businesses and organisations. • Environment: The company's efforts to reduce its environmental footprint, as created by company facilities, input materials, outputs or wastes and suppliers or distributors.

Governance of the B Impact Assessment
The BIA is developed and managed by B Lab with oversight from an independent Standards Advisory Council (SAC) composed of stakeholder representatives and impact experts. In addition to the SAC, B Lab has Regional Advisory Groups whose mandate is to deepen the engagement of regional experts in improving the standards of the BIA. Currently, B Lab has advisory groups in Latin America, East Africa, Australia and the United Kingdom that provide constructive feedback and recommendations on regionalspecific issues. 11

Uses of the B Impact Assessment
The BIA platform is a free public good, available for anyone at bimpactassessment.net. Originally developed in 2007, there have been more than 60 000 businesses to date that have registered to use the BIA.
The BIA can be used for the following purposes: • Assess and compare performance: By completing the assessment, a company receives an overall score to understand its overall impact. Benchmarks within the assessment are available to understand how the company compares to other similar businesses. • Improve practices: The assessment is designed to be educational and give companies direction on how to improve their overall impact. Companies are able to mark questions for improvement, scores can be tracked over time and questions feature resources -best practices, examples from other companies on how they implement different practices -to support companies in their improvement journey: The BIA broadened what we considered as impact. There are very many areas Peperuka had never considered in terms of impact [sic] e.g. we had never thought about things like the lights we use in the office. We are now working on an improvement plan as well as documentation and tracking of our procedures so as to show our impact. We are now talking to our networks about the BIA and how other businesses can use the assessment to improve on their current operating procedures. Wangari, Founder of Peperuka. 12 • Become B Corps Certified or get a Global Impact Investing Rating System (GIIRS): The BIA is the exclusive assessment tool used to earn B Corp certification or receive a GIIRS rating 11.The BIA is revised and upgraded on a 3-year cycle with an effort to continually improve how it measures impact. Improvements are made based on feedback from assessment users, B Lab staff and third-party experts. 12.https://b-labeastafrica.net/case-study-peperuka/ • Evaluation of the performance of other businesses that an institution partners with, like investees or suppliers.
Since B Lab East Africa started operating in East Africa, over 600 companies have registered on to the BIA platform. A further 200 companies have registered on to the platform in the rest of Africa. Majority of the companies in East Africa are using the assessment for impact measurement and management. The use of inbuilt improvement tools and benchmarking helps companies to track how they perform as it relates to social and environmental performance. This is available as a free public good.
B Lab and its regional partners offer paid services to support organisation to verify BIA performance. Users of these services generally fall into one or more of the following categories: • B Corps: The BIA is the exclusive assessment used to verify the performance requirement to become B Corps. • GIIRS-rated funds and companies: The BIA is used to issue GIIRS ratings -equivalent to a Morningstar rating 13 for impact rather than financial viability. • Community partners: The BIA is used by business associations, municipalities, large companies and nonprofits to advance the positive impact of their constituent businesses.

Certified B corporation
B Corp is to business what Fair Trade certification is to coffee or USDA Organic certification is to milk. B Corps are for-profit companies certified by B Lab to meet rigorous standards of social and environmental performance, accountability and transparency. The global B Corp movement is an example of the shift in business culture, to use business as a force for good.
Certified B Corps: • achieve a minimum verified score of 80 points on the BIA; assessment answers are verified by B Lab • make their B Impact Report transparent on bcorporation.net • amend their legal governing documents to require their board of directors to balance profit and purpose (see Appendix 2) 14 • update their certification every 3 years (Box 1).

B Corp movement in East Africa
There are over 2700 B Corps from more than 60 countries globally. They vary in size from billion-dollar companies, like Danone North America and Laureate Universities, to 13.'The Morningstar star rating is a rating given to mutual funds (and other managed products) by the investment research firm Morningstar. The ratings range from one to five stars, with one being the poorest and five being the best. The ratings are a snap shot of risk-adjusted performance at a point in time'. https://www. thriventfunds.com/mutual-funds/morningstar-ratings.html.
14.B Corps make this legal change by updating their articles of incorporation, reincorporating as benefit companies or making other structural changes. The B Corp legal framework helps companies protect their mission through capital raises and leadership changes and gives entrepreneurs and directors more flexibility when evaluating potential sale and liquidity options (see Appendix 2 on article amendments required of Kenyan B Corps). 17.An example of collective effort for improvement is the ongoing B Inclusive Economy challenge. Each year, B Corps can opt in to the challenge and identify areas for improvement as it relates to inclusive practices in their community, workforce, the environment and supply chain. https://bcorporation.net/for-b-corps/inclusiveeconomy-challenge.
• Attract talent and deepen engagement: Certifying as a B Corp helps companies in attracting values-aligned talent and keep them engaged over time (Giddens 2018

What matters most to your company?
Being the role model for fairly manufactured goods in sub-Saharan Africa.

What did you learn by taking the Assessment?
When we started, our employees in Ethiopia neither understood nor recognised that what we were doing was creating impact. But taking the assessment was a validating exercise for our employees -it showed the team that we were already doing some amazing stuff with our company. It also showed us where we needed to improve to become the role model we want to be.

What did you do as a result of taking the assessment?
Since then, we have taken the steps to certify our factory as the first Fair Trade footwear factory in Africa. We also found that the biggest gaps in our results were in the Environment section. We are continuing to educate our leather and rubber suppliers on how they can reduce their footprints. We have also made a commitment to donate 1% of our profits to environmental causes through 1% for the planet.

Take the B Impact Assessment (BIA): The first step in becoming a Certified B
Corporation is taking the BIA, which assesses the overall impact of your company on its stakeholders. The assessment varies depending on the company's size (number of employees), sector and location of primary operation.

Submit supporting documentation:
Following completion of the BIA, supporting documentation is asked to be uploaded. The assessment will randomly select six to eight questions that were answered in the affirmative regarding the operations of the company to demonstrate those practices in more detail.

Assessment review call:
A B Lab staff member will have a call with the company to review questions and documents provided by the company.

Submit additional documentation:
Post the review call, companies that meet a score above 80 out of the 200 points will typically be asked to provide additional documents specifically from the Impact Business Model section of the assessment that were answered in the affirmative.

Background checks:
In addition to the voluntary indication of sensitive issues in the Disclosure Questionnaire, companies pursuing certification also are subject to background checks by B Lab staff. Background checks include a review of public records, news sources and search engines for company names, brands, executives or founders and other relevant topics.

Completion of certification:
If the score of the BIA after the review process is above 80 points, the company will be asked to sign the B Corp Term Sheet (Appendix 3) and this will mark the end of the certification process.
*Site review: 10% of B Corps are randomly selected each year for an in-depth site review. The goal for this review is to verify the requirements of the certification and further confirm the accuracy of affirmative responses in the company's BIA. GIIRS ratings support funds that manage their portfolio's impact with the same rigour as their financial performance. Using the BIA as the measurement tool, GIIRS delivers a comprehensive accounting of a portfolio's impact on all stakeholders. Funds can use the rating to prove impact thesis, track progress over time, amplify impact through improvement tools, and benchmark and report their portfolio performance (see Box 3 on how Gray Ghost Ventures uses GIIRS rating).
To complete a GIIRS rating for a fund, the fund's portfolio companies must complete the BIA and the fund completes a fund manager assessment. A GIIRS fund rating is composed of an aggregate numerical score and rating for a fund based on a roll-up of score of the BIA for its portfolio investments.
Each year a fund receives an updated rating with current information about the investments in its portfolio. At the close of a fund, funds receive a track record rating -a report summarising its impact performance over the life of the fund (Figure 3).

Community partners
Major institutions are helping the companies in their network measure and manage their positive impact through BIA. In partnership with B Lab, these partners (including non-profits, associations and large corporations) use the BIA as a tool to help advance the positive impact of their constituent businesses, suppliers or subsidiaries.
By using the assessment, these institutions deliver a comprehensive accounting of the impact of their supply chain or network members or subsidiaries on workers, customers, communities and the environment (see Box 4). 19 19.You can learn more about these programmes on http://b-analytics.net/.

Beyond measurement, impact governance 20
The growth of the B Corp movement and use of the BIA has led to growing interest in corporate structures that enable business to embed purpose in their legal documents of incorporation. B Lab works to promote the creation of a solid foundation for long-term mission alignment and value 20.The 2016 report, including results from the programme, can be found on the following website: https://www.grupobancolombia.com/wps/wcm/connect/ 1b350d27-8c7a-4840-b6b3-08d31e6c1e46/Informe+Gestion+2016.pdf?MOD=AJPERES &CVID=lHnnX9S  In 2016, Grupo Bancolombia, the largest bank in Colombia, in collaboration with B Lab and its sister organisation in Latin America, launched a programme to use the B Impact Assessment to measure and manage the social and environmental impacts of 100 of its key suppliers, to enhance the positive impact of the bank and its value chain.

Why was B Lab's programme the right choice for Bancolombia?
Bancolombia had several programmatic objectives: (1) to understand how the companies in its supply chain are mission-oriented businesses; (2) to improve the sustainability performance of its supply chain and (3) to strengthen the bank's relationship with its suppliers. To fulfil these objectives, it was essential that the programme included the following: • a self-assessment tool that went beyond ESG evaluation, to allow suppliers to understand their social, environmental, governance and economic impacts of their businesses on society • an analytics platform that provided both a holistic view of the impact of the bank and its network in their local community and that allowed the bank to focus on impact improvement with the businesses in its supply chain • after evaluating numerous impact assessment tools used by banks and corporations, Bancolombia chose the tools -the B Impact Assessment and B-Analytics -as the best solution to fulfil its objectives.

How did Bancolombia's pilot programme work?
At a launch event that convened Bancolombia's largest suppliers, 100 missionoriented suppliers were asked to complete the B Impact Assessment. In addition to completing the B Impact Assessment, Bancolombia asked businesses to also identify two to three actionable areas for improvement over the next 12 months. Bancolombia ultimately invited 145 suppliers, of which over 111 completed the B Impact Assessment.Once the suppliers had completed the B Impact Assessment, Bancolombia digested the individual and aggregated data in B-Analytics. The sustainability team used the data in its ESG supply chain analysis and reporting 20 and generated performance reports for suppliers who completed the B Impact Assessment, highlighting areas for improvement, which allows Bancolombia to better understand the scale and composition of its supply chain.
What were the outcomes of the programme? More than 80% of suppliers completed the entire B Impact Assessment. In aggregate, those suppliers directly or indirectly employ more than 600 000 workers, allowing Bancolombia to better understand the scale and composition of its supply chain. Some statistics from the program include the following: • suppliers created over 17 656 jobs last year • on average, women hold 36% of executive positions at Bancolombia's suppliers • 34% of suppliers have a high-to-low-pay ratio between 1 and 5x, while 14% have a high-to low-pay ratio greater than 20 times • 68% of suppliers have an environmental policy, while 16% monitor their energy consumption, and 11% of suppliers have a certified environmental management system.

How did your portfolio companies manage the GIIRS process?
We always have a motivation to shield our entrepreneurs from too many requests because founders are often pulled in multiple directions and wear many hats. We surveyed our companies after they completed the GIIRS ratings process. Over 80% of companies did not find the process burdensome and some of the companies were thrilled with the nature of the questioning.

What did companies find valuable?
Many CEOs saw a corroboration between our investment expectations and a third-party requirement, especially in areas of governance and reporting. For example, all the companies began to understand better why we emphasise stakeholder language in companies' constitutional documents. They learned that this requirement was not idiosyncratic to Gray Ghost and that incorporating this language into bylaws can lead to a bigger movement for a larger swath of the social impact population. The scorecard framework of the impact report helped companies identify strengths and weaknesses and set impact objectives. Our companies tended to score very highly on the impact business models and community areas because that is their focus through their product or service. On the contrary, because of the early stage nature of our companies, the assessment illuminated some topics that will be important in the future enabling the companies to put policies in place in advance.
Did any companies make changes to their operations or practices after taking the assessment? Many HR departments made efforts to shift around their employment practices, especially in training and onboarding new hires. Equity incentive pools have expanded for the companies that are building for growth and liquidity. Many of our companies operate in geographies where the notion of an independent board is not widespread, but the assessment helped highlight to them how this governance structure could make the company stronger. They also began tapping other resources via a network of advisory board members or less formal bodies.

Conclusion
There is proof that businesses cannot continue to operate as they currently do; it is not sustainable for long-term development and profitability. Business can play an important role in addressing society's greatest challenges, together with government and civil society. For business to be an agent of change, credible standards and public transparency are necessary for customers, investors, policymakers and workers to differentiate good companies from just good marketing.
Credible standards hold businesses accountable and transparent about their impact performance. The BIA, Fair Trade, Sustainable Development Goals and Organic Certification are some of the standards enabling businesses to measure the impact their activities are creating on workers, suppliers, shareholders, the environment and the community they serve.
Measuring impact also enables companies to look holistically at their performance and work on improvement where needed. This works similar to how companies use financial reports to set goals for revenue, profit and expenses for the year. Tracking desired systemic outcomes (e.g. poverty was reduced because of a company product or service) will take years. By building impact metrics directly into company's systems, companies will be able to track progress towards both near-term and long-term impact goals.
For business culture to shift, the capital markets infrastructure is critical to channelling capital to high-impact enterprises.
The growth of the impact investing marketplace and the larger capital market's interest in responsible investment are showing that impact is an important factor for business. For impact investors, financial performance is not the only thing they look at. They should also require companies to measure and manage their impact on a broader stakeholder group. Impact measurement and management enables investors to understand how their investments are affecting their target groups and general well-being of the businesses.
Legal innovation is also necessary to align the interests of business with the interests of society and to allow companies and investors to pursue a higher purpose than just profit maximisation, especially as they scale via the capital markets. Regulation that is weak or non-existent will make it easy for exploitation of communities and environment to maximise their profits. To enable regulation, measurement has to happen for lawmakers to analyse outcome and impact created through business intervention.
The B Movement, as well as other high-impact business movements like Fair Trade, Organic Certification and SDGs, is offering standards that can enable businesses to track their impact on people and planet. When all businesses start embedding practices that are sustainable and inclusive for all in the market, this will be the right step in ensuring shared and durable prosperity for all.