B Corp™ #02 Transforming the Company / Part 1

"B Corporation™," administered by the American non-profit organization B Lab™, is a worldwide certification system known as "B Corp™." Companies with this certification adhere to rigorous environmental and social performance standards, spanning governance, employee benefits, community engagement, and customer relationships. Because this certification examines the fundamental nature of a business, it necessitates meeting demanding benchmarks in areas such as transparency, public benefit, and accountability.

The certification process begins with the "B Impact Assessment (BIA)," a digital evaluation tool that assesses a business's performance in five key categories: governance, workers, environment, community, and customers. A company must achieve a minimum score of 80 out of 200 points to advance to the next stage. Following this initial assessment, the process includes a legal examination, a review of corporate operations, the alignment of internal regulations with BIA standards, and a final interview with the assessment board.

Once a company is B Corp™ certified, it must verify its B Impact score every three years. This process involves a reevaluation conducted through the BIA and the submission and public disclosure of a "B Impact Report" outlining their initiatives.

Nice Corporation achieved B Corp™ certification in April 2023. To gain insight into the behind-the-scenes aspects and plans of Nice Corporation, we interviewed key figures involved in the B Corp™ certification process: CEO Ikuma Izutsu, Takayuki Yamatogi, who played a significant role in the B Corp™ process, and architect Shuzo Okabe, who spearheaded the company’s brand development strategy and catalyzed the B Corp™️ process. 

From the left, Takayuki Yamatogi, Ikuma Izutsu (Nice Corporation), Shuzo Okabe (upsetters inc.)

Although there's been a global uptick in businesses working towards joining the B Corp™ community, only a few companies in Japan have been able to do so. Why did Nice Corporation decide to do this? 

Izutsu: The process began with a critical examination of the state of Japan's garment sewing industry. We find ourselves in an era where considering people and the environment in our business practices has become the norm. Regrettably, the garment sewing industry falls short of these expectations. Issues ranging from low wages and employment conditions to the general perception of our work have contributed to a negative image of our industry. While acquiring the necessary skills is time-consuming, the relatively understated nature of our work often makes it challenging to find true fulfillment. This, in turn, does little to make our profession appealing to the younger generation.

With these concerns in mind, I embarked on a journey to revitalize our company's approach. I aimed to make our industry more appealing and equitable. While our initial objective was to enhance the brand value of our sewing factory, our real goal was to highlight the craftsmanship flourishing at the grassroots level. We wanted to demonstrate our unwavering commitment to creating top-quality products. It was in pursuit of visualizing this commitment that Mr. Okabe proposed the idea of pursuing B Corp™ certification.

Okabe: When I first met Mr. Izutsu, he was determined to revolutionize the working culture in garment sewing factories. However, implementing such sweeping changes can prove elusive for internal and external stakeholders. As we deliberated on how we can best represent Nice Corporation’s™’s commitment to these ideas, we began exploring the concept of B Corp. The B Corp™ standards resonated with Mr. Izutsu's vision, and joining this community could profoundly impact the sewing industry, an integral part of the broader fashion sector. Despite the challenges associated with certification, I viewed the process as a guiding principle for our team, regardless of the outcome. Mr. Izutsu's unwavering passion and determination motivated us to embrace this challenge.

Izutsu: The B Corp™ standards resonated with me on multiple levels. I felt they could anchor our company's guiding principles in the long run. Following Mr. Okabe's guidance, I delved into the guidelines to explore what we could do as a company. I realized that smaller and medium-sized enterprises in Japan might have a higher chance of becoming a B Corp™ business than larger corporations.

Okabe: Japan boasts a significantly higher number of small and medium-sized enterprises than other countries. These businesses often foster an environment conducive to effective top-to-bottom internal communication. I also anticipated that smaller enterprises might find it easier to become B Corp™. Additionally, Mr. Izutsu's English proficiency, honed through his overseas experiences, minimized language barriers—a fortunate advantage for us.

Izutsu: I quickly realized that navigating this journey with stakeholders who comprehended our company's inner workings would be more straightforward. Simultaneously, I recognized the difficulties of conducting the application process solely within our organization. A crucial aspect of the B Corp™ journey is selecting the right collaborators. This is where Mr. Yamatogi, with whom I was working on another project, became an invaluable asset. Through our collaborative efforts, we achieved certification more swiftly than I had envisioned.

Yamatogi: After university, I joined a government agency specializing in economics. Following my departure, I became a certified administrative scrivener in my hometown of Kurashiki City. I initially began collaborating with Nice Corporation to support their endeavors in securing government grant projects. Upon completing that work, Mr. Izutsu approached me, seeking our joint effort to become B Corp™. Given my awareness of Mr. Izutsu's long-term industry vision, I felt my involvement would be pivotal in realizing these ideals.

And how did the actual process play out? 

Yamatogi: The B Corp™ process begins with obtaining a particular score on the BIA. This involves two steps.

First is thoroughly documenting the company's mission statement and internal regulations. Second is the quantification and organization of company data. The first phase allowed us to overhaul our mission statement and internal regulations, aligning them with our current corporate status and the standards set by the BIA. We created new documents that reflected these changes.

The second phase revolves around the quantification and organization of company data. We compiled information on wages and our business partners, capitalizing on the wealth of data in our database. This meticulous data readiness significantly accelerated our certification process. For example, B Corp™ strongly emphasizes partner information in the community category.  Having local business partners can result in higher scores, as it indicates a commitment to giving back to the local community. Additionally, we successfully addressed the tracking of carbon dioxide emissions, which we initially assumed challenging to quantify, by employing external services.

 

Okabe: This is more of my take on the issue, but I think we could go through the process so swiftly because of how we navigated the journey leading up to the final review and the content of the last review itself. We prepared the documents quite meticulously, but what set us apart was the success of Mr. Izutsu's top-down internal governance at the company. Opposition and unproductive debate are far more likely in larger organizations, necessitating time-consuming approvals from various facets of the organization. However, internal communication tends to flow more smoothly in smaller to medium-sized companies. 

Additionally, Nice Corporation's proactive approach to embracing new initiatives further facilitated the process. I think B Corp™ evaluates that sort of stance quite highly. They're particularly favorable towards companies that actively nurture a culture of community engagement. B Corp™ is particularly receptive to companies eager to foster a proactive culture within the large B Corp™ community. However, the time taken for certification varies significantly from one case to another.

Yamatogi: There are only a few cases for B Corp™ certification in Japan, so we set our goal at six months to a year, based on the timeline of companies outside the country. Since we created our documents based on B Corp™ guidelines, we only had a few issues after the initial review and could smoothly get to the final stages. 

Mr. Okabe's point regarding the cohesive relationships between employees and management, bolstered by the company's transparent culture, is worth noting. The company was prompt in releasing data about its operations. The new company regulations devised for our certification process also demonstrate a vital consideration for employees, including their compensation and overall well-being. Mr. Izutsu readily accepted and shared these decisions with the employees, fostering a sense of unity with the staff. This couldn't have happened without the trusting relationships he has built with his employees over the years, which has nurtured a strong sense of belonging and commitment among them. The employees also paid close attention to my explanations and appeared genuinely satisfied. In this context, B Corp™ can be seen as a well-suited certification for unlisted, small and medium-sized enterprises and startups. Incorporating new elements into large Japanese corporations later in their business history can be challenging. I think the process went so smoothly because of these internal factors.

Izutsu: The average age of our employees has become younger than before, and I'm grateful for the eagerness and excitement for innovation. This open-mindedness has always been a part of our company culture. Still, it reflects how we value the local community and work collaboratively with them to run our business. We have a history of working together and complementing each other's strengths, contributing to our organization's transparent communication.

Regarding data management, we have always been proactive in seeking guidance from professionals such as banks, labor consultants, tax advisors, administrative scriveners, and judicial scriveners. Their expertise was instrumental in helping manage our data and prepare the necessary documents for B Corp™

Yamatogi: During our interview, we had to submit documents containing our fiscal communications with local banks and financial statements indicating the relationship between bonus amounts and company profits. These documents were crucial in formulating comprehensive responses to B Lab's multidirectional evaluation approach. Our submission detailed our internal strategies and improvement plans in preparation for the B Corp™ process.

Our Efforts

Environment: Weigh residuals and waste materials; implement waste reduction targets; convert 100% of the factory’s operating electricity to renewable energy; measurement of scope 1 and 2 carbon dioxide emissions; implement carbon dioxide reduction targets

Community: Actively hiring and promotion regardless of gender and promote them to management positions; maintain and expand business relationships with local suppliers; develop policies that contribute to the local community

Customers: Develop internal policies such as customer relations guidelines

Workers: Conduct regular internal training and personnel interviews; conduct and improve employee satisfaction surveys; set up opinion boxes; establish a system for feedback in the face of an industrial accident

Governance: Sharing financial and profit-and-loss information with employees; monitoring and revising social and environmental indicators at board meetings; holding regular meetings among managers

Our Next Steps

Environment: Promote the use of organic fabrics; calculate the amount of carbon dioxide produced per garment; measure Scope 3 carbon dioxide emissions

Community: Volunteer in local communities; share code of conduct guidelines with our suppliers

Customers: Collect and analyze customer feedback and incorporate findings into future product planning

Workers: Conduct regular on-the-job training and personnel interviews; conduct and improve employee satisfaction surveys; set up suggestion boxes to collect opinions from our employees; establish a system for feedback in the face of an industrial accident

Governance: Establish clear job descriptions and job ranking system; clarification of duties, roles, and company organizational chart in line with the expansion of the company's size

(As of April 5th, 2023)

The second part of the interview can be found in B Corp™ #02 Transforming the Company / Part 2

Text：Yoshinao Yamada

Photo：Shin Hamada

Location Support：Sniite