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B-CORP certification and financial performance: A panel data analysis.
Violeta Bringas-Fernández1, Carlos López-Gutiérrez1, Andrea Pérez1
1Santander Financial Institute (SANFI), Universidad de Cantabria - Fundación UCEIF, Spain.
Heliyon
|September 16, 2024
Summary
B-Corp certification initially shows a slight decrease in company profitability. However, long-term financial performance remains comparable to non-certified businesses, suggesting profit is not a primary driver for B-Corp adoption.
Area of Science:
- Business Strategy
- Corporate Social Responsibility
- Financial Performance Analysis
Background:
- B-Corp certification is a recent business development with limited research on its strategic and financial impacts.
- Longitudinal studies on B-Corp certification's link to financial performance are scarce, necessitating further investigation.
- Understanding the financial implications is crucial to assess if profitability incentivizes companies to pursue social and environmental impact certification.
Purpose of the Study:
- To investigate the short-, medium-, and long-term relationship between B-Corp certification and corporate financial performance.
- To determine if financial profit serves as a significant motivator for companies seeking social and environmental impact assessment and certification.
- To analyze the financial treatment effect of B-Corp certification on certified companies.
Main Methods:
- Utilized an international dataset of 103 B-Corp certified companies (2013-2020) and a control sample of non-certified companies.
- Collected economic data from the S&P Capital IQ database for comprehensive financial analysis.
- Employed a comparative approach to control for bias and establish a baseline for performance evaluation.
Main Results:
- No significant performance differences were observed between B-Corps and non-certified companies prior to certification, ruling out a selection effect.
- B-Corps exhibited a temporary decrease in economic returns for two years post-certification compared to pre- and non-certified firms.
- Long-term financial performance showed no statistically significant differences between B-Corps and pre-certified companies.
Conclusions:
- B-Corp certification does not appear to be driven by immediate profit motives, as initial returns may decrease.
- The long-term financial outlook for B-Corps is comparable to non-certified entities, suggesting sustainability beyond initial adjustments.
- Further research is recommended to explore the underlying causes of the short-term profitability dip post-certification.
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