Here is an example of how a mid-sized company could improve its governance and use an ESG system to track its progress as part of a journey to B Corp certification. (All names are fictional – no resemblance to people or things living or dead is intended.)
Background
Kyauvin Innovations are a mid-sized company based in the North of Scotland producing sustainable packaging solutions.
Kyauvin prides itself on its environmentally friendly products and strong community engagement. The founders believed that businesses could be a force for good, and the company had spent years refining its operations to minimise waste, reduce its carbon footprint, and support ethical labour practices across its supply chain.
As the company grew, it decided to formalise this environmental commitment by pursuing B Corp certification, a popular target for businesses who want to balance profit and purpose.
Kyauvin’s leadership believed the company had all the attributes of a B Corp. However, when the initial assessment results came back, they faced an unexpected hurdle: they fell short in the Governance impact area.
Although they excelled in environmental and community efforts, their governance practices did not meet the standards required. The leadership team realised they had to overhaul their approach to governance to align with B Corp’s mission-driven ethos.
The Challenges
1. Lack of Mission Lock
Though sustainability was central to Kyauvin’s identity, this commitment was not legally codified in its governing documents. The absence of a mission lock – legal language ensuring the company would prioritise social and environmental impact – left room for future leadership or shareholders to compromise its principles for profit.
2. Transparency Deficits
Kyauvin’s leadership shared operational and financial data with employees during quarterly meetings, but the process was informal and lacked consistency. Employees wanted more clarity on the company’s performance and impact metrics. It was also clear that there was no system for engaging external stakeholders, such as suppliers or community partners, in meaningful dialogue.
3. Board Structure and Accountability
The board of directors consisted solely of the company’s three co-founders, all of whom had similar backgrounds and perspectives. This lack of diversity limited the board’s ability to make well-rounded decisions. Moreover, there were no formal processes to evaluate board performance or ensure accountability to stakeholders.
4. Missing Policies on Ethics and Anti-Corruption
While Kyauvin operated ethically, it had no formal policies governing key areas like conflicts of interest, whistleblower protections, or anti-corruption measures. These gaps posed risks, particularly as the company grew and engaged with more complex markets.
The Turning Point
Realising the importance of governance to achieving B Corp certification, Kyauvin’s leadership sought outside help. They hired a B Corp consultant and engaged their employees, suppliers, and community partners to gain insight into their weaknesses. It became clear that improving governance would not only help them achieve certification but also strengthen their overall business model.
“Governance was the foundation we were missing,” said CEO and co-founder Anna Blake. “It wasn’t enough to have good intentions; we needed systems and structures that ensured our values would stand the test of time.”
The Fix
Embedding the Mission Lock
The leadership team worked with their solicitors to update the company’s articles of incorporation. They added a mission lock, formally requiring the company to consider its social and environmental impact alongside profits in all decision-making. This change ensured that even if leadership or ownership changed, the company’s purpose would remain intact.
Enhancing Transparency
Kyauvin adopted a policy of open-book management, sharing financial performance, sustainability metrics, and impact reports with employees during quarterly meetings. They also started using an electronic ESG reporting system that provided real-time updates on the company’s progress toward its environmental and social goals. Created by a local company, the fully-customisable ESG reporting tool helped the company track and manage their data using intuitive dashboards which they configured to show the most important information at a glance. Externally, the company began publishing annual impact reports, fostering accountability and trust with stakeholders.
Strengthening the Board
To improve decision-making and accountability, Kyauvin expanded its board of directors to include three independent members. These individuals brought diverse expertise in sustainability, governance, and community development. The company also instituted an annual board evaluation process, helping to identify gaps and areas for improvement. This shift ensured that the board was not only more effective but also more reflective of the communities Kyauvin served.
Formalising Policies
Kyauvin drafted and implemented comprehensive governance policies, including:
A whistleblower policy to protect employees who reported unethical behaviour.
A conflict of interest policy requiring all board members and employees to disclose potential conflicts.
An anti-corruption policy emphasising zero tolerance for unethical practices.
These policies were communicated to all employees through training sessions, ensuring everyone understood their role in maintaining and promoting the company’s values.
Creating a Stakeholder Advisory Panel
Kyauvin formed a stakeholder advisory panel to involve external voices in its decision-making process. The panel included representatives from the local community, key suppliers, and major customers who met quarterly. The group provided feedback on Kyauvin’s operations and suggested ways to improve its social and environmental impact. This structure not only strengthened relationships but also ensured that the company remained responsive to stakeholder needs. One immediate benefit was that a planning application for a distribution centre was approved after receiving and implementing helpful feedback from the local community council.
Governance Training
The leadership team and board members participated in governance training sessions focusing on ethical decision-making, accountability, and inclusive leadership. These sessions highlighted the importance of transparency, stakeholder engagement, and long-term thinking in building a purpose-driven organisation.
The Results
After months of hard work, Kyauvin Innovations retook the B Impact Assessment. Their efforts paid off: they scored well above the minimum threshold in the Governance impact area and exceeded expectations in other areas as well. In 18 months, Kyauvin achieved B Corp certification.
The benefits of these changes extended far beyond the certification itself:
Employee Morale: Employees reported higher levels of trust and engagement, knowing they were part of a transparent and purpose-driven organisation.
Stakeholder Trust: The new advisory panel strengthened relationships with suppliers and customers, fostering loyalty and collaboration.
Market Position: Kyauvin’s B Corp status enhanced its reputation, attracting new clients and investors aligned with its mission.
“Getting certified wasn’t just about a label, it was about becoming a better company,” said COO Mitchell Reid. “The governance changes we made have fundamentally transformed how we operate.”
Lessons Learned
For Kyauvin Innovations, the journey to B Corp certification revealed that good governance is not just a compliance exercise—it is the backbone of a resilient and impactful organisation. By embedding their mission into their legal framework, fostering transparency, and involving diverse voices in decision-making, Kyauvin not only met B Corp standards but also set a new benchmark for itself.
Their story serves as an inspiration to other companies aiming for B Corp status. Achieving certification requires more than good intentions; it demands a commitment to continuous improvement, accountability, and long-term thinking.
In the words of Anna Blake, “This process taught us that true sustainability starts from within. When your governance is strong, everything else falls into place.”
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