Tom Kelman CA is bringing B-corps to 21st-century business
By CA magazine
25 August 2021
For everyone who strived to achieve A grades at school, take heart: B is the new benchmark for 21st-century business. Tom Kelman CA, Consultant Finance Director at B Lab UK, tells Kitty Finstad why the B team is now the one to be on.
Build back better. The catchy, alliterative slogan has been used in campaigns by the UN, President Biden and New Zealand Prime Minister Jacinda Ardern. Notably too by the UK government for its plans for “investment in infrastructure, skills and innovation, and to pursue growth that levels up every part of the UK, enables the transition to net zero and supports our vision for Global Britain”. No small order. And business is uniquely placed to lead the way.
During his career in both private sector and not-for-profits, Tom Kelman CA has seen the shift from shareholder to stakeholder accountability, from no-holds-barred growth to ESG practices as baked-in targets. Nowhere is this sea change more evident than in the growing number of businesses seeking to become part of the B Lab-led B Corp community, an international network that creates standards, policies, tools and certifications to drive positive change. To secure B Corp status, firms must meet the highest standards of verified social and environmental performance, public transparency and legal accountability.
After stepping down from full-time employment in 2020, Kelman has remained active, and alongside charity and consulting work spends part of his working week as the interim Consultant Finance Director at B Lab (UK), which counts Ella’s Kitchen, Jamie Oliver Group, Abel & Cole and the Body Shop among its members.
B Lab UK’s success means the time has come for it to develop revised short to medium-term business plans, including budgetary control, resources and reserve planning
“In January 2021,” Kelman recalls, “I was invited by Chris Turner, Executive Director of B Lab UK, to assist him with several matters on a consultancy basis. One of the first things we agreed was to effectively make myself redundant by helping them find B Lab UK’s first Director of Finance and Operations. More importantly, together we’ve established key governance and reporting foundations and structures for that director to build on.”
It’s a key moment in the trajectory of the B Corp movement, which launched in the US in 2005 and in the UK in 2015. There are now more than 4,000 B Corps worldwide, with around 500 certified in the UK – you might have seen the black-and-white “Certified B Corporation” logo in an office or shop window – a hard-won prize that businesses are rightly proud to display.
B certificate
B Lab’s strategy is to be a catalyst for policy changes that enable business to be a force for good. Part of this in the UK is the Better Business Act campaign, an ambitious initiative that seeks to change the law so all companies, regardless of size or scope, align the interests of shareholders with those of wider society and the environment. The ultimate objective? To amend Section 172 of the Companies Act in line with these principles.
Businesses have the power to effect positive societal and environmental changes; for those with B Corp certification it’s also a legal obligation. Kelman, with his extensive background in non-profit finance, resourcing and advisory roles – he has worked for the Advertising Standards Authority (ASA) and Royal College of Physicians among others – has just the wide-ranging experience and perspective to help B Lab UK deliver on its mission and attract more businesses to the cause.
The certification process is twofold: companies must complete a free B Impact Assessment with a verified minimum score and amend their articles of association to commit to considering the impact of decisions on both shareholders and stakeholders, including wider society. The assessment process is rigorous – it’s the only certification to measure a company’s entire social and environmental practice. But the benefits are many. Companies surveyed last year by B Lab reported improved impact through participation in working groups; improved collaboration, including partnering with other B Corps to find solutions to specific challenges; better networking opportunities with similar organisations; better employee engagement and buy-in to company missions; and attracting more talent, more investment, more clients, more customers.
Being a qualified CA in for-profit organisations has taught me integrity, prudence and seeking the truth
“B Lab UK’s success means the time has come for it to develop revised short to medium-term business plans, including budgetary control, resources and reserve planning,” says Kelman. “This is to ensure the financial resources it’s accumulating are invested in furthering its purpose as a charity, maintaining resilience and sustainability, and surplus reserves are invested to preserve their capital value at a time when inflation is increasing and the risk-free rate of return on cash is stubbornly negative.”
But challenging conditions and managing large pools of resources are second nature to Kelman, who pivoted his own plans last year to help the ASA navigate its way through the early days of the pandemic. “I stepped down from my role as Director of Corporate Services in February 2020, intending to move to a mix of part-time paid employment and volunteering. I always wanted to give something back for the privilege of having had such a successful and rewarding career as a CA.”
When Covid-19 struck in earnest, Kelman put his part-time plans on hold. “In the early days of lockdown I worked the hardest I’d ever worked,” he says, “applying all my CA experience to quickly establish a revised budget that would deliver a 20% saving on an annual budget of around £9m for the start of Q2 2020. We managed this with a crisis recovery plan we’d formulated and updated over years. We froze recruitment, prioritising mission-critical – and postponing non-mission-critical – discretionary spending and tapping into the Job Retention Scheme.” Kelman is proud that the plan meant the ASA could flexibly continue operations without forcing redundancies – a remarkable result considering falling advertising revenues and an unstable macroeconomic outlook. It was a unique and valuable experience to take with him to B Lab.
Tipping point
At the start of 2021, Kelman moved to B Lab UK as interim Consultant Finance Director after a few months at the Rank Foundation. He’d joined Rank just as it became one of 19 UK foundations that worked with the UK government to distribute £90m of funds allocated to assist civil society – an excellent example, says Kelman, of joined-up thinking and engaged philanthropy.
This impact-driven approach chimes with B Lab’s vision of responsible, ethical business practice, which is why the two concurrent roles are a perfect fit for Kelman’s desire to give back while helping businesses to achieve their purpose-driven goals.
We may already be at a tipping point. The pandemic has given us the thinking space to reconsider our values as citizens
“Being a qualified CA in for-profit organisations has taught me integrity, prudence and seeking the truth,” he says. “The non-profit sector has limited resources, and that has at times meant a limited talent pool. But this is changing – it’s changed a lot over my 16-plus years as more people working in the sector appreciate that profit for purpose and non-profit with purpose are more valuable. The shift from shareholder to stakeholder value is an exciting one, especially for a global movement like B Lab. And why the Better Business Act is in a unique position to influence change in every sector.
“As CAs we know the value of measuring things, and we have strong voices that are valued. If we measure the right things based on facts and reason, we can help the organisations we support to make good decisions. That means good gets done because what’s measured gets done. If the UK government is serious about ‘build back better’, and making COP26 in Glasgow this November a success, then adopting the initiatives and movements being spearheaded and led by B Lab UK – including B Corp certification and the Better Business Act campaign – will be an effective enabler.
“We may already be at a tipping point. The pandemic has given us the thinking space to reconsider our values as citizens. Good businesses get this – they know that, given a choice, consumers prefer to invest time and money supporting businesses that operate with integrity. That’s where the B Corp movement has an important leadership role. The future is ours to make better.”
People, planet, profit
The Better Business Act campaign seeks to amend Section 172 of the Companies Act. For many, this change wouldn’t materially affect business practices. But if it becomes law, aligning long-term interests of people, planet and profit would be a matter of law, not choice. The four principles are:
1. Aligned interests
Shareholder interests would be advanced alongside those of wider society and the environment, establishing a new principle of fiduciary duty.
2. Empowering directors
The board will exercise judgement in weighing up and advancing the interests of all stakeholders.
3. Default change
It will no longer be optional to benefit wider stakeholders beyond shareholders.
4. Reflected in reporting
Businesses must report on how they balance people, planet and profit in a strategic or impact report.
About B Corps
Established in 2005 in New York, the B Corp movement now includes more than 4,000 certified B Corporations across 153 industries in 77 countries.
Since 2015, B Lab UK has certified more than 500, with London now the global capital of B Corps. PwC notes that becoming a B Corp brings multiple soft benefits, including positive impact on brand equity and greater recruitment appeal.
B Corps also drive business performance. In a survey conducted in November 2020, UK B Corps reported an average growth rate significantly higher than the national average. As investors look to bring diversity into their portfolios, there may be less due diligence required in the acquisition of a B Corp.