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Man practicing karate on the grassy horizon | AccountingWEB | Kung Fu Accounting kicks B Corp to the curb
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Kung Fu Accounting kicks B Corp to the curb

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Do accounting firms really need to be B Corp to make a difference? Scott Johnson from Kung Fu Accounting doesn’t think so. Ahead of his sessions at the Festival of Accounting & Bookkeeping, the ‘ethical accountant’ explains why he gave up his certification. 

19th Feb 2024
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Kung Fu Accounting was the first accountancy firm to attain the B-Corporation certification seven years ago, but at the start of this year the firm’s founder Scott Johnson decided that he would not be renewing his membership. 

The non-profit organisation B Lab created the B Corp certification in 2006 to recognise organisations that meet certain environmental, sustainability and governance (ESG) standards. The process to attain a certification has been described as rigorous by those who have met the high B Corp standards. 

It’s no wonder then that the certification is becoming an attractive badge for accountancy firms looking to show their commitment to social sustainability and environmental standards, and as a tool to win the war on talent and attract new clients, with around 16 accountants now featuring in the B Corp directory. 

While the B Corp certification continues to grow in popularity – with high-end retailer Waitrose even featuring a B Corp range and the month of March dedicated to the ethical revolution – Johnson had become disenchanted with companies using the badge to greenwash their business, which has made him question whether the certification can bring substantial change.  

“If B Corp means that more businesses and individual consumers are becoming more ethically aware, then that’s a great thing, but does a firm really need to be B Corp?” Johnson asked ahead of his “To B Corps or not to B Corps?” session on day two of the Festival of Accounting & Bookkeeping at the NEC, Birmingham, where he will provide practical tips for those smaller firms looking to do the right thing, but not sure how. 

Do you really need to be B Corp?

Johnson noted that there was some prestige around becoming the first to do something and it sets you out as the market leader. But he’s come to the realisation that he doesn’t have to be a B Corp. 

“From day one of running my company we chose an ethical bank. We had a clear employment policy, with over and above the statutory minimum for sick pay and holiday pay and holiday leave. We had very clear client selection criteria with industries we just wouldn’t use, we only work with certain suppliers and prioritise local businesses, and we don’t buy new. 

“All of those things were already in place and are completely accessible for every single business. So do you need to pay the premium to get that B Corp badge on your logo or on your paperwork?” 

Greenwashing B Corp businesses 

He decided to get a B Corp certification and as a result he was attracting B Corp clients because of the logo. But he started to sour on the certification when he started working with some of those businesses and saw some of their questionable business practices using the B Corp as a badge and not living up to it. 

In one example, Johnson said he was recruited by a client with a B Corp certification for just year-end compliance but soon took on a virtual FD position at the business. One of the first things the client said to him was, “You’re not here to talk about sustainability, you’re here to do the accounts.”

Johnson explained: “I was like, ‘Hang on a minute. we’re all humans and I can see things where you could become even more impactful’.  

“They were buying brand new Apple Macs every other year for the whole team and there were 15 of them. I questioned why they need to be brand new and whether they need to be replaced every two years or if they can stretch it out or buy refurbished? But they didn’t like that challenge.” 

This was just one example of many that Johnson had over the past seven years with businesses with the B Corp certification. “It just called into question the benefit of the rubber stamp,” said Johnson, adding that there is no way of differentiating the standards of two different companies with the certification. 

Lack of transparency

If anything, he said the B Corp certification doesn’t go far enough. “True transparency would be for me to say here’s my P&L: I made £200,000 last year and I gave £5,000 to charity. That’s true transparency. 

“However, B Corp says this company is committed to giving to charity, but how much? Is it based on turnover? Is it gross profit? Is it net profit? How is that calculated? No one knows because it’s hidden behind the B Corp badge.” 

The lack of transparency with B Corp firms is in some ways no different to the secrecy throughout the business world, where Johnson has come across “shady tax dealings and subversive tax arrangements”. 

What’s right for your firm, not B Corp?

He said the risk for accounting firms looking towards the B Corp process to transform their environmental and social footprint is that the exercise often falls to a company’s marketing department and it then becomes “a tick box exercise and it’s a performative thing rather than a truly substantial change”. 

He’s realised that he doesn’t need the B Corp badge to continue on his journey of business transformation, and he thinks if anything there needs to be more of a focus on the impact of the business. 

Johnson has already started mentoring the next generation of ethical accountants through a 10-week course last summer where they looked at each area of their businesses as accountants and explored how they can make a difference. 

It’s these lessons that he’s looking at taking to the Festival of Accounting & Bookkeeping to help attendees to have better conversations with their clients and build ethical, sustainable and impactful businesses. 

He argued that you don’t need a B Corp certification to start having open and frank conversations about people and the planet. “How can you do things better if you’re outwardly focused on what B Corp wants, rather than inwardly focused on what I want for my business and what’s the right thing for me? 

“If we’re going to change the world, accountants and bookkeepers connect every single business in the world. So if we’re having better conversations with our clients, that's going to change the world more quickly than everyone going down into the B Corp funnel. That’s where I’m aiming now: how can I get more accountants to give a damn.”

Festival of Accounting & Bookkeeping

Book your FREE ticket for the Festival of Accounting & Bookkeeping on 13 and 14 March at the NEC, Birmingam to hear more from Johnson. 

He will be speaking on day two of the festival. You can see him first at the Pitch stage at 12.20pm where he will be sharing his story and his plans for the future that doesn’t include B Corp. 

Then head over to the Bookkeepers Retreat at 2.40pm where Johnson joins Natalie Binstead-Wey from BW Business Accountants and Advisers and Wild Bookkeeping’s Penny Allard in a “To B Corps or not to B Corps?” roundtable looking at ESG from the context of a small business.

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By FactChecker
19th Feb 2024 19:01

Could be an interesting inversion of 'the king's new clothes' story, here.

I've never understood why the takeaway for most people was the gullibility of one person (the king); whereas just about everyone else was quite prepared to go along with him (whether out of fear of contradiction or slowly doubting their own eyes or ...).
And it sounds as though Scott Johnson's eyes were opened when he got too close to some of his proudly won new clients - only to discover that transparency had a different meaning within those companies than what their promoted 'branding' claimed.

It's a shame when the ugly reality of chasing profits butts up against social needs ... so, as I said, it'll be interesting to hear how Scott has reacted to this realisation, in terms of handling existing clients and/or targeting new ones.

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