Etsy is an online marketplace that makes it easy for people to buy and sell all things handmade and vintage. The company is doing pretty well: it has over 800,000 active sellers and a 15 million-person marketplace across 150 countries, and last year its gross merchandise sales reached $525 million. But CEO Chad Dickerson isn't satisfied. He's committed to making Etsy a business with a higher purpose beyond profit. To that end, he's helped Etsy become a Certified B Corporation — a new type of company which uses the power of business to solve social and environmental problems.
So what is B Corp Certification exactly?
B Corp certification is to sustainable business what LEED certification is to green building or Fair Trade certification is to coffee. Here's how it works. B Corps are certified by the nonprofit B Lab to meet rigorous standards of social and environmental performance, accountability, and transparency. The certification provides a framework to measure success for all stakeholders — including employees, community, and environmental interests — not just for shareholders. As Dickerson put it when he announced the B Corp news to the Etsy community, "We are imperfect, but we are publicly committing ourselves to upholding our values and grading ourselves for the long term," and encoding this commitment into the company's DNA.
With certification, Etsy joins a community of 650 innovative companies from 18 countries across 60 different industries working toward one unifying goal: to redefine success in business. Although already considered a "good" business by many, the company barely cleared the bar for B Corp certification, earning right above the minimum score for environmental and social performance on the B Impact Assessment.
For Etsy's leadership, this was an opportunity to engage their entire team by giving them ownership of how to make Etsy better.
Etsy employees were first introduced to the B Corp concept on May 9, the first day of their certification, at a company-wide meeting Dickerson convened. Not satisfied with their initial B score, the Etsy team decided to hold a Hack Day to brainstorm how they could improve Etsy's performance. Etsy identified areas for improvement, and on May 24th, all employees dropped their normal workload and focused on improving the health and happiness of their workplace, their local community, and the environment. Over 150 team members participated across every department, putting their values, ideas, and experiences to work. At the end of the day, the entire staff came together to share their most exciting ideas.
The teams proposed twenty-two ideas: One engineer created a program to track the company's carbon footprint, while other groups worked on a wide range of ideas from empowering women to take leadership roles, through improving volunteer programs with local community organizations, to increasing employee access to art studios. Employees even explored how to provide healthcare to Etsy's massive network of freelancers and entrepreneurs.
Only time will tell how effective these projects will be. But becoming a B Corp has connected Etsy's motivated employees to a movement bigger than the company itself. And by taking Etsy to the next level in its social and environmental performance, they've increased motivation while creating a better workplace.
Engaging employees makes business sense. A recent Gallup poll found that 71% of American workers are "not engaged" or "actively disengaged" in their work. Yet decades of research has shown that engaged employees are more profitable, more customer-focused, safer, and less likely to leave. Within the US workforce, Gallup estimates disengaged employees cost companies more than $300 billion in lost productivity alone. An additional report from Hewitt Associates found that companies with high levels of engagement (65% or greater) outperformed the total stock market index and posted shareholder returns 19% higher than average in 2009. Companies with disinterested employees (40% or less engagement) had a total shareholder return 44% below average.
Etsy's Hackathon may result in better policies and a higher B Impact Score, but there's more to it than that. It's already spurred employee initiative, innovation and intrepreneurship — all in the name of making Etsy better. And this is something every company, regardless of industry, size or mission, can appreciate.
Because these days, good just isn't good enough.