Business
ESG
By
Kara Anderson
updated 14 Jun 2024
UK Copywriter
at
Greenly
By becoming a B Corp, businesses can show they care about more than just their profit margins.Of course, some for-profit businesses have always operated with a mission-driven purpose. However, this doesn't give them external validation or recognition for it.
Enter B Corp, a third-party certification offered by the non-profit B Lab. It offers a sleek label to show on your website to show a business honours the highest ethical standards and makes a positive impact on society.
👉 B Corp certification is for businesses that care about people and the planet, not just profit. In this article, we explore why companies are choosing to become B Corp.
B Corp Certification
B Corp certification, represented by the circled “B” label, is awarded by B Lab, a non-profit organisation. This certification signifies that a business has undergone rigorous third-party verification to demonstrate its commitment to high standards of environmental and social responsibility, accountability, and transparency. Companies with this certification are recognised for their efforts to improve their impact on their employees, communities, and the environment.
Companies displaying the circled “B” label on their website have been certified by B Lab, which offers third-party verification for businesses improving their environmental and social responsibility.
👉 As of June 2024, B Lab reports that 8,810 companies across 101 countries have achieved B Corporation certification.
According to B Lab, the certification process ensures businesses meet the highest standards of sustainability with the following principles:
- Social and environmental performance evaluation
- Transparency through public reporting
- Legal accountability by balancing purpose and profit within the business structure.
"We envision a global economy that uses business as a force for good. This economy is comprised of a new type of corporation – the B Corporation – which is purpose-driven and creates benefit for all stakeholders, not just shareholders." - The B-Corp Declaration of Interdependence states
B Corp Certification meaning
A B Corp Certification is a verified standard for purpose-driven, for-profit businesses to demonstrate their positive impacts on people and the planet.Certified B corporations take several steps to receive their distinction.
They complete a free online B impact assessment in a way that reflects on all of their stakeholders. They can then submit this for review to start the certification process.
Certified B corporations agree to share their findings publicly. Anyone can access a company's B impact assessment information in the B Corp Directory.
The Board of Directors submits legal documents to verify the purpose-driven business standards of the company to become certified. Companies publicly disclose the findings of their B impact assessment report in the B Corp directory.
👉 Companies must pay a fee to earn a verified assessment score and join the B Corp community of members. These fees vary based on revenues.
Once a company is registered as a B Corp, it needs to update its B impact assessment every three years to keep its certification. This way, a company can improve its B Corp score and continue to build trust with its stakeholders by publicly disclosing its activities.
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What is the difference between B Corp and benefit corporation?
The similarity in name between B Corp and Benefit corporations sometimes leads to confusion.In fact, they do share some similarities, but they share no affiliation and they serve different purposes.
A benefit corporation is a specific US-based, legally recognised business entity structure – similar to an S-Corp, a C-Corp, or an LLC. Benefit corporations are recognised in 37 US states, but each state has its own legal requirements for this business structure.
Like Certified B corporations, benefit corporations pledge to give equal importance to the environment and social impacts as they give to their for-profit purpose.
However, there are key differences worth noting:
- Benefit corporations exist only within the United States, whereas Certified B Corporations can operate in any country across the world.
- Certified B corporationsare independently verified and scored by a non-profit based on B impact assessments on purpose-driven initiatives.Benefit corporationsdon't receive a score, because their articles of incorporation are filed internally by board members.
- B Corp certificationis the same from state to state, country to country.Benefit corporationlaws differ for each state. It's important to research the requirements for your state-level authorities to register your business as a benefit corporation.
- Companies can become certified asB Corpat any time, while companies that want to become abenefit corporationhave to do so when they file their articles of incorporation.
In the US businesses don't have to be either a Certified B corporation or a benefit corporation; they can be both. If the state where a company operates allows businesses to register as benefit corporations, those businesses can also become certified by B Lab to become B Corp.
💡 If you choose to register your business as a benefit corporation, you'll need to check your state laws for the specific guidelines and requirements.
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Why should companies become B Corp Certified?
There is a growing consensus that businesses need to play a positive role in society.People choose to “vote with their pounds/dollars” by supporting businesses that share the values they care about.
💡 According to consulting firm Bain, brand purpose and environmental, social, and corporate governance (ESG) considerations have become key purchasing criteria for over half of consumers globally, as indicated by their recent survey.
Another significant finding by Bain with major implications for consumer goods companies is that consumers are "divesting" from brands with poor diversity, equity, and inclusion (DEI) and social track records. 33% of Gen Z consumers surveyed in the US indicated they would boycott a brand with poor labour practices.
By becoming a B Corp, companies can show their ethical purpose publicly. The B Corp label offers a veneer of trust, similar to theFair Trade Certificationor Certified Organic label.
The commitment to base a business's value on more than shareholder returns or revenues departs from conventional business approaches. This shifts the emphasis from competition to collaboration and transparency.
B Corp certification offers a way for businesses to invest back into their communities, protect the environment, and serve their employees' needs.
Theoretically, these businesses could operate as non-profit organisations. However, non-profit organisations require certain internal processes and structures that don't appeal to ethical for-profit businesses.
Certified B corporations still want to earn a profit, but they hope to do so while also supporting the shared values of their stakeholders.
B Corp certification also fills a gap for small- and medium-sized businesses. Whereas most corporate sustainability reporting standards are designed for large organisations with extensive staff and resources. B Corp offers a manageable solution for companies not operating at that scale.
What is a B Impact Assessment?
To start the B Corp journey, companies undergo a comprehensive B impact assessment that identifies how a business's activities affect its stakeholders.
Companies of any size - from sole proprietorship to publicly traded companies – can complete the B impact assessment for free. Questions are tailored to the size of your operations.
It's a questionnaire in which companies self-report their impacts and approach to governance, workers, community, environment, and customers.
To proceed to verification, B Labs reviews and verifies this impact assessment and provides companies with aB impact assessment score to depict the company's performance (more on this later).
B Corp Certification requirements
First, your business should have been operating for a year. You can then complete the B Impact Assessment for free on the B Corp website.
If you have a start-up and you'd like to get the B Corp certification before a year, you can still complete a B impact assessment, but your certification will be marked as “pending” until your company's first anniversary.
For a quick snapshot of your performance, you can respond to the questions in as short as half an hour, but for a deeper dive, you'll want to spend a bit more time.
The amount of time you'll need depends on your business size and complexity. You can leave and come back to your questionnaire if you can't complete it in one go.
B Impact Assessment categories your company needs to match with
Here are descriptions of some of the best practices evaluated within each category of the B Impact Assessment.
Governance
Businesses are evaluated on how well their governance structure aligns with their mission. Companies are encouraged to demonstrate transparency and accountability for financial, social, and environmental performance.
They may also earn points for diverse board members and leaders, engaging stakeholders to achieve their mission, and providing forums for stakeholders to give feedback.
Workers
Businesses should prioritise employee well-being. Specifically, companies should offer fair and adequate compensation, benefits, training, and ownership opportunities. Workplace health and safety commitments, flexibility for special needs, and open channels of communication also reflect positive business impacts.
Community
Businesses play a profound role in their communities. Assessment for business stewardship of a thriving community includes practices such as local supplier engagement, support for diversity and inclusion, charitable donations, and other engagement activities.
Customers
Businesses' core offerings of products and services should create a positive impact on the world. Products and services can benefit customers based on their core offering of education, healthcare, or financial services support.
Businesses using ethical approaches to marketing, data privacy and security, and customer support or feedback forums may also score higher.
Environment
Companies should demonstrate efforts to reduce the negative environmental impact of their activities. Examples includeminimising greenhouse gas emissions, reducing waste, conserving water, optimising resource use efficiency, and designing products for reuse.
B Lab evaluates a company's facilities, materials, emissions, resource use, transportation and distribution, and supply chain for environmental impacts.
How Greenly can help: Greenly supports companies in these efforts by helping measure and reduce GHG emissions, decarbonise supply chains, and conduct life cycle assessments, all of which contribute to achieving B Corp certification and enhancing environmental performance. Get in touch to find out more!
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B Corp Certification process
B Labs reviews and verifies the B impact assessment and provides companies with an impact assessment score to depict the company's performance. Companies must achieve a score of at least 80 out of 200 to be certified.
The scoring system reflects the positive impacts your business has on the world, so there is no 'bad' score.Companies earn points based on their responses to questions, and each question is given a different weight.
However, these weights depend a lot on contextual factors. With over 50 variations on the Assessment, your organisation could score differently based on its size, industry, and region.Most companies earn scores between 40 and 100 points.
Many well-known companies have achieved B Corp certification, signalling their commitment to high social and environmental standards. Patagonia and Ben & Jerry’s are prominent examples of brands leading the way in this movement. In the UK, notable B Corps include JoJo Maman Bébé, Innocent Drinks, Abel & Cole, and the Guardian Media Group, all of which are part of the 2,000+ certified B Corps in the country. These companies exemplify how diverse industries are embracing sustainable and ethical business practices.
Steps to become Certified B Corp
Whether you're an ESG manager or the Chief Sustainability Officer at your company, these are the important steps you must follow to become B Corp Certified:
| Step 1. Register for a B Impact Assessment | Sign up on the B Lab website to access the B Impact Assessment tool. |
| Step 2. Begin the B Impact Online Assessment | Start the online assessment to evaluate your company's impact on various stakeholders. |
| Step 3. Submit Your Assessment | Complete and submit the assessment for review by B Lab analysts. |
| Step 4. B Lab Analyst Evaluation | B Lab analysts will review and evaluate your submitted assessment. |
| Step 5. B Lab Analyst Verification | Engage in a verification process with B Lab analysts to confirm the accuracy of your assessment. |
| Step 6. B Corp Agreement Signature | Sign the B Corp Agreement to formalise your commitment to the B Corp standards. |
| Step 7. Achievement Process - Receive Your Score | Receive your verified score and confirmation of B Corp certification. |
| Step 8. Keep Up Your Improvement for the Next Three Years | Continuously improve your impact and prepare for recertification every three years. |
How to get B Corp Recertification
Every three years B Corps will need to renew their certification. It's a great chance for companies to reassess and measure their impact - and to showcase the progress that they're making when it comes to helping people and the planet. So how does a business re-certify?
To re-certify a B Corp will need to:
- Have paid all outstanding annual fees;
- Submitted an updated B Impact Assessmentbeforethe recertification date;
- Completed any legal requirements;
- Provided all documents requested for the recertification.
Once the assessment is submitted along with all relevant documents, the B Corp score will be verified by B Lab.
It's advisable for companies to start preparing for their B Corp recertification around a year in advance. This will enable companies to plan effectively and to make themselves aware of the current version of the assessment standards, which are updated every few years. For more advice on preparing for recertification please refer to the B Corpwebsite.
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What are the benefits of being B Corp certified?
Support Social Responsibility
Social responsibility is important for communities and supply chains to ensure safe and equitable working conditions.
Businesses play a huge role in reducing poverty, ensuring economic access for diverse employees, closing income gaps between men and women, and providing living wages across the supply chain.
Earn your client's trust
Marketing research shows the immense value customers place on purpose-driven products and services:
- 88% of customers look to brands to help them make a difference to improve their own personal sustainability (Futerra).
- Nearly 7 in 10 US Millennials actively consider company values when making a purchase – compared with 52% of all US online adults (Forbes).
- 73% of consumers say they would pay more for a product if the company behind it practices transparency (Label Insight).
Attract new talent
Businesses that prioritise social and environmental benefits attract some of the most caring, ambitious, and dedicated talent. To keep your workforce engaged, B Corp certification helps effectively communicate the value of your mission to employees. This certification not only demonstrates your commitment to positive impact but also inspires your team by aligning their personal values with your company's goals.
Reduce your operational costs
Sometimes businesses associate ethical business practices with costly, time-consuming activities, which doesn't have to be the case. Businesses improving environmental sustainability often cut down on inefficiencies in their business systems that help them save energy, resources, and material costs.
B Corp Certification eligibility
B Corp certification is highly versatile. While the majority of B Corp are small- to medium-sized organisations, companies as small as a sole proprietorship to the size of a publicly traded company can also get certified.
Type of business and revenue
B corporation offers unique guidelines for businesses of different sizes and types:
Startups:Until they have operated for a year, startups can only earn a “Pending B Corporation” certification.
Small Enterprises:Companies that generate less than USD 5 million in annual revenue and employ fewer than 50 full-time employees.
Small-Medium Enterprises (SMEs):Companies that generate more than USD 5 million in annual revenue or employ 50-250 full-time employees.
Medium Enterprises:Companies that generate more than USD 100M in annual revenue or employ more than 250 full-time employees.
Large Enterprises:Companies that generate more than USD 100M in annual revenue with 10 or more subsidiaries operating in multiple countries, or generate more than $1B in annual revenue.
B Corps requires companies with $5B in USD annual revenue to participate in their B Movement Builders program. Subsidiaries should all follow the large enterprise approach, no matter their size.
💡 The B Movement Builders program engages large, multinational corporations to advance the B Corp movement by integrating B Corp principles into their operations and influencing industry-wide change towards more inclusive, equitable, and regenerative economic systems.
Greenly can help
Greenly can help you in getting your B Corp Certification by demonstrating efforts to reduce the environmental impact of your operations.
Start your climate journey: Measure your scope 1, 2, and 3 emissions and develop custom action plans with support from our climate experts.
Decarbonise your supply chain: Engage suppliers in your Net Zero journey, reduce emissions, and monitor their progress. Identify and replace wasteful suppliers with less carbon-intensive options.
Life Cycle Assessment (LCA): Unveil your product’s full environmental impact and gain a competitive edge with product-level emission intelligence, helping your company stand out in the market.
