Gone are the days when businesses were only expected to generate profits and it was up to non-profits to solve society’s problems. Today, businesses are also expected to have a positive impact on society and the environment. One way companies are filling this new role is through the B Corp certification.
What is a B Corp?
A certified B corporation, or B Corp, is a designation for companies that meet high standards of social and environmental performance, transparency, and accountability. These companies have demonstrated commitment to the triple bottom line: people, planet, and profit.
There are three key aspects of a B Corp:
- The company has demonstrated high social and environmental performance through the B Impact Assessment, which covers the company’s impact on its workers, community, environment, and customers
- The company has made a legal commitment to be accountable to all stakeholders, not just shareholders. Traditional corporations are legally obliged to serve the financial interests of shareholders or company owners. However, B Corps must also create value for all stakeholders, meaning those impacted by business decisions such as customers, employees, and community members
- The company exhibits transparency by publishing its performance and impact assessment on the B Lab website
Today, many companies are choosing to demonstrate their social and environmental values with the B Corp certification. Globally, there are nearly 6,000 B Corps in 85 countries covering 158 industries.
Who certifies B Corporations?
B Corps are certified by B Lab, a non-profit dedicated to transforming the global economy to benefit all people, communities, and the planet. Founded in 2006 in the United States, B Lab has grown into a global network with hubs all over the world that support potential and certified B Corps in their regions.
In addition to the B Corp certification, the B Lab also creates other standards, policies, tools, and programs to help companies address society’s biggest challenges.
Can any company become a B Corp?
In general, any for-profit company can become a B Corp. B Corps span every industry and range in size from sole proprietorships to multinational corporations. The only criteria are that the company must have been in operation for at least one year, and non-profits and state-owned entities are not eligible.
Additional requirements may be applied to certain companies, such as large multinational and public companies. B Lab defines these complex cases as companies with more than $1bn in revenue and/or operate in 2+ industries, 5+ countries, or have 5+ subsidiaries. In these cases, B Lab may apply additional screening and consultation before awarding the B Corp certification.
What are the criteria and verification process to become a B Corp?
To become a B Corp, a company must go through the B Impact Assessment, or “BIA”, which covers the company’s entire performance, from supply chain and carbon footprint to charitable giving, diversity and inclusion, and employee benefits.
The process looks like this:
- Submit the B Impact Assessment, which is a free, confidential, online tool that scores the company’s social and environmental impact. The assessment has five key topic areas: Governance, Workers, Environment, Community, and Customers. Sample questions include:
- Governance: What portion of your management is evaluated in writing on their performance with regard to corporate, social, and environmental targets?
- Workers: What percentage above the legal minimum wage does your lowest-paid hourly employee earn?
- Environment: Does your company monitor and record its universal waste production?
- Community: What percentage of management is from underrepresented populations?
- Customers: Is the social or economic problem addressed by your product/service one that is faced directly by your customers and/or your clients’ beneficiaries?
- To be eligible for B Corp certification, the company must achieve at least 80 points out of a possible 200.
- Responses are then evaluated by B Lab analysts to determine the company’s eligibility.
- The B Lab then verifies responses by reviewing the company’s documentation backing up the answers in the B Impact Assessment.
- Once verified, the company must publish the impact report online for transparency and is officially certified!
Companies then need to recertify their B Corp status every 3 years.
There is a fee for the certification, which varies by country and company size. In the UK, the submission fee is £250 + annual fees depending on the company’s sales (£1,000-50,000).
What is the difference between a Certified B Corp and a benefit corporation?
Certified B Corps are often confused with benefit corporations given their comparable names and purposes. The difference is that:
- The B Corp certification is a private certification of companies that meet the social and environmental standards through the B Impact Assessment and commit to being legally accountable to all stakeholders.
- A benefit corporation is an official legal structure that embeds stakeholder governance within a business’ operating model. This legal structure exists in the US and the UK, and within the EU, in Italy as Società Benefit and in France as Société à Mission.
Since B Corps are required to be legally accountable to all stakeholders, they can fulfil this requirement by becoming a benefit corporation.
What is the difference between a B Corp and ESG?
B Corps and ESG also have significant overlap, but they are not the same. ESG, or environmental, social, and governance, is a concept to understand a company’s environmental and social performance. ESG is not a certification. It is assessed with multiple standards, most commonly GRI or SASB.
B Corps follow one certification standard (although they can use ESG reporting standards as well). Given ESG criteria are embedded within the B Impact Assessment, B Corps have strong ESG performance.
What are some examples of companies that have become B Corps?
The B Corp certification is a popular way for start-ups and smaller enterprises to showcase their environmental and social commitments because the assessment process is quite accessible and the certification is recognisable.
However, there are several large, well-known companies that have also become B Corps:
- Danone – French dairy producer Danone has been working with B Lab since 2015 to certify its subsidiaries as B Corps. Today, 70% of global sales are covered by B Corp certifications with the goal of achieving 100% by 2025.
- Coursera – the global online learning platform became a B Corp in February 2021 to support its mission of universal access to world-class learning.
- Athleta – the women’s athletic apparel manufacturer became a B Corp in March 2018. As a subsidiary of Gap, Inc., Athleta is working to incorporate more recycled materials into its products as well as provide free fitness events and over 10,000 hours of employee volunteer hours.
- Natura & Co – the global cosmetics brand, which includes Avon, Natura, The Body Shop, and Aesop, became a certified B Corp in November 2020 to support its mission of circularity and regeneration.
Today, B Corps span nearly 160 industries, so there is a wide variety of companies, from banks and tech consultancies to dental services and vacation resorts. The range of B Corps can be explored here: Find a B Corp.
Why should companies consider becoming a B Corp?
Becoming a B Corp is one of the many tools for advancing corporate sustainability. Because the certification is recognisable and comprehensive, it helps articulate the company’s mission externally to investors, customers, and suppliers. It instantly demonstrates a commitment to social and environmental challenges, which can build brand trust, engage employees, and attract talent. Additionally, the certification has the potential to improve a company’s impact through a network of other B Corps.
Finally, the B Corp certification is grounded in continuous improvement with metrics, tracking, and review. Regardless of certification, all companies can apply this valuable approach to sustainability strategy – a commitment to understanding where the business is today and how to improve its impact in the future.