This article is part of our Sustainability 101 series. We created this collection to provide an introduction for those entering the sustainability space for the first time.
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What is a B Corp?
Certified B Corporations, or B Corps, are companies that have been verified by B Lab to meet the highest standards of social and environmental performance, transparency, and accountability.
The B in B Corp stands for “beneficial”, as the name suggests, the accreditation is designed to amplify organisations whose practices promote societal and environmental benefits that go the extra mile.
By becoming certified as B Corp, a business voluntarily meets certain standards of transparency, accountability, sustainability, and performance. Ultimately, the certification aims to highlight those who are working to create value for society, rather than only for financially motivated shareholders.
Created and moderated by non-profit B Lab, the first companies were certified in 2007. As of September 2022, there are over 6,200 certified B Corporations across 158 industries in 85 countries, including Ben & Jerry’s, Patagonia, and Danone, boasting a total revenue of $150 billion (£123bn).
In December, multinational brewery and pub chain BrewDog lost its B Corporation status after the accreditation reportedly conducted an investigation into staff complaints about a “toxic” workplace culture.
The certification has even made it into the public domain, as illustrated by both Waitrose and Boots’ inclusion of a ‘B Corp’ filter on their online stores for ethically minded shoppers to apply.
What are the benefits of becoming a B Corp?
The certification process is demanding, and the fee is required, so what is the motivation for businesses to become a B Corporation?
According to a community survey from the certifier, between 2017 and 2020, B Corporations saw average turnover growth of 26% compared to the national average of 5%. In addition, 98% of B Corps believe that certification is likely to contribute to future success.
But how is certification able to provide these benefits?
Providing a framework for better practices
Certification requires a holistic assessment of an organisation’s practices against a set of “good for all” criteria. If a company fails the evaluation process, they’re not left empty handed. Instead, they’re provided with direction on how to amend their operations in order to provide greater value to their customers, employees, suppliers, and the environment.
Creating positive brand awareness
The impact businesses can have on society is more relevant now than ever, with four to six times more consumers likely to buy from, trust, champion, and defend companies with a strong ‘purpose’.
Today’s war for attention has left consumer engagement often fleeting, and the window of opportunity businesses have to market their product or service is increasingly small. By displaying the recognised B Corp logo within a brand, ethically minded customers can quickly ascertain the values and benefits of that business over others.
Allows for competitive pricing
A 2021 study by Simon Kutcher and partners found that 35% of consumers would pay more for sustainable products or services. These results also showed the younger generations are more committed to this concept, with a respondent rate of 39% among Gen Z and 42% with Millennials. By presenting a B Corp certification, consumers can feel confident the organisation is working for the greater good, and will vote with their wallets to support that.
Building a sense of community
Becoming B Corp certified introduces businesses to a network of like-minded people and organisations, including access to exclusive community events, allowing them to improve their impact through participation in working groups where they can share best practices.
Supports staffing and retention
Workers are also changing their priorities, especially when it comes to employer responsibilities. According to a recent study by YouGov and YuLife, 42% of 18 to 24-year-old’s would not work for a company lacking “green credentials”. This number is set to rise as younger generations complete education and enter the workforce. Achieving B Corp certification tells potential employees that the company has a strong, meaningful purpose which aligns with theirs.
Furthermore, by certifying, the business demonstrates its commitment to positive working conditions for employees along with engaging them in the company’s purpose and mission. Meaningful and happy workplaces are important to reduce staff turnover, which, according to a study by the Society for Human Resource Management, can cost a business on average 6 to 9 months of salary after recruitment and training expenses are accounted for. By investing in sustainable employee practices, organisations can not only save money, but also hire and retain the best staff available to help build the company.
How to become a B Corp?
According to B Lab, the certification process is “comprehensive and rigorous” ensuring only those who truly match the “good for all” values complete certification.
Step 1: Perform an impact assessment
The first step of the application process is to complete a 200+ questionnaire impact assessment of business practices against five key categories:
- Governance
- Workers
- Customers
- Community
- Environment
Questions measure the positive impact the company has on its staff, suppliers, community, and environment. To move onto the next stage, they will need to score at least 80 points.
B Lab states that it’s rare for a business to pass the assessment on the first attempt, and many will need to change their practices before re-attempting the assessment. The assessment platform includes tools for how businesses can improve their scores, with B Lab providing support throughout.
Step 2: Provide any sensitive information and disclosures
The company is then required to disclose any sensitive practices, fines, or sanctions they may have received. This information is entirely confidential and does not affect the numerical score received on the B Impact Assessment. During the verification process, disclosures will be reviewed to determine their relevance and if follow-up actions are necessary.
Step 3: Changing the businesses purpose
The business must also update its articles of association, which is the legal structure and purpose of the business. This must indicate that the business commitment to working in the interests of not only the shareholders, but also the stakeholders involved in the business (such as workers, customers, suppliers, and more). In the UK, the articles of association can be changed for free via Companies House.
Step 4: Reviewing the application
Now it is time to submit the application to B Lab, who will conduct a video review with the business to confirm everything is eligible. In order to ensure its commitment to the full verification process, the company will need to pay a one-off fee, which is variable based on the company’s annual turnover.
At this stage, points scored on the initial impact assessment may be lost. If the overall score drops below the required 80 points, the business will be ineligible to continue and will need to take steps to increase that score before re-taking the assessment.
Passing the evaluation
Once the application passes the review stage, the company becomes officially B Corp certified and can then begin accessing all the benefits that come with the accreditation.
Follow-up tasks
B Corp certified companies have to publish a yearly impact report to share their progress. Additionally, they must pay an annual certification fee based on the annual turnover of the business. The certification lasts 3 years, after which the company will have to re-apply.
Controversies with B Corp certification
Overall, the B Corp certification has been applauded by many for encouraging and supporting businesses in adopting sustainable and ethical practices. However, some critics consider the certification as a method for organisations to greenwash. These claims are often supported by a list of organisations who are currently certified, but who are not considered to be a ‘good for all’ force.
For example, Harrogate Spring Water sells bottled water made of plastic. An industry commonly seen as the world’s biggest scam and considered environmentally catastrophic.
But, certification covers more than just environmental impact, such as considering corporate governance and social impacts. Therefore, organisations who may not have the best environmental record can still pass the assessment in these other areas instead.
This approach has faced criticism from some who believe that corporate governance & social and environmental impacts are entirely unique and should all be necessary for successful application.
B Lab addresses this on their website, stating the following for water companies:
“Bottled water companies are controversial because of issues related to water usage and access, as well as the waste produced by their business model. Bottled water companies are required to meet requirements around sustainable water usage, fair water access, and waste management to be eligible for B Corp Certification.”
For fossil fuel companies, which are arguably the least environmentally friendly organisations, they state that:
“Fossil fuel and energy companies are disproportionately responsible for greenhouse gas emissions that contribute to climate change. Companies involved in the production and sale of fossil fuels, including those that generate or sell energy derived from fossil fuels, are eligible for B Corp Certification if they are not engaged in specific prohibited practices regarding extraction, lobbying, and financial incentives; have successfully transitioned their energy portfolio to be at least 50% carbon free; and have committed to make progress towards transitioning to a fully carbon-free portfolio within specified timeframes.”
Final thoughts
The most challenging global problems cannot be solved by governments or non-profits alone. Private business involvement is essential to tackle some of the most enduring challenges we face.
The B Corp certification exists to encourage action and highlight those who are taking on these challenges, collaborating and working towards a better world. But, there are some who argue that by including organisations who don’t truly uphold the accreditations “good for all” ideal, the system is flawed.
As with most things, it’s not straightforward and there is no perfect solution. B Lab’s ambitions are a step in the right direction, and with continual refinement and transparency, the B Corp certification opens the possibility of providing an overall benefit to society, even with rare cases of seemingly contrasting purposes.
