What is a B Corp? And should your business become one?

Superscript
Flexible monthly business insurance
25 April 2022
5 minute read

More and more businesses are looking to join the fight against climate change by improving their environmental, social and governance standards, using their products or services for good and their platform as a place to educate on sustainability. But with many brands claiming to be greener than they are, it’s hard for consumers to tell who is really on our planet’s side.

Enter B Corporations (B Corps) – companies that meet the highest standards of social and environmental performance.

Whether you want to learn more about B Corps or you’re looking to turn your business into one, this article will run through what they are, why they matter and the requirements to become one.

What is a B Corporation?

B Corps are verified companies that meet the highest standards of social and environmental performance, complete transparency and legal accountability – the key factors that make up a truly sustainable business.

B Corp status certifies that a business is purpose-driven and that growth is measured as a balance between profit and purpose. B Corp companies are expected to think about their impact on public stakeholders rather than private stakeholders and that means putting people and places above profit.

To become a B Corp, businesses voluntarily go through a rigorous assessment and certification process as set out by non-profit organisation B Lab.

woman tending to plants in dungarees

Why B Corps matter

The climate crisis is becoming increasingly urgent. And while national leaders and individuals have a part to play in turning our impact around, businesses large and small are waking up to the power they have to make positive changes in their community and beyond.

While the standard business model has worked so far in making profit, it’s clear that without adequate consideration for our actions, we’ve put ourselves on a path to destruction. This is why B Corps are so important.

The B Corp assessment aims to view businesses in a different light – as one that gives primary consideration to the stakeholder, instead of as a vehicle to make its shareholders money.

By doing this, B Lab is hoping to turn the tides on how businesses are perceived. By shifting everyone’s mindset, it’s hoped that businesses can halt their negative or even neutral impact and can actively begin becoming part of the solution.

Through transparency and scrutiny, B Corp businesses commit to being open and honest about their areas of responsibility, development and improvement. The process of becoming a B Corp shows a commitment to real environmental and social change.

What are the benefits of becoming a B Corp?

The benefits of becoming a B Corp go beyond the certification. Receiving B Corp status is seen as a badge of honour and one that’s widely recognised by consumers and clients as a company is committed to make be the positive change they want to see in the world.

Some benefits to this include:

  • It could help you win investment – many investors are keen to see some level of ESG consideration within a company’s structure and B Corp status could be a big bonus
  • It builds trust with current employees – it also helps them to feel appreciated and valued
  • It attracts and retains new talent – more and more jobseekers want to feel connected to their next venture on a personal level, and a commitment to the planet and its people will definitely show them that
  • It separates your company from those that are greenwashing
  • It builds loyalty with customers – similar to jobseekers, more consumers are considering a brand’s ethical values before purchasing
  • Gives you the chance to join a collective movement – the B Corp community is supportive and wants to see its other members succeed. Many B Corp businesses partner together for a collective cause to take corporate action, stop emissions and create an inclusive and regenerative economy. You’ll also gain access to a wealth of knowledge, events and resources from other members

trees in a forest with the sun shining through the leaves

What are the requirements to become a B Corp?

Each business that wants to become a B Corp needs to be assessed by B Lab. There is certain eligibility criteria and a process to follow:

  • You must be a for-profit business that’s been operating for 12 months or more. This includes sole traders, startups and large corporations, but charities and non-profit organisations are not eligible
  • You must complete the B Impact Assessment which consists of 200 questions and you must achieve a score of 80 out of a possible 200
  • Make sure you meet B lab’s legal requirements, which differ depending on your company’s entity type and usually involve incorporating certain language into your Articles of Association or structural changes
  • Once certified, you’ll be asked to sign the B Corp Agreement, pay an annual fee and publish an annual impact report to show your progress and goals

It’s very rare that a company will score 80 points without having to make improvements. If you’re a fairly new or small business, it should be relatively easy for you to change your processes and shift your focus. But, if you’re an established business, this may be slightly more difficult and could require hiring a dedicated person to manage the process especially in relation to the shift of internal structures, the actions you’ll need to take and communicating this to stakeholders.

What if I haven’t been operating for 12 months?

If you haven’t been operating for 12 months, you can still begin the B Corp process by becoming a B Corp with pending status. Once you have 12 months worth of data that B Lab can use, you can then earn full status.

What to expect from the B Corp assessment

The assessment is split into five sections or ‘Impact Areas’: Governance, Workers, Community, Environment and Customers. Companies also need to fill out a disclosure questionnaire. Each section vets the processes and practices of the company and acts as a guide for improvements.

Each question is given a score and companies need at least 80 points to qualify for B Corp certification.

Once the company completes its B Corp assessment, it is submitted to B Lab and assessed by them. Because of the sheer volume of companies aiming to become a B Corp and the level of detail that goes into each assessment, this process can take months.

The B Corp standard itself is ever evolving, so if a company achieves B Corp status, they will then need to re-certify every three years. This prevents sustainability becoming a tick-boxing exercise and ensures each company is continually improving against the latest recommendations.

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This content has been created for general information purposes and should not be taken as formal advice. Read our full disclaimer.

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