What Does B Corp Certification Actually Mean?
Many of us want to find ways to have a more eco-friendly lifestyle to lessen the pressure on our planet’s resources. However, it can be challenging to do so while knowing all of the options.
There exist many certifications that state that businesses are sustainable. From Certified Vegan, LEED Certification, Forest Association, and so on, there are a lot of choices one can look for in a company.
However, this one certification is described as “la creme de la creme” of eco-credentials by the Independent, which guarantees that a company is ethical and sustainable.
This certification is the B Corp and is known by those working in the sustainability field and businesses wishing to have a better performance environmental and social-wise. But what exactly is B Corp?
B Corp Certification
B Corp is a lesser-known sustainability credential created by B Lab in 2006. B Lab is a nonprofit network transforming the global economy to profit all people, economies, and the planet. B Lab was founded by three friends in the United States who have the vision to make business a force for good.
B Lab became known for certifying B Corporations, which are companies that meet high social and environmental performance standards, accountability, and transparency. B Corps use the power of business to do more than seek profit. They use their profits and growth to impact their stakeholders and the planet positively.
To be certified, a company must:
- Demonstrate high social and environmental performance by achieving B Impact Assessment score of 80 or above and passing B Corp risk’s review. Multinational corporations must also meet baseline requirement standards.
- Make a legal commitment by changing their corporate governance structure to be accountable to all stakeholders, not just shareholders, and achieve benefit corporation status if available in their jurisdiction.
- Exhibit transparency by allowing information about their performance measured against B Lab’s standards to be publicly available on their B Corp profile on B Lab’s website (B Lab, 2022).
Why are Companies Getting Certified?
Corporate governance practices have now tightly linked the purpose of business with maximizing shareholder value.
As the 21st century pushes on, there has been an increased emphasis on other stakeholder values, particularly social and environmental concerns. This has led to the growth in “triple-bottom-line” thinking and has fueled the emergence of a new organizational form: the Certified B Corporation.
The “triple-bottom-line” of sustainability are environment, social, and economy for those unfamiliar with the term. The three spheres interconnect and are equally important for sustainability to occur in a firm.
The triple-bottom line can be broken down into the three Ps: People, Planet, and Profit.
Instead of focusing solely on profit, a company should also favor people’s well-being and the environment.
Who Can Become Certified?
A company must be a for-profit business and have been in operations for at least 12 months to be eligible for B Corp Certification. While for-profit companies of all shapes and sizes can certify as B Corps, the path to get there varies.
Why Does B Corp Matter?
The first 82 certified B Corps were certified in 2007. Since its launch in 2006, more than 150,000 businesses have signed up for the B Corp Impact Assessment, yet only 4500 have been certified. This is a testament to its extremely high standards (Taylor, 2022).
B Corp Certification is the only certification that measures a company’s entire social and environmental performance. Certification doesn’t just prove where companies excel now; it also commits companies to their mission for the long term (B Lab, nd).
Identifying as B Corporation states that a company cares about shareholder and stakeholder success. This also sends a positive message about a firm’s value to customers, which is particularly beneficial when the firm is claiming an identity different from the industry norm.
Individual leaders are also partly why some organizations broaden their purpose beyond maximizing shareholder value.
One might consider Sir Richard Branson, who in 2013 co-launched the “B Team,” publicly decrying corporations’ sole focus on short-term profits and calling for a reprioritization of people-and-planet-focused performance. Leaders of firms like Ben & Jerry’s or Patagonia (both B Corporations) can also be considered. They have prioritized societal and environmental agendas (Kim et al., 2016).
Certifying as a B Corporation separates good companies from what is just good marketing
Rather than encouraging greenwashing, B Corps have to commit to policies that actually make an impact (and hence don’t just market themselves as eco-friendly). This helps build consumer trust.
Employees demand it
Studies demonstrated that more and more employees, particularly millennials, want to work for a mission-driven company. Research has also shown that a company is more successful when you have employee buy-in.
B Corps are a global community that businesses are eager to join
The supportive community uses its collective voice and action to create a regenerative rather than extractive economy.
For example, in February 2019, a group of North American certified B Corporations formed the B Corp Climate Action Collective. It is a group of committed B Corps invested in fighting climate change (Elder, 2019).
B Corp Month
Did you know that March is “B Corp month”? This is a time to celebrate what it means to be a B Corp. It was the time to amplify the imperative for the type of business that meets diligent social and environmental impact standards.
B Corp month also lifts up the work that B Corps do to tackle injustice and inequality and positively impact people and the planet. During B Corp month, B Corps open their doors to show how communities are making business a force for good (B Corp, 2022).
What does it take to be certified B Corp?
The pathway to becoming certified depends on a few factors, such as company size and complexity. However, to be certified, all companies must go through the following steps:
- After having registered for the free and confidential B Impact Assessment, use the Legal Requirement Tool to determine how your company can integrate stakeholder consideration into its governance structure, depending on its location and corporate structure.
- Complete the Risk Review and baseline requirements for multinational corporations if applicable.
- Gather the company’s supporting documentation and data, and get ready to record answers.
- Take the B Impact Assessment online.
- Establish a company profile; the company will be prompted once it fills out most of the assessment and starts the Disclosure Questionnaire. The company will learn its baseline score; if it is under the 80-point benchmark, it has to reevaluate and prioritize improvement areas.
- If the company is over the 80-point benchmark, it can submit its B Impact Assessment for review.
- The company will next wait in the Evaluation Queue, as an analyst from the B Lab’s team reviews the company’s eligibility for B Corp Certification.
- Once eligibility is determined, the company enters the Evaluation phase. An analyst from B Lab Global will look over the company structure, any controversial industries, and answers to the entire Assessment.
- The company will then enter the Verification Queue, where it’ll be asked to provide information about its employees and any suppliers.
- During Verification, the company’s representative (the person doing the certification process) will have their review call with an analyst, go through their verification report, and provide all documentation backing up their answers to the Assessment.
- If the company meets the verified 80-point threshold, it’ll enter the Post-Verification stage and sign the B Corp Agreement.
- The company has now reached Certification. To meet the transparency requirement for B Corp Certification, the company needs to publish its public profile in the B Corp Directory, including the company’s score and impact report.
- Now it’s time to Launch! The company can celebrate and share its B Corp status internally with employees, board members, and shareholders and externally with suppliers, vendors, and the public.
- The final step in the company’s B Corp journey will last the longest. It’ll prepare for recertification every three years and use the B Impact Assessment and the certification process as a tool for continuous improvement.
While the steps to become certified might seem tedious, having firms being certified B Corps guarantees that those companies positively impact communities and the environment around us.
While we have for a long time sworn by the principles of the traditional corporate form, which is quite linear and does not leave room for new methods of circularity, B Corps break this pattern. We are now shifting to a new way of doing business that considers local needs and protects the environment.