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 Corps, 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 honors the highest ethical standards and makes a positive impact on society.
❓ B Corp Certification: what does it mean?
For-profit businesses can show their B Corp certification label proudly by honoring shared social values like environmental protection and ethical labor practices. B Lab helps them achieve these goals.
B Corp definition 📖
You may have seen companies display a circled “B” label on their website. This label is granted by B Lab, a non-profit that offers third-party verification for businesses taking steps to improve their environmental and social responsibility.
As of February 2022, 4,673 companies in 78 companies are certified B corporations.
According to B Lab, the certification process ensures businesses meet the highest business sustainability standards with the following principles:
- Social and environmental performance evaluation
- Transparency when businesses report to the public
- Legal accountability by declaring the dual importance of purpose and profit within the business structure
The B-Corp Declaration of Interdependence states:
“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.”
Why should you get B Corp certification? 👍
There is a growing consensus that businesses need to play a positive role in society. People choose to “vote with their dollars” by supporting businesses who share the values they care about.
By becoming a B Corp, companies can show their ethical purpose publicly. The B Corp label offers a veneer of trust, similar to the Fair Trade Certification or 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 organizations. However, non-profit organizations require certain internal processes and structures that don’t appeal to ethical for-profit businesses.
Indeed, Certified B corporations still want to earn 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 organizations with extensive staff and resources, B Corps offers a manageable solution for companies not operating at that scale.
What is a B Corp Certification? 📕
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 Corps directory.
Companies must pay a fee to earn a verified assessment score and join the B Corps 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.
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 company–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 a B impact assessment score to depict the company’s performance. More on this below.
📌 What is the difference between B Corp and benefit corporation?
The similarity in name between B Corp and benefit corporation 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 legally recognized business entity structure–similar to an S-Corp, a C-Corp, or an LLC. Benefit corporations are recognized 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 environment and social impacts as they give to their for-profit purpose.
However, there are key differences worth noting:
- Certified B corporations are independently verified and scored by a non-profit based on B impact assessments on purpose-driven initiatives. Benefit corporations’ don’t receive a score, because their articles of incorporation are filed internally by board members.
- B Corp certification is the same from state to state, country to country. Benefit corporation laws 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 as B Corps at any time, while companies that want to become a benefit corporation have to do so when they file their articles of incorporation.
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.
📑 What are the initial requirements to be B Corp Certified ?
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.
5 B Impact Assessment categories your need to match with ✅
Here are descriptions of some of the best practices evaluated within each category of the B Impact Assessment.
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.
Businesses should prioritize employee wellbeing. 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.
Businesses play a profound role in their communities. Assessment for business stewardship of a thriving community include practices such as local supplier engagement, support for diversity and inclusion, charitable donations, and other engagement activities.
Companies should demonstrate efforts to reduce the negative environmental impact of their activities. Examples include minimizing greenhouse gas emissions, reducing waste, conserving water, optimizing for 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.
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.
Impact Assessment score 💯
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 organization could score differently based on its size, industry, and region.
Most companies earn scores between 40 and 100 points. As of 2021, the company with the highest score (183/200) is South Mountain Company, Inc., an engineering and renewable energy firm.
📝 8 Steps to become B Corp certified
Step 1. Register for B Impact Assessment
Step 2. Begin the B Impact online Assessment
Step 3. Submit your Assessment
Step 4. B Lab Analyst Evaluation
Step 5. B Lab Analyst Verification
Step 6. B Corp Agreement signature
Step 7. Achievement process - Receive your Score
Step 8. Keep up your improvement for the next three years
🔮 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.
Get clients trust ✋
Marketing research shows the immense value customers place on purpose-driven products and services:
- 88% of customers want brands to help them make a difference to improve their own personal sustainability (Futerra).
- Nearly seven 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 promises transparency (Inc).
Convince new talents 💬
Businesses who place value on social and environmental benefits to the society attract the most caring, ambitious, and dedicated talent. To ensure your workforce is engaged, B Corp certification helps you communicate the value of your mission to your employees.
Reduce your costs 💵
Sometimes businesses associate ethical business practices with costly, time-sucking 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 them energy, resource, and material costs.
👉 Who is eligible to get the BCorp Certification?
BCorp certification is highly versatile. While the majority of B Corps are small- to medium-sized organizations, companies as small as a sole proprietorship to the size of a publicly traded company can all get certified.
Regarding your 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: 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 $100M USD 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.
Regarding your state area 🌎
B Labs certifies businesses in every state and many countries outside of the United States. However, 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.
In sum, if you’re a business owner of any size and you want to show you care about your planet, community, and purpose, start your B impact assessment today. B Corp is making a positive impact on the world by changing how business is done.
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