Before 2006, there was no way for companies to demonstrate their sense of social responsibility and prove their commitment to balance purpose and profits. Then there was B Corp.
Started by the non-profit B Lab, B Corp accreditation is awarded for social and environmental performance, transparency and accountability.
At first only open to US firms, the first wave of B Corp businesses in 2007 totalled 82. Since then, the movement has expanded globally.
There are now more than 6,000 B Corps around the world, about 1,400 of which are based in the UK. Among its ranks are recognisable names that include lifestyle clothing brand FatFace, recipe subscription firm Gousto and Patagonia.
Raconteur is now a B Corp as well.
There are plenty of reasons why businesses want to be certified. For B Lab UK’s head of growth, Annie Olivier, it’s about companies being transparent about their progress beyond profit. She says: “B Corp Certification provides an opportunity for companies to measure and improve their impact on all stakeholders, across all areas of their business. It’s a helpful way to communicate purpose to customers and employees.”
What are the benefits of being a B Corp?
As businesses, and their customers and employees, become increasingly aware of the importance of ESG issues, B Corp certification has become an important differentiator. “The social and environmental challenges we’re facing are urgent, and the UK public expect more from the brands they shop from and organisations they work for,” Olivier adds. As a result, many B Corps will proudly display the official B Corp logo on their company websites, products and packaging.
As a B Corp, businesses can engage in community events and connect with other B Corps. Being part of this community is another benefit for some. “Securing B Corp status enabled us to join a like-minded community of businesses, outside of our own industry,” Mey Tang, office and operations manager and B Corp lead for communications consultancy Stand.
Research from B Lab also shows that on average B Corps have higher revenue growth, greater levels of employee retention and higher levels of innovation than other companies. As more businesses review their supply chains to comply with their own social and environmental goals, being certified as B Corp may help to make a business more desirable for other companies to deal with.
Can any company become a B Corp?
Not quite. To be eligible to apply for B Corp certification, a business must be for-profit and have been in operation for a year.
Each prospective member then carries out a B Impact Assessment. This is an online form that calculates the impact a business has on the environment, communities, customers, suppliers, employees and shareholders.
A score of 80 points or more, out of a possible 200, is needed to progress towards B Corp certification.
Can startups become B Corps?
Because B Corp certification is only available to businesses that have been active for 12 months or more, there is an alternative option for early-stage startups.
Pending B Corp is a temporary status that is only available to such businesses that are not yet eligible for full B Corp status.
The process for gaining pending membership is similar to that of B Corp and requires the business to meet the same B Corp legal requirements, complete and submit a prospective B Impact Assessment and make a payment of £500 to cover the 12-month Pending B Corp membership period.
There are currently more than 100 Pending B Corps in the UK and B Lab claims that the status can help to demonstrate a commitment to good corporate governance to prospective investors and customers.
What is the B Corp accreditation process like?
There are four key stages to becoming a B Corp. The first is to measure business impact. This involves answering questions on governance, employees, offices, clients, supply chain and impact on the environment, customers and wider community.
Completing the B Impact Assessment allows a company to compare how it performs against other businesses, evaluate its performance and identify where there is room for improvement. It is rare for a company to achieve the required score of 80 in the B Impact Assessment on first attempt.
The B Corp certification journey is a comprehensive and challenging process
Speaking about the process, founder and CEO of glasses brand Ace & Tate Mark de Lange says: “While long-term sustainability goals can sometimes feel intangible for the people working on them, setting out to become B-Corp certified is a fully trackable goal that is really hard work to achieve and really exciting when you achieve it.”
Olivier advises that businesses should clearly explain the reasons for pursuing the certification to employees before beginning, so that everyone is pulling in the same direction. “The B Corp certification journey is a comprehensive and challenging process. So it’s key that leadership is bought in from the start and that a clear direction is set for the company,” she adds.
There is also a legal requirement, which must be met by all companies to demonstrate an ongoing commitment to the triple bottom line of people, planet and profit. This involves amendments to the business’s Articles of Association and requires sign-off from the board of directors and to be filed with Companies House.
Full details on the legal requirement and the wording of the revised Articles of Association can be found here.
The application is then ready to be submitted and reviewed.
How long does it take to become a B Corp?
The length of the process can vary. For businesses that are already operating to high social and environmental standards, the process might only take a matter of months.
For Stand, a communications consultancy, becoming a B Corp took 18 months. “Our existing policies were robust, but data collection was hard, particularly in areas where we have less control like our serviced office space,” explains Tang.
For others, it can be a lengthier process. For example, Ace & Tate first considered becoming a B Corp in 2017 and didn’t gain certification until 2021.
“We were still a small company at that time, so we faced challenges in setting up new policies, like codes of conduct, and creating ways of tracking and measuring our carbon emissions and other outputs,” Lange explains. It all comes down to the size and complexity of the business that is being certified.
The wait time for verification can also vary. B Lab advises that small to medium-sized companies should expect a wait time of six to eight months, while larger multinationals usually need longer.
How much does it cost to be a B Corp?
A one-off fee is required from all prospective B Corporations when they submit the documentation. B Lab says this is to “ensure the company’s commitment to the full verification process”.
There is also a certification fee, which needs to be paid annually for the business to retain B Corp status. The amount payable varies depending on the annual revenue of the company. Businesses that make up to £149,999 in annual sales pay a fee of £1,000. Meanwhile the largest B Corps, which generate between £750m and £1bn in sales, will pay a £50,000 annual fee.
See the full breakdown here.
What are the common challenges and what should a business do if it fails the B Corp assessment?
Becoming a B Corp isn’t meant to be an easy process. Meeting the required standards to be certified requires high levels of social and environmental performance. Business leaders shouldn’t be disheartened if they do not pass the first time.
“For mission-driven organisations that don’t achieve certification at the first try, it’s important to persevere,” says Hadi Moussa, general manager for EMEA at Coursera. The online learning platform didn’t reach the necessary 80 points initially but did reach B Corp status in 2021 after going through an improvement process.
For organisations that don’t achieve certification at the first try, it’s important to persevere
“B Lab offers considerable support with this process, from generating a customised improvement report to providing a resource hub that supports companies falling below the score threshold to return to their employee base and make the procedural and cultural changes necessary to resubmit successfully,” he adds.
Environmental consultancy Tyler Grange is another B Corp member. Its people director, Jon Berry, also found the certification process “rigorous”. “This isn’t a box-ticking exercise. You need to live and breathe B Corp to achieve certification,” he says.
Due to the nature of the business, many of its consultants are required to travel to clients. This presented a challenge when trying to reduce the company’s environmental impact score. Berry explains that Tyler Grange’s implementation of the four-day work week, better coordination between staff and increased use of electric vehicles helped them reach the B Corp target.
How to maintain a good B Corp score
B Lab emphasises that accreditation is not the final step and recertification is required every three years to maintain B Corp status.
“Gaining the original certification was never an excuse for us to rest on our laurels – instead, it served to crystallise our focus on our mission,” Moussa says. As part of its efforts to continue demonstrating its commitment, Coursera produces an annual impact report, in accordance with B Lab’s specifications. This has now been developed into the business’s first ESG report, which it publishes publicly.
By continuing to strive towards the B Corp mission, the business improved its B Impact Assessment score by 10 points in its first review. According to Moussa, it has allowed the business to “continue having a profound positive impact on our employees and culture”.
Is the certification process changing?
The online impact measurement tool regularly goes through changes and a new iteration of the B Corp certification process is scheduled for release in 2024. B Lab has indicated that it will be the biggest evolution of the standards so far, driven by the urgency and scale of challenges such as the climate crisis and growing inequality.
As part of the changes, minimum standards will be introduced across 10 categories. Companies will have to meet the criteria in each category to become a B Corp, rather than relying on a good overall score as is the case now. It is hoped this will prevent businesses that perform well in the majority of areas but have a poor record on the environment, for example, from becoming B Corps.
