What to consider before applying for B Corp Certification
The B Corp logo is fast becoming a symbol of business as a force for good, globally
recognised by consumers, investors and business leaders. And its reputation is
escalating at a staggering rate. Why? Because now more than ever, people are
determined to work for, buy from and invest in businesses with purpose.
Behind the logo, B Corp is a global business certification based on a robust
sustainability framework that measures each certifying business's entire social and
environmental performance.
If your business is one of the many thousands thinking about B Corp certification,
here’s what you need to consider before applying.
1. Eligibility
Who can apply? For-profit businesses of any size that have been operating for over
1 year can apply for B Corp certification. Charities and non-profits are not eligible.
If you are a young start-up and don’t yet have one full year of operations under your
belt, you can apply for something called B Corp Pending (in some but not all
regions), which certifies your business temporarily and puts you on the right track.
In terms of scoping, you will also have to disclose the structure of your business
entity. B Corp has strict rules about whether parent companies, subsidiaries,
franchises and partnerships sit inside the scope of the assessment. These rules
apply to brands as well. It’s really important to determine the scope of the entity you
wish to certify before you start the assessment.
However, it’s worth noting here that any business, non-profit or charity can use B
Corp’s best-in-class sustainability framework (the BIA) without becoming certified. In
fact, over 50,000 businesses worldwide do.
Beware the Red Flags!
B Corp’s Standards Advisory Council has recently tightened up the eligibility
screening process in relation to controversial industries. That means if your company
is connected to industries that exploit people or planet, that will send up a big red
flag and may disqualify your business from certification. Red flag industries include
mining, tobacco, gambling, porn, palm oil, slaughterhouses, sale of data, plastic
water bottles and many more. The scope of the connection includes a company’s
client base, so if, for example, you run an advertising agency and your biggest client
runs a gold mine, it’s worth checking in advance if your business is still eligible.
It’s not a definite disqualification, though. For most businesses, it’s a matter of
disclosing the connection and providing evidence, for example, if you run a
restaurant you simply need to disclose your sales from alcohol and provide your
licence, or you might be a jeweller working with an ethical mine trying to create
positive change in the industry.
2. The legal change
What gives B Corp certification teeth is the legal commitment businesses are asked
to make. B Corps in the UK must amend the wording in their Articles of Association
to adopt a stakeholder business model. You can check the legal requirements for
your country here.
The purpose of the legal change is to commit your business to stakeholder
governance. That means B Corps are legally required to consider their impact on all
stakeholders, including the planet, not just shareholders.
In the UK, The Better Business Act campaign is demanding a shift to stakeholder
governance as the new norm, so as a B Corp you’ll be an early adopter.
3. Committing time, money and resource
How hard will it be?
To become a B Corp, businesses must go through a rigorous certification process
that starts with completing an in-depth ESG framework assessment called the B
Corp Impact Assessment (BIA).
Completing the assessment and verification process is not an easy task, and the
precise amount of time and effort required will differ from business to business.
The BIA tracks and measures a business’s impact across 5 areas: Governance,
Workers, Community, Environment and Customers. It’s an intensive assessment
focused on actions (rather than promises) with points awarded for positive impact
and improvements. A score of 80+ is required before a business can submit for
certification.
How much will it cost?
There are also the fees to consider. B Lab ask for a submission fee (currently
£250+VAT in the UK) to cover the verification process, and then, assuming your
business passes verification, B Corp takes an annual fee for certification, which is on
a sliding scale based on company turnover. If your business is majority-owned by a
woman or person from an underrepresented background, you may be eligible for an
equity discount of up to 40%.
The certification fee is paid annually, so you’ll have to pay it every year to keep the B
Corp logo and accreditation.
How long will it take?
Becoming a B Corp is very much a journey. Every company will have a different
experience but on average it takes a minimum of 6 months for smaller businesses
and up to 18 months for larger ones.
After three years, you’ll have to recertify and show improvements, reflected by a
higher score in the BIA. Do note, however, that by then B Corp will have evolved
their standards. If you’ve adopted the BIA as your framework you should be on the
right path for continuous improvement.
Before starting your B Corp journey consider that B Corp isn’t about ticking ESG
boxes, or being neutral, it’s for businesses that want to be a force for good and
change the world for the better. Gaining B Corp certification isn’t easy (nothing
worthwhile ever is) but the journey is rewarding, inspiring and vitally important.