B Corporation (certification)

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Certified B Corporation logo mark. This B Corp mark can only be used by companies certified by B Lab. Certified B Corporation B Corp Logo 2022 Black RGB.svg
Certified B Corporation logo mark. This B Corp mark can only be used by companies certified by B Lab.

In business, a B Corporation (also B Corp) is a for-profit corporation certified for its social impact by B Lab, a global non-profit organization. To be granted and to maintain certification, companies must receive a minimum score of 80 from an assessment of its social and environmental performance, integrate B Corp commitments to stakeholders into company governing documents, and pay an annual fee based on annual sales. [1] Companies must re-certify every three years to retain B Corporation status.

Contents

As of February 2024, there are 8,254 certified B Corporations across 162 industries in 96 countries. [2]

Purpose

Example of a B Corp certification label Runa B Corp Label.jpg
Example of a B Corp certification label

B Lab certification is a third-party standard requiring companies to meet social sustainability and environmental performance standards, meet accountability standards, and be transparent to the public according to the score they receive on the assessment. B Lab certification applies to the whole company across all product lines and issue areas.

An issue in deciding to be a certified B Corporation would be the administrative and legal costs a corporation will face in changing their business model in accordance to B Lab's regulations. [3]

As a matter of law, in Massachusetts or states that recognize B Corporation certification, it doesn't bring any legal significance to its shareholders, stakeholders or to its employees. However, the certification brings a multitude of branding tools to the corporation. [4]

B Corp certification will bring no legal liabilities to a C Corporation or any for-profit business structures apart from its business model structure which should adhere to the B Labs. [4] To add on, many C corporations usually adapt the B Corporation certificate to gain goodwill. [5]

Similar to other business associations, certified B Corporations and their employees have access to a number of discounts from outside entities and fellow members. [6]

B Lab certification has no legal status [5] and is lacking in mandatory due diligence mechanisms. [7] B Lab has been criticized for framing private sector led multi-stakeholder governance as a substitute for public sector regulation. [8]

In order to obtain and maintain a B Corporation certification, B Lab charges annual administrative and legal fees depending on the revenue generated by the respective companies which could result in a perverse incentive. [9] [10]

B Lab develops private standards which are non-consensus, and does not reference or adhere to international standards which are voluntary consensus-based. With potential for confusion and fragmentation in the marketplace for social responsibility. [11] B Corporation has also been criticized for not being the "force for radical change" required to tackle the world's pressing problems. [12]

B Lab certification is not accredited. The European Commission proposed directive will require mandatory accreditation of verifiers. [13]

Private sector Multi-Stakeholder Initiatives (MSIs) [14] may adopt weak or narrow standards that better serve corporate interests than rights holder interests. [15]

Distinction from benefit corporation

In the United States, a benefit corporation is a legal status conferred by state law in the US. Legislation for the passage of benefit corporation legal status has been passed in 35 states, including Delaware. [16]

B Lab certification is privately issued by a non-profit organization run by people principally from the business community. It has no legislative framework, and is not needed to obtain benefit corporation status. [17]

Certification process

The company needs to adhere their corporate legal structure to B-Lab regulation in order to qualify for the certification process.

Online assessment

To obtain a B Corporation certification, a company first completes an online assessment. Companies that earn a minimum score of 80 out of 200 points undergo an assessment review process, essentially a conference call verifying the claims made in their assessment. Companies are required to provide supporting documentation before they are certified.

The assessment covers the company's entire operation and measures the positive impact of the company in areas of governance, workers, community, the environment, as well as the product or service the company provides. [18] Socially and environmentally-focused business model points ultimately are accrued in their relevant impact area (governance, workers, community or environment). [19] Depending on a company's industry, geographic location, and number of employees, the online assessment adjusts the weightings of the question categories to increase its relevancy. For instance, companies with more employees will have a heavier weighting in the workers category, and companies in manufacturing will have a heavier weighting in the environment category.

To maintain credibility, the B Corporation certification standard operates under principles that are independent, comprehensive, comparable, dynamic, and transparent. [20] B Lab has an established standards advisory council that can independently make decisions with or without the support of B Lab. [19] As of May 2014, 28 of 30 members were listed by their business affiliation. [21] The council recommends improvements to the B Corp assessment on a biennial basis. There is a 30-day public consultation period before releasing a new version of the B Corporation assessment. [19]

Currently the B Corp Impact Assessment is its sixth version which released in January 2019. [22]

Requirements

Certification also requires companies to integrate their stakeholder commitments into the company governing documents. In the United States, the avenue for corporations making the legal amendment to certify will depend on the state in which they are incorporated. Some states, known as "constituency" states, will allow for this change in the articles of incorporation, but other states, known as "non-constituency states", will not; and many states now have the option of adopting the benefit corporation legal structure, which also meets B Lab's requirements for B Corp certification. [23] Beyond the corporate model, other for-profit business entities make an amendment of the company by-laws or governing documents. These include:

However, B Lab certification allows the company bylaws to remain secret.

The fact that B Corp standards are not legally enforceable, and that none of a companies' governing bodies and leadership are liable for damages if a company fails to meet them has also been flagged as a problem. [27]

Verification and transparency requirements

On completing the assessment, a company is required to meet certain transparency requirements and background checks to become a certified B Corp. These requirements are: an in-depth review of public record of the companies, employees, products and other relative topics and randomised site visits. [28] Companies are required to re-certify every 3 years.

Notable B Corporations

Notable B Corporations include:

A corporation displaying signage in their workplace highlighting that they are B certified with a description of what that certification entails. B Corp.jpg
A corporation displaying signage in their workplace highlighting that they are B certified with a description of what that certification entails.

In 2021, BrewDog, a Fully Certified B Corp, was accused by former staff as having a "rotten culture". [44] BrewDog's B Corp status was subsequently rescinded. [45] In 2024, B Corp-certified bottled water brand Aqua topped the audit of Indonesia’s biggest plastic polluters. [46]

In 2022, 30 Certified B Corps joined together with certification watchdog Fair World Project to petition against Nespresso's Certification as a B Corp, [47] considering only 28% of their aluminum capsules are recycled. [48] B Lab’s decision to certify corporations with single use products, effectively putting these companies into the category of good corporate citizens, has resulted in accusations of greenwashing. [49] [50] [51] B-Corp is described as “capitalism through certification," with calls for more fundamental reforms that prioritize shared prosperity, democracy in the workplace, and sustainability. [52]

In July 2024, four Havas agencies lost their B Corp status over work for Shell plc. [53]

International adoption

In November 2024, there were 9,187 certified B Corporations across 161 industries in 216 countries, including Canada (1079 companies), Australia (1032 companies), France (1232 companies), United Kingdom (3144 companies), South Africa, and Afghanistan. [2] The most active community outside of the United States is Sistema B. [54] Since 2012, Sistema B has been the adaptation of the B Corps movement in Latin America, including in Argentina, Brazil, Chile, Uruguay and Colombia. [55] This non-profit adapts proprietary certifications and evaluation metrics and modifies both to the context of each country. B Lab also assists Sistema B in incorporating a benefit corporation distinction into local legal systems. [56]

See also

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References

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  2. 1 2 "B Lab Global Site". B Lab . Retrieved 29 August 2023.
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  19. 1 2 3 "GIIRS Governance". B Lab. Archived from the original on September 30, 2012. Retrieved September 11, 2013.
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  26. ↑ See Lencioni (July 2002).
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  32. ↑ "Coursera Receives B Corp Certification". blog.coursera.org. 2021-02-02. Retrieved 2022-04-10.
  33. 1 2 3 "B Corps Grow Up (SSIR)". ssir.org. Retrieved 2021-08-20.
  34. ↑ "Ethique has been named the most environmentally responsible company in New Zealand". MINDFOOD. Retrieved 2021-08-20.
  35. ↑ LeBus, Mary (4 July 2023). "Award-winning ice cream shop makes a new home in Cincinnati". Fox19. Retrieved 26 October 2023.
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  41. ↑ "Weleda is now a B Corp".
  42. ↑ "Mijenta becomes the first tequila to receive B Corp Certification".
  43. ↑ https://www.bcorporation.net/en-us/find-a-b-corp/company/the-human-beauty-movement-pbc/
  44. ↑ "Former BrewDog staff accuse craft beer firm of culture of fear". The Guardian . Retrieved 2021-09-05.
  45. ↑ Sweney, Mark; Davies, Rob (2022-12-01). "BrewDog loses its ethical B Corp certificate". The Guardian. ISSN   0261-3077 . Retrieved 2023-08-15.
  46. ↑ Hicks, Robin (2024-02-20). "B Corp-certified bottled water brand Aqua tops audit of Indonesia's biggest plastic polluters". Eco Business. ISSN   2322-8326 . Retrieved 2024-02-27.
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  48. ↑ "Nespresso: Known for Human Rights Violations, Now B Corp Certified". fairworldproject.org. Fair World Project. 4 May 2022.
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  53. ↑ Ormesher, Ellen (2024-07-18). "Havas Agencies Lose B Corp Status Over Work For Shell". DeSmog. Retrieved 2024-07-18.
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  56. ↑ Ip, Melissa (September 26, 2012). "B Lab and Sistema B Partner to take B Corps Global". Social Enterprise Buzz. Archived from the original on 28 June 2017. Retrieved September 11, 2013.

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