Let’s start off with a reminder on what we mean by ‘B Corp’. Certified B Corps are companies that have achieved a score of 80 points or more on the B Impact Assessment (BIA) and have had their practices validated by the third-party, non-profit, B Lab.
These companies are assessed on their policies and performance under 5 categories; Governance, Workers, Community, Environment and Customers.
They are for profit entities that are expected to uphold the highest standards of social and environmental performance, transparency and accountability.
B Corps are committed to a stakeholder governance model, striving to strike a balance between profit and purpose, using business to make a positive impact on society or commonly referred to as “using their business as a force for good”.
The B Corp certification validates and embeds the principles of interdependence, transparency and accountability. It’s the only certification that exists globally across all industries, where the community of businesses who hold the certification are encouraged and do hold each other accountable as well as actively participate in the improvement of the standards.
It’s fair to say then that it’s not just a certification but it’s also a movement, a movement toward making stakeholder governance practices the norm in business and it's a movement designed for consistent progress rather than just a moment in time.
However, as with all things increasingly in the spotlight, there has been some negative press around B Corp and B Lab recently. The B Corp movement came under much scrutiny last year as larger companies began to certify in the lead-up to the launch of an assessment for multinationals. Small, purpose-led brands questioned why companies with a historically high negative environmental impact, like Nestle’s Nespresso or multiple Danone-owned businesses, were able to pass the Assessment.
Another cause for concern was BrewDog leaving the B Corp movement in December 2022. It is still unclear whether the brewer voluntarily stepped aside or was stripped of its status, after a BBC documentary uncovered allegations of abuse of power. BrewDog was also criticised last year for its approach to forest restoration in Scotland. Locals accused the firm of driving up land prices and limiting public access.
Understandably this has led to people questioning if B Corp certification means as much as people think.
So, what do we think at Actus?
Since we’ve have been working in the B Corp community, we’ve seen many improvements to the standards, risk assessments and disclosures; we’ve also seen companies lose their certification. The process to not just certify, but to improve on your performance ongoing, means that those who don’t embed B Corp values in their leadership style and workplace culture correctly, will often fail on their certification at some point.
Most people also don’t realise that there’s a disclosure portion of the assessment. Even the highest scoring B Corp, Dr Bronner’s, includes public disclosures on issues which require additional context. This portion of the assessment is an additional layer of transparency, accountability and an opportunity to report on corrective actions if required.
B Lab can’t police this movement entirely on their own. It’s intended to be a community focused, inclusive movement – a force for good. And as a community, we need business leaders, employees and other stakeholders to challenge those who aren’t acting responsibly or maintaining their legal requirement under B Corp certification to consider all stakeholders in their decision making. That’s the power of the declaration of interdependence and it should be activated.
The B Corp movement has created a platform for us as leaders to challenge each other on what is best practice and what responsible business really means. The examples provided above demonstrate the power of the pressure from the community, these were B Corps who were holding BrewDog accountable and holding the bar higher for B Lab itself.
It's certainly not a perfect system, and there are improvements to be made, but it’s the only system to date that has generated the greatest action toward moving the needle on stakeholder governance and away from shareholder primacy.
And B Lab recognise this too, with new standards in development for 2025, that will be a lot tougher and less ambiguous; what we know is there will be mandatory performance requirements across eight Impact Topics. And a company’s eligibility to pursue and retain B Corp certification will be assessed against ‘Foundation Requirements’ (including a risk assessment) before the company’s practices are reviewed against the ‘Performance Requirements.’
And this won’t just apply to those new to B Corp; those already certified companies who are not doing the work now may lose their certification against the new criteria.
The devil will, of course, be in the detail, but we very much welcome the direction of travel; the new standards will bring more clarity to what it means to be a B Corp, as well as ensuring that all B Corps take meaningful action on key issues of our times. It will mean a tougher certification process, no doubt, but being rigorous is key.
As B Lab Global’s director of standards Judy Rodrigues says, “It’s important that the standards enable businesses to achieve meaningful progress towards a more inclusive, equitable and regenerative economy while remaining within reach for all kinds of businesses across the globe,”
By recognising that new standards are needed is a natural evolution of what it means to be a B Corp; certification will become more relevant than ever before, and the community will be more empowered via collective action.
For us, B Corp certification has not lost its purpose or value. It provides, and will go on to provide, a model for the mainstream corporate world whilst helping all companies embody and live a true social purpose. It’s at a crossroads, for sure, but it’s addressing that openly and collaboratively whilst looking at the direction it is going and how to take us all there.
As those companies who sign up to go through the B Corp certification process, B Lab themselves are now requiring dedication, courage and resilience to take this forward.
If you're interested in B Corp benefits, the certification process, or purpose-driven business models, contact the actus Consulting team at 020 8133 1845 or partners@actus.consulting.
We have extensive experience in building stakeholder governance into businesses and are ready to guide you on this transformative journey.