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.