Since its establishment in 2006, B Corp certification has become one of the most recognizable indications of sustainable business practices across the globe.
It has become comparable to Fair Trade or USDA Organic certification applied to certain foodstuffs—a powerful marketing tool that makes products instantly stand out from their non-organic competition.
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What is a B Corporation?
A certified B Corporation, or B Corp, is a for-profit enterprise. According to B Lab, a non-profit organization that measures other companies’ social and environmental impact against a set of sustainability and transparency standards, and certifies companies with B Corp status accordingly, a B Corp meets “the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose.”
Companies certifying as B Corps should do no harm, and their products, services, and business practices should benefit all stakeholders. B Lab defines stakeholders as workers, community, customers, and the environment.
According to B Lab, when starting a business, five conditions that B Corps must meet are:
- Accountability. Directors must consider the company’s impact on all stakeholders.
- Transparency. Companies must publish and make a public report of social and environmental performance.
- Performance. Companies must attain a minimum score on the B Impact Assessment and file to recertify every three years.
- Availability. Any business can become a B Corp, regardless of its country or state of incorporation.
- Cost. Companies pay certification fees to B Lab, with the size of the fee depending on their revenues.
B Lab sorts certified B Corps into four categories:
- Multinational and public corporations
- Companies with related entities
- Internationally certified B Corps
B Corps voluntarily opt into B Lab’s assessment program. As part of that assessment, they undergo a rigorous B corporation certification process, detailed below.
What is B Corp certification?
B Corp certification is awarded to businesses that meet stringent social and environmental performance, accountability, and transparency standards. B Lab assesses whether the company has a positive impact on its workers, community, customers, and the environment.
The B Corp certification process involves an in-depth assessment that scores you on things like governance, transparency, environmental practices, and more. You must score at least 80 out of 200 points and incorporate B Lab commitments into its legal structure.
Once certified, you have to maintain those standards and are reevaluated regularly.
Advantages and disadvantages of a B Corp
Trying to decide whether becoming a B Corp is a good idea for your business? Let’s look at some reasons why and why not.
- Enhanced corporate responsibility and accountability: A B Corp considers the impact of its decisions on all stakeholders, not just shareholders. The result is a higher level of responsibility, ethical practices, and transparency, which builds trust between you and your customers.
- Differentiation in the marketplace: Getting B Corp certification shows your commitment to social and environmental responsibility. You’ll attract loyal customers who share your values and create a competitive advantage.
- Attract and retain talent: Many employees, especially younger generations, are looking for employers with strong values. It’s easier for B Corps to hire and retain talented people who are motivated by a sense of purpose.
- Access to capital and partnerships: Investors, funds, and partners like sustainable and responsible businesses. Getting a B Corp certification can help open doors to financing and collaborations you wouldn’t otherwise get.
- More resilience: By balancing profit with social and environmental wellness, B Corps can build a more resilient and sustainable business model that weathers economic fluctuations and changes in consumer trends.
- Costs: B Corps have to pay an annual fee to keep its certification, which can cost anywhere between $1,000 and $50,000.
- Compliance: Maintaining B Corp certification requires constant effort. This means regular monitoring, reporting, and possibly changing business practices, which can be resource-intensive.
- Potential for greenwashing accusations: A B Corp may be accused of greenwashing if its certification is perceived as primarily a marketing tool. It can damage a company’s reputation and undermine its stakeholders’ trust.
B Corps vs. benefit corporations
“B Corp” is often mistaken as an abbreviation of “benefit corporation.” While benefit corporations share some similarities in mission with B Corps, they are distinct in several significant ways—namely, benefit corporations have no association with B Lab.
What is a benefit corporation?
A benefit corporation is a traditional type of corporation, like a C corp legal entity, that modifies its practices to commit itself to higher operational standards, accountability, and transparency. Benefit corporations tend to commit to creating public benefit and adding sustainable value in addition to turning a profit.
Similarities and differences
In their commitment to prioritizing stakeholder benefit globally and in the local community, benefit corporations and B Corps are alike.
Directors of B Corps and benefits corporations must consider a company’s impact on all stakeholders and publish reports about its social and environmental performance, measuring it against third-party standards. However, they differ in who issues the certification, availability, and cost.
- Availability: Benefit corporation status is only available in 30 US states and DC. Oregon and Maryland offer benefit LLC options. B Corp certification is available to any business, regardless of location.
- Accountability, transparency, and performance: B Corps are certified (and must be recertified) by B Lab analysts. State agencies enforce eligibility standards for benefit corporations, but the corporation is responsible to self-report performance. Government regulators won’t assess a benefit corporation’s ongoing performance.
- Recognition: B Corp status is a private certification provided by an independent nonprofit that offers third-party, objective performance evaluation. Companies that obtain B Corp status can use the Certified B Corporation logo from B Lab in their marketing materials. A benefit corporation is a status recognized by government authorities, but the government’s responsibilities end once benefit corporation eligibility is determined.
- Cost: Benefit corporations necessitate between $70 and $200 in state filing fees. B Lab certification fees range from $500 to $50,000, based on company revenues.
If you’re interested in obtaining B Corp certification, your first step is to reflect on whether your business meets or is close to meeting B Lab’s standards.
Do you already have community-minded sustainability practices in place? If so, you can prepare to sit for the B Corp Impact Assessment, which is free to take. Even if you choose not to pursue certification, assessing your own company’s sustainability practices this way can be useful if your goal is to make your company more environmentally and socially conscious in its practices.
Examples of B Corp companies
DAME is a UK-based company that makes sustainable feminine care products. The brand has created a reusable tampon applicator, along with organic cotton tampons and more, aiming to reduce single-use plastics commonly found in these products.
Teapigs makes whole leaf tea and accessories. As part of its commitment to sustainability, it uses biodegradable or recyclable packaging, and its tea temples are made from plant starch.
Finisterre is a UK-based outdoor clothing brand designed for those who love the sea. It combines innovative materials with a strong focus on sustainability and ethical manufacturing practices, creating products for surfers and coastal explorers that minimize environmental impact.
Known Supply is a US-based clothing brand that emphasizes human connection in the apparel industry. By offering clothing that is responsibly sourced and produced, it prioritizes fair labor practices and seeks to build a more transparent connection between consumers and the people who make their clothing.
How to get certified as a B Corp
A company’s pathway to becoming a certified B Corp will vary depending on several factors, including sector, industry, scoring, and ownership structure.
B Lab estimates the process takes six to eight months for small to mid-sized companies. Generally speaking, the steps are as follows:
Register for the B Impact Assessment. There’s no cost associated with this step.
2. Complete pre-work
Learn the specific legal requirements of B Corp certification for your company. B Lab provides an interactive tool for determining legal requirements on its website, based on location, type of business, corporate status, and other factors.
If you are applying as a multinational company, complete a risk review provided by B Lab—a pre-screening process that takes a more rigorous look at a multinational’s history, operating procedures, goals, and public image to determine B Corp eligibility.
Gather supporting documentation and data for the B Impact Assessment.
Complete the B Impact Assessment online for initial scoring. (Note: Completing the B Impact Assessment does not constitute a finalized application.)
Some sample questions might concern the company’s processes for sharing financial information, how its compensation structure compares with the market, how supplier quality control is conducted, or whether it employs any energy efficiency programs. Answers are typically multiple choice and are sometimes organized on a scale (i.e., very often, often, somewhat often, rarely, never, etc.).
Establish a company profile, which you will be prompted to do once you complete most of the assessment, and start a disclosure questionnaire. At this point, your baseline score will be revealed. If it is under the 80-point mark, you may need to reevaluate your company and improve in certain areas before taking the assessment again.
If you’re over the 80-point mark, submit your B Impact Assessment for review. At this point, you’ll pay a $150 submission fee.
B Lab determines your eligibility by having an analyst review your company profile and assessment. You may be asked follow-up questions about your employees and suppliers.
Have a review call with an analyst, during which you’ll go through the verification report prepared by the analyst and provide your previously gathered documentation backing up your answers on the assessment.
If an analyst verifies you’ve passed the 80-point threshold, you’ll enter post-verification and sign a B Corp Agreement. After signing the agreement, you will be officially certified as a B Corp. You’ll pay a yearly certification fee, depending on the size and earnings of your company.
Want to become a certified B corporation? Apply today
It’s clear that joining the B corp movement can benefit your bottom line. Brands like Patagonia and Ben & Jerry’s have leveraged its certification to promote the social mission, creating extra shareholder value and making a positive impact on the world.