The ABC's of Becoming a B Corp

In today's rapidly evolving global business landscape, the pursuit of profit no longer stands alone as the primary objective for many companies. With increasing awareness about social and environmental issues, stakeholders are demanding more from corporations than just strong financial returns at any cost. This paradigm shift has given rise to a new breed of businesses - Certified B Corporations, or B Corps, that are redefining success by balancing purpose and profit. For global business leaders, obtaining B Corp certification isn't just a badge of honor. It's a strategic imperative that unlocks numerous benefits for the company, its clients, partners, and employees. These leaders believe in the power of business as a force for good.

Started by the non-profit B Lab, B Corp accreditation is awarded for social and environmental performance, transparency, and accountability.  This is a way for companies to demonstrate their sense of social responsibility and prove their commitment to balance purpose and profits.

Initially only open to US firms, 82 businesses led the first wave of B Corps in 2007.  Since then, the movement has expanded globally and now there are now more than 8000 B Corps in 97 countries, across 162 industries.

What are the benefits of being a B Corp?

With the increasing focus and importance placed on Environment, Social, and Governance (ESG) issues, B Corp certification has become an important differentiator.   In this time of urgent environmental challenges as well as social inequity, many consumers, especially millennials and Gen Z expect more from the brands they shop at and organizations they work for. B Corp certification instantly elevates a company's reputation as a socially responsible and environmentally conscious entity and helps communicate purpose to customers and employees.

Additionally, research consistently shows that, on average, B Corps have higher revenue growth and increased access to capital than their traditional counterparts.  In the current environment, investors increasingly favor companies with a demonstrated commitment to social and environmental responsibility.

In today's competitive job market, many employees seek purpose-driven organizations that align with their values. B Corps have a distinct advantage in attracting and retaining top talent who are passionate about making a positive impact through their work.   Also, B Corps invest in employee development programs that focus not only on professional growth but also on fostering values-aligned leadership and social responsibility.  Lastly, B Corps prioritize employee well-being by offering flexible work arrangements, wellness programs, and supportive workplace cultures. Employees often experience less burnout and greater work-life balance, leading to higher levels of satisfaction and performance.

Additionally, implementing sustainable practices not only reduces a company's environmental footprint but also leads to significant cost savings over time. From energy-efficient operations to waste reduction initiatives, B Corps optimize resource utilization while minimizing expenses.

As a B Corp, businesses can engage in community events and connect with other B Corps as the community facilitates collaboration and idea sharing with like-minded leaders, outside of discrete industries and regions.

There are also benefits to partners, both clients and suppliers.  Many partners prioritize doing business with companies that prioritize social and environmental responsibility. This is important when looking at scope 3 emissions.  B Corp certification serves as a seal of approval, assuring stakeholders of the company's commitment to ethical business practices.  Additionally, there is an alignment of values which fosters stronger relationships built on mutual trust, respect, and shared goals of driving positive change.

 What’s the Process to Become a B Corp ?

To be eligible to apply for B Corp certification, a business must be for-profit and have been in operation for a year.  

There are multiple stages to becoming a B Corp – assessment, verification, certification. The first is to measure your business impact through The B Impact Assessment.  This robust assessment is divided into five stakeholder-focused “Impact Areas”:  Governance, Workers, Community, Environment, and Customers.   

The confidential assessment scores your company’s accountability and transparency, its impact on employees, the community and the environment, as well as the beneficial impact of its products or services.  It also allows you to benchmark your social and environmental performance against other companies. It’s a great ESG “health check” for your business as well as a great opportunity for internal reflection and refocus.  Most organizations discover many hidden growth/transformation/innovation opportunities when doing such a thorough check under the hood. And for organizations that are now starting or enhancing their ESG program, this assessment could be a great foundation to kick-start your process. 

The B Corp certification journey is a comprehensive and challenging process so it’s imperative that executive leadership has bought in from the start, that a clear direction is set for the company and this process and prioritization has been shared with employees.  The assessment requires a significant time commitment from employees from multiple different teams, so this directive must not only come from the top but be well communicated and exemplified across the organization so everyone understands their part in this activity.

There is also a legal requirement which must be met by all companies to demonstrate an ongoing commitment to the triple bottom line of people, planet and profit. This involves an update to the company's Articles of Incorporation or equivalent governing document, reincorporating as a benefit corporation, or making other structural changes and requires sign-off from the board of directors.  This is the key differentiator between B Corps and traditional companies. B Corps are not only required to create shareholder value, but also to account for the impact of their actions on other stakeholders.

How long does it take to become a B Corp?

The length of this process can vary. For businesses that are already operating with a robust ESG program and metrics, the assessment process might only take a matter of months. But it’s not uncommon to take 18 months to several years to complete, again depending on the level of sophistication of your processes and policies as well as the ESG metrics you are already tracking.  There are often many conversations with and lots of support from the B Corp Lab team as they go through a very thorough verification process which can take 6 months or more.

Becoming a B Corp isn’t meant to be an easy process and many businesses don’t get certified the first time they apply.  But if you’re a mission-driven leader then you’ll ensure you take advantage of the identified opportunities for improvement and persevere in the process. 

Different types of companies will have issues in different areas.  For example, some manufacturing firms may struggle to comply with requirements around ethical sourcing, environmental impact, and a lack of transparency in the supply chain.   However, travel to client locations and diversity and equity may negatively impact the score for professional services firms.  Every organization is unique.

Of course, B Lab accreditation is only the first step and recertification is required every three years to maintain B Corp status. 

As B Lab is also focused on continuous improvement, a new iteration of the B Corp certification process is scheduled for release in 2024. B Lab has indicated that it will be the biggest evolution of the standards so far, driven by the urgency and scale of challenges such as the climate crisis and to improve clarity of standards.

As part of the changes, minimum standards will be introduced across 10 categories. Companies will have to meet the minimum criteria in each category to become a B Corp, rather than relying on a passing overall score as is the case today. The hope is that this evolution will prevent businesses that perform well in the majority of areas, but have a poor record in one area, such as the environment, from becoming B Corps, or help them to evolve in the areas where they are deficient.

Running a B Corp requires visionary leadership that prioritizes purpose, transparency, and long-term sustainability over short-term gains. It's about inspiring teams to rally behind a shared mission of using business as a force for good, driving positive change in society and the environment.