image/svg+xml

Resources

What is a B Corp business, and should your business become one?

people picking up plastic from a grassy space and putting it into black bin bags

If you’re a business owner, you may have heard about other companies being described as a “B Corp business”.

The idea of a B Corp was founded by B Lab, a network of non-profit organisations looking to create a working model of stakeholder governance that promotes ethical business behaviour.

But what exactly is a B Corp business? And is it worth applying for B Corp status for your business?

What is a B Corp business?

“B Corp” is short for Certified B Corporation. To become a B Corp business, the company must meet B Lab’s criteria regarding business transparency, accountability, and performance.

The concept behind B Corps is to encourage businesses to contribute to society’s biggest issues.

This means the company must balance profit and “purpose”, meeting the highest standards of social and environmental performance, public transparency, and legal accountability.

In turn, they must then use their profits to continue promoting these values, creating a positive impact for their employees, communities, and the environment.

B Corp businesses are different from benefit corporations, in which a company is legally able to pursue positive stakeholder impact alongside profit.

While they aren’t the same thing, it’s possible for businesses to be both a B Corp and a benefit corporation.

PWC report that there are 193 B Corporations in the UK, including well-known names such as JoJo Maman Bebe, Innocent drinks and Abel & Cole.

You must be certified to become a B Corp business

To become a B Corp business, you must meet the certification criteria set by B Lab and its Standards Advisory Council.

Businesses must complete the B Impact Assessment to determine whether they can become a B Corp. This involves a survey with around 200 questions based on the company’s size, sector, and market to assess both what they do, and how they do it.

To become verified, the business must score a minimum total of 80 across all impact areas.

Source: PWC

The business must also complete a separate Disclosure Questionnaire, involving background checks, a public complaint process, and an opportunity to mention any sensitive practices, fines, or sanctions that may be relevant.

While the Disclosure Questionnaire won’t have an impact on the B Impact Assessment score, any information that’s deemed “material” could see a company required to change their behaviour to achieve status. It could also see their Certification denied, or even revoked after it’s been granted.

The B Impact Assessment is free, and fees to become a B Corp start as low as $1,000 and scale up based on business revenue.

Currently as of July 2021, B Lab estimate that it takes 6 to 10 months for them to complete a review of an application. Of those that apply, they report that one in three achieves B Corp status.

Why is it useful to become a B Corp business?

The main reason why you might want your business to be a B Corp is that it gives you access to the B Corp community.

With businesses in more than 70 countries, this network helps businesses to support one another. This could include supporting each other financially, giving referrals to each other, or even to impact policy and legislation for the greater good in their respective countries.

As a result of their strong environmental, social, and governance behaviours, publicly listed B Corps may also see investment managers include them in their “ethical” funds. This widens their availability to investors, boosting their visibility and making it possible to receive even more investment.

Issues with B Corp certification

However, just because a company has achieved B Corp certification, it doesn’t necessarily mean it’s entirely free from bad ethical behaviour.

For example, Ben & Jerry’s, one of the most well-known ice cream brands in the world, has achieved B Corp certification. They’re now well known for supporting causes they believe in and hosting fundraisers through their social media channels.

However, Ben & Jerry’s is owned by consumer products giant, Unilever. Unilever is regularly criticised for its lack of support for environmental pledges, as well as governance issues throughout its supply chain.

Despite pledges of corporate responsibility, reports published as recently as 2017 in the Guardian and in Forbes both criticised Unilever of gesture politics that failed to make any tangible difference to the way the company is run.

As a result, while Ben & Jerry’s may meet the criteria to be a B Corp, you could certainly make a case for Unilever not meeting the same standards. That means other B Corp businesses looking to support Ben & Jerry’s good behaviour indirectly also support Unilever.

Is it worth becoming a B Corp business?

Overall, the choice to become a B Corp business is personal to the business owners.

If you’d like your business to have a wider, positive social impact, applying for and attaining B Corp status is a great way to align your values with your operations.

It also gives you access to the B Corp community, expanding your professional connections and giving you the opportunity to grow alongside like-minded business owners.

On the other hand, even without the accreditation, your business can still be a force for good in the wider community.

You can still have strong governance principles and promote good environmental and social practices in your business, whether it’s recognised by a professional body or not.

Get in touch

If you’re a business owner and you’d like to get the financial side of your affairs in order, we can help. Email hello@sovereign-ifa.co.uk or call 01454 416653.

What do our clients have to say?