Introducing B Corporations: a new model for socially responsible businesses
The B Corp movement started in 2006 when a group of entrepreneurs, investors, and nonprofit leaders came together to explore how they could create a new type of corporation that was designed to benefit society as well as shareholders. They wanted to create a legal structure that would protect mission-driven companies from pressure to prioritize profits over social and environmental responsibility.
In 2007, this group of individuals founded B Lab, a nonprofit organization that developed the B Corp certification and assessment process. The B Corp certification evaluates a company’s social and environmental performance, accountability, and transparency. To become a certified B Corp, a company must meet rigorous standards and undergo an independent assessment.
The B Corp movement gained momentum in 2010 when the first state-level benefit corporation legislation was passed in Maryland. Since then, over 35 US states and several countries have passed similar legislation, recognizing the legal status of benefit corporations and providing a legal framework for businesses to prioritize social and environmental impact alongside financial returns.
Today, the B Corp movement has grown to include thousands of businesses around the world, spanning a diverse range of industries and sizes. The movement has helped to create a new paradigm for business that prioritizes creating shared value for all stakeholders, including employees, customers, communities, and the environment.
The certification process: how to become a certified B Corporation
Any for-profit business, regardless of its size or industry, is eligible for B Corp certification. The B Corp certification evaluates a company’s impact on its workers, community, customers, and the environment. The assessment covers a wide range of areas, including governance, employee benefits, environmental practices, supply chain management, and social responsibility.
To be eligible for certification, a business must achieve a minimum score on the B Impact Assessment, which is the tool used to evaluate a company’s performance against the B Corp standards. The assessment is comprehensive and covers a wide range of topics, so businesses typically need to invest time and resources to prepare for and complete the certification process.
Once a business achieves certification, it must maintain its performance and meet ongoing requirements to remain certified. The certification is valid for two years, after which the business must recertify to maintain its status as a certified B Corp.
Overall, any for-profit business that is committed to using business as a force for good can pursue B Corp certification, regardless of its size, industry, or location.
The length of time it takes to become certified as a B Corp varies depending on several factors, including the size and complexity of the business, the availability of data and documentation, and the level of preparation and resources the business has dedicated to the certification process.
On average, the certification process can take anywhere from six to 12 months, although some businesses have been able to complete the process in as little as three months. However, the process can take longer for larger or more complex businesses.
The certification process involves several steps, including completing the B Impact Assessment, providing supporting documentation, and undergoing a verification process to confirm the accuracy of the assessment results. The verification process includes a review of the business’s financial, legal, and operational practices, as well as an on-site assessment for larger businesses.
In addition to the certification process, businesses also need to complete a B Corp legal requirement, which involves amending their articles of incorporation to reflect their commitment to the B Corp values and mission.
Overall, becoming a certified B Corp is a rigorous process that requires a significant investment of time and resources, but it can provide many benefits for businesses that are committed to using business as a force for good.
The cost of becoming a certified B Corporation: an investment in social and environmental responsibility
The cost of becoming a Certified B Corporation varies depending on several factors, including the size and complexity of the business, the country or region where the business is located, and the level of support and services the business requires.
The certification fee is based on a sliding scale, which takes into account the business’s annual revenue. The fee ranges from $500 to $50,000, with the average fee being around $2,500. The fee is designed to be affordable for small businesses while also allowing larger businesses to pay a higher fee based on their size and revenue.
In addition to the certification fee, businesses may incur other costs associated with the certification process, such as the cost of hiring a consultant to help with the assessment or the cost of making changes to their operations or supply chain to meet the B Corp standards.
B Lab, the nonprofit organization that certifies and supports B Corporations, also offers additional services and support to help businesses maximize their impact and maintain their certification status. These services may include access to resources, events, and networking opportunities, as well as assistance with the recertification process.
Overall, the cost of becoming a Certified B Corporation is relatively low compared to other certification programs, and it is designed to be affordable for businesses of all sizes. The certification fee can be seen as an investment in the business’s long-term success and impact, as becoming a B Corp can help businesses attract customers, employees, and investors who are looking to support businesses that prioritize social and environmental responsibility.
The importance of transparency for certified B Corporations
Certified B Corporations are required to be transparent about a variety of information related to their social and environmental impact, governance practices, and business model. This transparency is a key part of the B Corp certification process and helps to ensure that certified companies are accountable to their stakeholders and committed to using business as a force for good.
Some of the information that B Corps must make transparent includes:
- B Impact Assessment: B Corps must complete the B Impact Assessment, which is a comprehensive evaluation of their impact on their workers, community, customers, and the environment. The results of the assessment are made public on the B Corp website and are available for anyone to view.
- Annual Benefit Report: B Corps must prepare and publish an annual benefit report that provides detailed information about their social and environmental impact, governance practices, and business model. The report is required to be transparent and accessible to stakeholders, and it must be verified by an independent third party.
- Governance Documents: B Corps are required to make their articles of incorporation, bylaws, and other governance documents available to the public. These documents provide insight into the company’s mission, values, and commitment to social and environmental responsibility.
- Supply Chain Information: B Corps are required to disclose information about their supply chain, including their suppliers, sourcing practices, and efforts to ensure fair labor practices and environmental sustainability throughout the supply chain.
Overall, Certified B Corporations are required to be transparent about a wide range of information related to their impact, governance, and business practices. This transparency helps to build trust with stakeholders and demonstrate the company’s commitment to using business as a force for good.
The future of the B Corp movement: trends and possibilities for socially responsible businesses
The B Corp movement is important because it is promoting a new paradigm for business that prioritizes creating shared value for all stakeholders, including employees, customers, communities, and the environment. By becoming certified, businesses can demonstrate their commitment to these values and differentiate themselves from their competitors, while also benefiting from increased consumer and investor trust.
Possible future trends for the B Corp movement may include continued growth in the number of certified B Corps, as more businesses recognize the benefits of becoming certified and more countries pass legislation to support benefit corporations. Additionally, we may see an increase in collaboration and partnerships between B Corps and other stakeholders, such as nonprofits, governments, and impact investors, to drive social and environmental change at a larger scale. The B Corp movement may also lead to increased adoption of sustainable business practices and a shift towards more equitable and just business models that prioritize the well-being of all stakeholders.
Interesting facts
- There are currently over 3,800 B Corps in 74 countries, spanning 150 industries. (B Corp, 2021)
- The B Corp movement has grown rapidly in recent years, with the number of certified companies increasing by over 500% since 2015. (B Corp, 2021)
- A study by the Harvard Business Review found that B Corps outperform their peers in terms of employee satisfaction, brand reputation, and social and environmental responsibility. (Harvard Business Review, 2019)
- Companies that prioritize social and environmental responsibility have been shown to attract and retain top talent, with 80% of millennials stating that they prefer to work for a company that cares about its impact on society. (Deloitte, 2018)
- Sustainable investment funds are outperforming traditional funds, with socially responsible funds seeing a 4.4% increase in assets under management in 2020. (Morningstar, 2021)
- The COVID-19 pandemic has highlighted the importance of companies prioritizing social and environmental responsibility, with many companies adopting measures such as hazard pay, paid sick leave, and donations to pandemic relief efforts. (Forbes, 2020)
- B Corps are attracting investment from impact investors and mainstream investors, with over $8 billion in investments in B Corps to date. (B Corp, 2021)
- The B Corp movement has helped to shift the conversation around business from a focus on shareholder value to a focus on creating shared value for all stakeholders. (Harvard Business Review, 2019)
- According to a study by Nielsen, 66% of consumers are willing to pay more for products and services from companies that are committed to social and environmental responsibility. (Nielsen, 2015)
- A survey by Cone Communications found that 94% of consumers would switch brands to support a company that was committed to social and environmental responsibility. (Cone Communications, 2015)
