Is B Corp certification good or bad for business?

They're the (relatively) hot new thing that everyone's talking about, making companies more ethical and sustainable – then the giant multinationals came along.
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So, what’s the B Corp movement all about?

‘Regardless of industry, it’s about good practices and being a good business that is putting out a good force,’ says Flo Glendenning, the sustainability lead at supplement brand The Nue Co

She’s talking about the (relatively) hot new thing that everyone is talking about in the world of modern business: B Corp Certification. That’s the designation that a business can receive once it meets rigorous standards of performance, accountability and transparency across a range of factors including employee benefits and supply chain practices. In practice, this means the business makes decisions that are respectful, sustainable and ethical towards the environment, community and staff.

‘The whole principle is that you don’t put profit over people and the planet,’ says Laura Slack, an expert in B Corp who consults for companies all over the world looking to certify. ‘Yes, you can make a healthy profit, but you must also consider the planet and people too through all of your business decisions.’

The origins of the B Corp can be traced back to 2005 in the US, when Jay Coen Gilbert and Bart Houlahan sold their basketball footwear company, AND1. When the new owner stripped back the social responsibility framework they’d installed – things such as parental leave, charitable donations and fair wages – they teamed up with their friend Andrew Cassoy to launch a non-profit to hold companies accountable for the ways they benefit their stakeholders, rather than shareholders. 

B Lab, as they called it, was founded in 2006, and it gave out over 80 B Corps the following year, all small and medium-sized independent businesses with robust, purpose-driven agendas. 

Presumably there are many more B Corps today?

That’s right. There are more than 6,000 B Corps spread globally across hundreds of industries from beauty and fashion to finance and technology. As founders and investors continue to push for higher environmental and social responsibility, and young adult customers almost expect it, the number of companies seeking to certify has been accelerating. 

For example, the number of new B Corps more than doubled last year, and it’s proving particularly popular in the UK, where there are more than 1,300 B Corp companies. That’s the highest number relative to its population in the world. Some companies are investing years to certify their businesses as B Corps, and the membership boasts a 96% retention rate. 

Give us some examples… 

One such company is Haeckels, which finally achieved its certification in December 2022. Finally, because it was a slog. It took the natural skincare and fragrance brand around two years, with several staff members working hard on it. It was important to show the world that there is ‘a way of building a business without screwing over somebody in your supply chain,’ explains Charlie Vickery, the managing director at Haeckels.

But it’s also a way of proving that the  brand’s claims of being sustainable and socially conscious were legitimate: that it’s walking the walk, not just talking the talk. There wasn’t such a need 10 years ago, when the company started, because fewer companies were making such claims. ‘As more and more people are doing it, B Corp certification has become kind of a necessity,’ says Charlie. ‘Because it’s such a rigorous approval process, it becomes a really good badge of honor to have.’

A badge of honor sounds good, right? 

Well, B Corp certification does give companies a competitive advantage. A 2021 Deloitte survey showed that around a third of consumers look for brands with strong sustainable and ethical credentials. 

But it also helps them to build trust with suppliers, draw mission-driven investors, and to attract and retain employees. This is according to data from B Lab UK, the UK arm that sits under B Lab Global, which administers the audit process. 

‘Millennials, coming into the workforce, they care and they’re far more aware,’ says Laura Slack, ‘and I think this generation now wants to be working for people who are doing good, and they want to buy from companies who are doing good.’ 

For this reason, the logo, a black encircled B, is prevalent on product packaging and websites. (Once you know what it looks like, you start seeing it everywhere.) 

Meanwhile, ‘investors want to know that their money is going to good companies,’ Laura adds. Between 2011 and 2020, social impact investing in the UK rose from £833 million to £6.4 billion, indicating the growing appeal of socially conscious businesses. 

According to Charlie at Haeckels, B Corp certification also helps companies to better themselves. To achieve and maintain the status, companies have to undergo a comprehensive assessment that proves they are meeting high levels of overall social and environmental performance. Only around one in three applications are approved. 

While this is time-consuming, businesses can use B Lab’s assessment criteria to assess their performance and  improve corporate policies, strategic planning and investment decisions.  ‘It can highlight gaps in what companies are doing,’ says Charlie, ‘and it helps you to think about things you might otherwise not have done.’ 

During 2020 and 2021, when Haeckels was growing rapidly, it used the assessment to inform its internal processes. As a result, for example, it implemented a volunteering programme. With B Corp, self-improvement and development is ‘more achievable because there’s a blueprint for how to do it,’ says Charlie.

Is any greenwashing going on?

What can be said is that there have been concerns surrounding the certification. Increasingly, the community of independent B Corps has become populated by giants such as Ben & Jerry’s ice cream, which is owned by Unilever, the publicly traded British food conglomerate also behind Domestos, Hellman’s and Marmite; and Natura, the Brazilian global personal care cosmetics group behind Body Shop and Aesop. Innocent Drinks, a subsidiary of Coca Cola, has maintained its certification ever after it had its advertisements banned in the UK after an activist network filed a formal complaint for their blatant greenwashing. 

Today, the B Corp’s global community includes around 90 multinationals, and their staff represent almost a third of the total workforce of all B Corps. Previously, B Lab has also certified companies allegedly involved in tax avoidance (Etsy) and cultivating and processing cannabis (Americann). 

A very different looking bunch of companies from B Corp’s early days… 

Correct. All of which has sparked fears among smaller businesses that the credibility of the certification is being weakened and its integrity eroded. Might the movement have become too big, so as to jeopardize the rigor by which companies are being assessed? 

In May 2022, after Nespresso, a subsidiary of Nestlé, achieved B Corp status, several existing B Corp members penned an open letter urging B Lab to increase the stringency of its certification process, pointing to Nestlé’s history of abuse of factory workers and child labor on farms that grow its beans. 

‘The fact that Nespresso can achieve a score that allows them to be certified as a B Corp and use the certification to greenwash its business model and practices demonstrates that the B Impact Assessment scoring system and certification process is in serious need of repair,’ the letter says. 

According to Laura, however, onboarding multinationals is not necessarily a bad thing. ‘We need big businesses to be making changes for a better business future as they hold so much power,’ she says – provided they're raising their standards in critical areas. 

To ensure they are doing this might require reform to the existing certification process. One of the shortcomings of the current process is that businesses can be selective in the areas they choose for monitoring impact. They could, in theory, have a large carbon footprint but still certify for B Corp status because they perform exceptionally in other areas, like how they treat employees and customers. 

‘You have to provide answers for everything and evidence for those answers, but there is a potential to gain many points in one category and few in another,’ Laura says.  This appears to create a hole in the net, and one that needs to be closed. 

‘If the right updates can be made to the verification process, bigger businesses joining the ranks of B-Corps is ultimately a positive,’ Flo at The Nue Co says in agreement, ‘changing the wider business ecosystem for the better’. 

Okay, moving on, so how does the process actually work? 

Provided they have at least a year of operations under its belt, any for-profit company can apply for B Corp status. The pathway begins with the B Corp assessment, an online questionnaire that evaluates social and environmental performance. There are a lot of questions – more than 200! – covering B Lab’s five key metrics: governance, workers, community (physical or virtual), environment and customers. 

Each response is assigned a score, and to be eligible for B Corp certification the company must score a minimum 80 points out of a possible 200. (Unfortunately, there are no points awarded for actually completing the questionnaire.) 

Companies who fall below this benchmark must reevaluate and improve; they might implement paternity and maternity policies, for instance. But those who reach the magic number can submit their assessment for formal review, paying a one-off fee of £250. 

What next? 

The boring bit: verification. Say the business has claimed that all of its packaging is manufactured in England, it then needs to produce evidence to an auditor. Plus provide written answers to follow-up questions and attend several interviews. Consequently, scores will be adjusted up and down. 

‘It’s a huge amount of document gathering. For a lot of businesses who are starting from a place where they don’t have any of these processes or practices in place, that can take years,’ says Flo. ‘This tends to be the largest part of the process.’ 

Companies must also legally codify the B Corp commitment to remain accountable to all of its stakeholders into their mission statement. The specific requirements vary depending on the company's legal entity type (a limited liability company, partnership, co-operative, etc) and place of registration, but most UK companies will be required to adjust the company's articles of association. 

According to Laura, the total process normally takes between 18 months and two years, depending on B Lab’s backlog of submissions. But it can take much longer for companies that have to make significant changes to their business in order to be compliant. 

Even once certified, companies must submit an annual impact report that states how they have been improving their social and environmental impacts, and pay an annual fee. Which, in the UK, ranges from £1,000 for a company that turns over less than £149,000, to £50,00 if your company turns over between £750m and £1bn. For those just starting out, then, a pretty significant fee. 

They’ll also need to update their impact assessment every three years to recertify, ensuring they continue to meet the required standard. ‘It’s meant to be an ongoing process,’ continues Laura. ‘The idea isn’t that you certify and you forget about it.’

Sounds like a lot of work…

Yep. ‘It was almost like having another job,’ says Charlie from Haeckels. For this reason, the process has spawned an industry of consultants, like Laura, who will guide companies through the process. (Nothing in life comes for free.) 

But it’s not all doom and gloom, especially for companies who have baked sustainability and social responsibility into their mission from the beginning. With The Nue Co, for instance, the whole process took nearly two years but the assessment and evaluation was reasonably straight-forward because it already met most of the qualifying conditions and it didn’t need to codify corporate policies. All that documentation and data was already available. 

‘We had a very good starting point as a business,’ Flo explains, ‘because to go away and create that type of document, and have all of your suppliers agree to signing, could take an entire team six-months plus.’ 

‘I don’t think it’s actually that complicated if you know your own business,’ says Charlie, echoing Glendenning’s comments, ‘but if you are a Joe Bloggs company who is importing stuff, then it might be a very big task.’ 

Nonetheless, ‘making sure that you are prepared for the level of investment in terms of team and time resource is hugely important,’ adds Flo, ‘because it is not a throw away project.’ 

Any other catches?

Not really. But one thing to consider is that the cost of simply operating a B Corp is likely to be much higher. ‘Just being a B Corp will cost you more because you’ve got to understand your business; you’ve got to pay people a fair wage,’ says Charlie. ‘Our biggest cost is simply existing as a blueprint for how a B Corp business should exist.’ 

Of course, this will have a knock on effect for the consumer. ‘The reality is B Corp products and services are likely to be more expensive, but this is because the businesses are treating people and the planet well, and that comes at a cost,’ Laura says. ‘We have, as consumers, become so used to products being cheap, but the impact of that is the huge amount of damage we as humans cause on a daily basis.’ 

Small brands starting out often don’t have much money lying around. Should they still go through with it?

Aside from the obvious examples, such as tobacco and firearms manufacturers, there are few companies Laura wouldn’t recommend it for. ‘Why would you not want to do the best you can?’ she says. 

‘I really think it’s something that most businesses, whether they’re service-led or product-led, can benefit from,’ Flo says. ‘As long as it is the right stage to go after it, I would encourage most businesses to go after it.’ 

According to Jack Scott, co-founder of infused sparkling water company Dash-Water, which is just recertifying for the first time, B Corp certification is more suited for some businesses than others. ‘For instance, it has commercial value for fast moving consumer goods brands because Waitrose has an aisle that is B Corp and Ocado has an aisle that is B Corp, and it can help conversations with buyers,’ he says. 

He also believes in the importance of timing. ‘B Corp status is not going to get your business or brand selling. It’s a thing that you bring in once you’ve got that going,’ he says. ‘To do the application requires a lot of time and money and, at the beginning, that time and money might be better spent on selling your product or refining your proposition.'

Looking ahead, how's this going to play out?

Kyle Soo, partnerships a product manager at B Lab UK, the home of the UK B Corp movement, acknowledges that the certification process needs to be updated, and the latest iteration of them is in the works. 

‘The urgency to bring about systemic change is clear,’ Kyle says. ‘The new standards evolve what it means to be a B Corp, ensuring that Certification is relevant for the challenges of today and tomorrow.’

This will be the most significant change to what's required from businesses looking to pursue and maintain B Corp status so far. The outcome of B Lab’s design work to date moves B Corp Certification away from a flexible verified scoring mechanism to specific requirements across core topics. These topics will be finalized during the next round of consultation this year. 

‘This is a good thing as it will ensure balance across the categories which will serve to increase trust in the B Corp certification as the movement grows in numbers, strength and visibility,’ says Laura. 

According to Flo, the reassessment and recertification should also become more regular and rigorous, particular for larger entities. ‘I think there should also be curve-ball assessments,’ she says. ‘Should people still be being assessed on the same metrics or categories that they have embarked upon at the beginning of the process?’ 

In 2023, controversial beer brand BrewDog lost its B Corp status after former employees signed an open letter alleging a ‘culture of fear’ in which workers were being bullied. While this demonstrates that the processes B Lab has in place aren’t toothless, Flo points out that the non-profit must continually adapt in response to the growing popularity of the certification. 

After this transition, says Laura, B Corp will become stronger than before. ‘A businesses' past does not have to be its future,’ she continues, ‘and I believe that the growth of B Corp will prove to skeptics that this way of business works, and that it will inspire many others to move away from “business as usual”.’

Photos courtesy of Zay, Almighty and Pals.

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