What is a B Corp? Three Important Requirements In Order to Become B Corp Certified
B Corp Certification Explained
Certified B Corporations are businesses that have undergone a thorough assessment by the nonprofit B Lab, meeting stringent criteria for social and environmental performance, transparency, and accountability. Think of B Corp certification like LEED certification for eco-friendly buildings, Fairtrade certification for coffee, or USDA Organic certification for milk. Unlike single-focus certifications, the B Corp Certification evaluates the entire company, encompassing five categories: Governance, Workers, Customers, Environment, and Community. This holistic evaluation ensures a clear distinction between genuinely responsible companies and those that merely use greenwashing marketing tactics. The certification’s B Impact Assessment also provides a way for companies to measure and benchmark their impact while incorporating all forms of stakeholder value creation (not solely shareholder value creation) into their growth plans.
Since 2006 at the founding of the nonprofit B Lab, which created and oversees the B Corp Certification, the B Corp Movement has grown into a global community of several thousand Certified B Corporations from diverse industries that are united in redefining what success in business means. Their shared vision is to transform competition, prompting companies to compete not only to be the best in the world but also the best for the world.
What are the requirements to become a Certified B Corp?
To earn B Corp Certification, companies must fulfill three core requirements: verified social and environmental performance, legal accountability, and public transparency. The performance aspect involves achieving a minimum verified score of 80 points on the B Impact Assessment, with a maximum potential score of 200 points. While this may sound easily achievable - and it can be, with the right team in place - it is an extremely rigorous standard. Few companies surpass 80 points on the assessment and no company has ever achieved the full 200 points on the assessment.
Requirement #1: Legal Accountability
Legal accountability mandates that Certified B Corporations consider the interests of all stakeholders in their decision-making process. Various corporate structures, such as benefit LLCs, benefit corporations, cooperatives, and more, can fulfill this requirement.
Requirement #2: Transparency
Transparency builds trust. Certified B Corps must publicly share their B Impact Report on www.bcorporation.net. The report summarizes the company's B Impact Assessment scores by category, maintaining confidentiality at the question level.
Requirement #3: For-Profit Entity
Notably, nonprofit organizations and government agencies are ineligible for B Corp certification. Eligible entities include benefit corporations, C corporations, S corporations, cooperatives, LLCs, L3Cs, partnerships, sole proprietorships, wholly owned subsidiaries, and for-profit companies based outside the United States.
To complete the B Corp certification process, prospective companies sign the B Corp Declaration of Interdependence, aligning with the B Corp community's values. Additionally, they enter a B Corp Agreement, outlining the conditions and expectations of certification, and pay an annual certification fee based on their sales. Certification is valid for three years, after which companies must undergo re-assessment and verification to maintain their B Corp status. Once certified, B Corps can use the Certified B Corp logo on their packaging, marketing, and website, signifying to the world that they are a company that uses business as a force for good. Certified B Corps also gain access to the B Hive Network, which today consists of almost 7,000 Certified B Corps that network, collaborate, share best practices, and often patronize each other’s businesses.
Interested in Becoming a Certified B Corp?
Torrey Project can help you through the whole B Corp certification process, from beginning the B Impact Assessment all the way to making the most of the certification once you achieve it! You can schedule a free consultation with one of our consultants by clicking the following link: www.torreyproject.org/b-first-consultancy#contact