If you are not the best business in the world, you can still be the best business for the world. That is the growing sentiment for thousands of businesses getting B Corporation certification.
B Corporations are a new kind of business, increasingly becoming a global force for good. Put simply, B-certified corporations are businesses that are socially conscious of the impact their business has on their employees, their customers, the community and the environment. As the name implies, businesses must become certified in order to receive the designation. B Corporation certification (also known as B Lab certification or B Corp certification) is a third-party standard, requiring companies to meet social sustainability, environmental performance and accountability criteria, and to be transparent to the public according to the score they receive on their B Impact Assessment (BIA). At the time of this publication, there were over 2,800 certified B Corps across 150 industries in more than 64 countries.
B Corps should not be confused with benefit corporations. A benefit corporation is a legal status conferred by state law in the U.S., whereas B Lab/B Corp certification is issued by the private nonprofit B Lab organization and has no legislative framework.
How do you become a B-certified corporation?
B Corps are expected to balance profit and purpose, and are legally required to consider the impact of their decisions on every aspect of their business, and at every step of their supply chain. As already stated, a business must become B-certified to receive the designation, starting with the business owner completing an online B Impact Assessment. The BIA is a free, comprehensive and industry specific tool, which provides benchmarks and standards to measure a company’s social and environmental impact. The standards are created and revised by the Standards Advisory Council (SAC), a group of independent experts in business and academia.
The BIA takes a couple of hours and measures five aspects of your business: workers, suppliers, community, customers and environment. Essentially, the assessment is intended to provide an analysis of the operational impact of your business, and the impact business model. Operational impact relates to the day-to-day impact of running your business to the environment, employees, community and governance structure. The impact business model measures whether your company creates positive outcomes for one or more stakeholders. Some examples include: a company donating a percentage of its revenues, having an employee-owned business, using suppliers from low-income communities or serving an underserved market with your product or service. Once you complete the BIA, you will receive a score, and that score must be at least an 80 out of 200 possible points.
B Corps have certain legal requirements in order to obtain the designation. The reason for this is so that companies align their legal structure with their mission. By adopting B Corp legal standards, your company’s values will become part of the corporate structure; you can obtain legal protection and incorporate non-stakeholders into decision making; and, ensure the company’s mission is protected over time and through changes in management. The certification term is three years, so B Corps are obliged to keep their standards. Legal requirements vary state from state, so you should consult with your attorney before getting started. It is also worth mentioning that there are annual fees for B Corps, and they are based on annual revenues.
Why become a B Corp?
The motivation is to join a community of like-minded business owners who are mission-driven and committed to improving their practices and increasing their impact in the world. Some believe that building a B economy would help all businesses. B Corp certification can also be a tool to attract talent. Millennials will be the majority of the workforce in 15 to 20 years, and frequently look for companies with a stated mission where they can have an impact.
Businesses want to do business with B Corps, and being one will help your business stand out. At any rate, even without becoming certified, the B Corp process allows business owners to enhance their best practices because they can compare their results with benchmarks of other B Corps. According to the BIA website, over 15,000 businesses are using the BIA as an assessment tool for their business — and the list is impressive. With an estimated 2,800 B Corps across 64 countries, there are many well-known brands. If you do decide to become a B-certified business, you will be in good company.
Speak to an adviser if you would like to learn more about B Certification.
Michael Napolitano is a partner at Citrin Cooperman, with over 20 years of experience helping business owners make strategic decisions about their business. He can be reached at email@example.com.