Achieving B Corp Status Through Pathway 2

Reflecting B Lab’s commitment to social and environmental responsibility, service providers working with (or in) industries designated as “controversial” face a more rigorous B Corp certification process. 

B Lab’s Pathway 2 for B Corp certification offers a compliance route for companies that have clients in controversial or ineligible industries, are linked to (or contribute to) adverse impacts, and generate less than 1% of their revenue from these industries.  

Industries designated as controversial by B Lab include: 

These are industries whose operations can cause adverse social and environmental impacts. B Lab classifies these industries on a global basis, so activities that are legal within some countries, such as the production or sale of recreational marijuana, can be considered as having adverse impacts.  

Ineligible industries go against B Lab’s theory of change, which is centered on transforming the global economic system into one that is inclusive, equitable, and regenerative. Affected industries include: 

For companies active in these designated industries, the certification process involves additional disclosures, risk assessments, and sometimes stricter eligibility thresholds compared to companies in non-controversial sectors. 

In some instances, this may include minimizing interaction or decommissioning of customers. But rather than automatically precluding companies that serve companies in these industries from certification, B Lab encourages conversation and collaboration during the assessment process. 

Companies have different routes to certification or recertification that depend, in part, on the industries they serve and how they work with customers in those industries. B Lab has three levels of industry involvement:  

This involvement will influence a company’s pathway to certification. Companies must disclose the industries they serve and their level of interaction (associated, linked, or contributing), and implement specific whistleblower and grievance policies.  

The following graphic illustrates how B Lab helps companies determine their pathway based on industry type and interaction level: 

Pathway 1 is suitable for companies interacting only with adverse impact industries at an associated level, and with no direct theory of change clients for at least the past five years. This pathway is simpler and mainly requires disclosure of industries and associations. 

Pathway 2, the most common, is for companies with clients in controversial industries (primarily adverse impact, possibly a few against theory of change), where revenue from these industries is under 1% of total revenue. 

A company pursuing Pathway 2 needs to complete a B Lab spreadsheet detailing its client interactions, services, and other relevant information. This spreadsheet, different from the Impact Verification Template (IVT), asks about the nature of work, position on working with clients, and due diligence processes.  

The spreadsheet requires details for each client, which can be time-consuming to compile. To protect service providers who cannot disclose client names, such as accountants or lawyers, B Lab allows internal client numbers to be used. 

Companies must disclose publicly the nature of their involvement with clients in controversial or ineligible industries, and work to ensure it generates less than 1% of its revenue from ineligible industries.  

B Lab also mandates companies pursuing Pathway 2 post-grievance and whistleblower policies:  

The grievance policy must outline the company’s process for accepting grievances, handling them, and escalation if the initial response is unsatisfactory. It also requires a live, responsive contact method (email or hotline) that B Lab will verify, must state freedom from retaliation, and should include an open-door policy or suggestion box (especially for workers without computer access). The policy must apply to all stakeholders in the company’s value chain or ecosystem, not just internal workers. 

Whistleblower Policy 

The whistleblower policy needs to outline the complaint process, to guarantee no retaliation, and to prevent negative repercussions by ensuring the confidentiality of the whistleblower’s identity.  

To meet these mandates, companies can consider hiring an outside service provider to accept and investigate grievance and whistleblower complaints. Along with reducing administrative overhead, outsourcing provides third-party objectivity that can improve the effectiveness of the process. 

For us at Sensiba, for instance, we completed Pathway 2 for the following reasons:  

Beyond helping with our recertification, this process plays an important role in our ability to manage risk more effectively and to meet our goals of serving clients and using our business as a force for good.  

To learn more about B Corp certification, contact us.