What is a Certified B Corporation?

The business community has seen a shift in recent years. Many companies are using business as a tool for social and environmental change. Businesses leverage their work to build healthy, equitable, and regenerative communities. This trend is reflected in several recent movements and certifications like the B Corporation.

The basic definition of a B Corporation or certified B Corp is a for-profit company that uses its business as a force for social and environmental good. For example, an ice cream company that uses its flavors to create awareness of critical social issues. Or a toilet paper company that donates 50 percent of their profits towards clean water and toilets for everyone. Every B Corp company considers the impact of their business decisions on not just shareholder value but all stakeholders across the value chain.

Each certified B Corp has completed a multi-question, robust assessment of their social and environmental performance as an organization and supplied documentation to validate their answers on the assessment. The assessment is then reviewed for high levels of accountability and transparency by the oversight organization, B Lab. Once the organization passes the review, or sometimes during the process, companies also amend their governance documents.

First, an organization must complete the B Impact Assessment or BIA. The BIA is an entirely free online benchmarking and measurement framework for non-financial data metrics used by over 50,000 companies worldwide. It looks at five different areas of a company: governance, workers, community, environment, and customers. There is also a sixth company disclosure area that identifies any potentially sensitive industries, practices, fines, or sanctions of a company that are not explicitly called out in the rest of the assessment.

After completing the B Impact Assessment, companies undergo a multi-step verification process to review all the documentation provided and answers given. Each assessment must earn a minimum of 80 points for certification.

In addition, B Lab performs a background check of the organization. Background checks include reviewing public records, news sources, and search engines for company names, brands, executives/founders, and other relevant topics.

Once a business passes certification, B Lab creates a public page sharing the B Impact Report summary of a company’s scores on the B Impact Assessment by category. There is also an annual fee all certified B Corps must pay to B Lab to support the organization. It is based on a sliding scale by revenue.

There are several benefits to becoming a certified B Corporation. Here are the top five benefits that are most often touted.

Choosing to be a B Corp allows you to pursue broader management goals. Running a traditional for-profit business, your investors expect you to focus solely on shareholder value. That can make you a servant to your profitability. With a B Corp, your investors, employees, and customers know from the get-go that your goals are much larger than simply turning a profit. This gives you greater latitude to manage your business as you desire, focusing on producing the most meaningful results for your business’s mission.

Financial metrics are great to measure but only tell a short-term story about the profitability of an organization. Non-financial metrics tell a much richer account of a business’s overall health and grants you a much longer view of the broad range of risks facing an organization. Economists and business experts now see that the top five risks within any business are Environmental, Social, and Governance (ESG) concerns.

Certification can help you identify and mitigate these risks. Frameworks, like B Corp certification, allow a business owner to benchmark and measure a whole host of non-financial metrics that have been typically hard to measure in the past.

B Corps are attracting top talent, especially among employees who seek purpose in their careers. Certification helps promote and validate an employee-centric culture, which engages great candidates because of the company’s reputation as a great place to work. Instead of staffing your business with individuals looking for a paycheck, you can staff your business with employees who are engaged in what you’re doing. Companies with engaged workforces are more profitable and twice as likely to succeed as businesses with less-engaged workforces.

When you become a B Corp, you can’t just claim to be sustainable or socially conscious — you must prove it. The certification process requires you to demonstrate through rigorous documentation how you create tangible benefits for people and the environment. This means consumers and other businesses can trust that companies with B Corp status aren’t just claiming to benefit their community. They’re walking the walk.

Consumers are increasingly interested in buying products and services from companies that make societal and environmental commitments. A 2019 Deloitte survey revealed that more than 80 percent of consumers would be willing to pay more if a brand raised its prices to become more environmentally and socially responsible or pay higher wages to its employees. The demand by conscious consumers is already having an economic impact on the sales of consumer goods, as products with an element of sustainability have been.

When writing this article, there are 4,762 companies in 77 countries and 155 different industries, all operating with one unifying goal of using business as a force for good. Many companies are consumer brands that most folks use daily, like Ben & Jerry’s Ice Cream, Tom’s Toothpaste, Patagonia, Method Soap, and Athleta. Professional service firms like Sensiba, Wendel Rosen Law Firm, or Beneficial State Bank are also B Corps. There is more than likely a B Corp for anything you need. I highly recommend consulting the B Corp Directory anytime you want to purchase.

For a list of the currently certified companies and their B Impact Report, visit BCorporation.net and click the “Find a B Corp link” at the top of the page.

Contact our team of B Corp consultants to learn more about certification.