Since its establishment in 2006, B Corp certification has become one of the most recognizable indications of sustainable business practices across the globe. It has become comparable to Fair Trade or USDA Organic certification applied to certain foodstuffs—a powerful marketing tool that makes products instantly stand out from their non-organic competition.
A 2019 survey found that 47% of consumers would pay at least 25% more for sustainable products and services. According to a 2018 Yale University report, certified B Corps demonstrate greater revenue growth rates than public firms of comparable size. This trend even held during the Great Recession.
What is a B Corp?
A certified B Corporation, or B Corp, is a for-profit enterprise that meets “the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose.” This definition is published by B Lab—a non-profit company that measures other companies’ social and environmental performance against a set of sustainability and transparency standards, and certifies companies with B Corp status accordingly.
Companies certifying as B Corps should do no harm, and their products, services, and business practices should benefit all stakeholders. B Lab defines stakeholders as workers, community, customers, and the environment.
According to B Lab, when starting a business, five conditions that B Corps must meet are:
- Accountability. Directors must consider the company’s impact on all stakeholders.
- Transparency. Companies must publish and make a public report of social and environmental performance.
- Performance. Companies must attain a minimum score on the B Impact Assessment and file to recertify every three years.
- Availability. Any business can become a B Corp, regardless of its country or state of incorporation.
- Cost. Companies pay certification fees to B Lab, with the size of the fee depending on their revenues.
B Lab sorts certified B Corps into four categories:
- Multinational and public corporations
- Companies with related entities
- Internationally certified B Corps
B Corps voluntarily opt into B Lab’s assessment program. As part of that assessment, they go through a rigorous certification process, detailed below.
How to get certified as a B Corp
A company’s pathway to becoming a certified B Corp will vary depending on a number of factors, including sector, industry, scoring, and ownership structure. For small to mid-sized companies, B Lab estimates the process takes between six and eight months. Generally speaking, the steps are as follows:
- Register for the B Impact Assessment. There’s no cost associated with this step.
2. Complete pre-work
- Learn the specific legal requirements of B Corp certification for your company. B Lab provides an interactive tool for determining legal requirements on its website, based on location, business model, corporate status, and other factors.
- If you are applying as a multinational company, complete a risk review provided by B Lab—a pre-screening process that takes a more rigorous look at a multinational’s history, operating procedures, goals, and public image to determine B Corp eligibility.
- Gather supporting documentation and data for the B Impact Assessment.
- Complete the B Impact Assessment online for initial scoring. (Note: Completing the B Impact Assessment does not constitute a finalized application.) Some sample questions might concern what processes the company already has in place for sharing financial information, how its compensation structure compares with the market, how supplier quality control is conducted, or whether it employs any energy efficiency programs. Answers are typically multiple choice and are sometimes organized on a scale (i.e., very often, often, somewhat often, rarely, never, etc.).
- Establish a company profile, which you will be prompted to do once you complete most of the assessment, and start a disclosure questionnaire. At this point, your baseline score will be revealed. If it is under the 80-point mark, you may need to reevaluate your company and improve in certain areas before taking the assessment again.
- If you’re over the 80-point mark, submit your B Impact Assessment for review. At this point, you’ll pay a $150 submission fee.
- B Lab determines your eligibility by having an analyst look over your company profile and assessment. You may be asked follow-up questions about your employees and suppliers.
- Have a review call with an analyst, during which you’ll go through the verification report prepared by the analyst and provide your previously gathered documentation backing up your answers on the assessment.
- If an analyst verifies you’ve passed the 80-point threshold, you’ll enter post-verification and sign a B Corp Agreement. After signing the agreement, you will be officially certified as a B Corp. You’ll pay a yearly certification fee, depending on the size and earnings of your company.
B Corps vs. benefit corporations
“B Corp” is often mistaken to be an abbreviation of “benefit corporation.” While benefit corporations share some similarities in mission with B Corps, they are distinct in several significant ways—namely that benefit corporations have no association with B Lab.
What is a benefit corporation?
A benefit corporation is a traditional corporation, like a C corp legal entity, that modifies its practices to commit itself to higher operational standards, accountability, and transparency. Benefit corporations tend to commit to creating public benefit and adding sustainable value in addition to turning a profit.
Similarities and differences
In their commitment to prioritizing stakeholder benefit, both globally and in the local community, benefit corporations and B Corps are alike. Directors of B Corps and benefits corporations are required to consider a company’s impact on all stakeholders and publish reports about their social and environmental performance, measuring it against third-party standards. However, they differ in who issues the certification, availability of the certification, and cost.
- Availability: Benefit corporation status is only available in 30 US states and DC. Oregon and Maryland offer benefit LLC options. B Corp certification is available to any business, regardless of location.
- Accountability, transparency, and performance: B Corps are certified (and must be recertified) by B Lab analysts. State agencies enforce eligibility standards for benefit corporations, but the corporation is responsible to self-report performance. Government regulators won’t assess a benefit corporation’s ongoing performance.
- Recognition: B Corp status is a private certification provided by an independent nonprofit that offers third-party, objective performance evaluation. Companies that obtain B Corp status can use the Certified B Corporation logo from B Labs in their marketing materials. A benefit corporation is a status recognized by government authorities, but the government’s responsibilities end once benefit corporation eligibility is determined.
- Cost: Benefit corporations necessitate between $70 and $200 in state filing fees; B Lab certification fees range from $500 to $50,000, based on company revenues.
If you’re interested in obtaining B Corp certification, your first step is to reflect on whether your business meets or is close to meeting B Lab’s standards. Do you already have community-minded sustainability practices in place?
If so, you can prepare to sit for the B Corp Impact Assessment, which is free to take. Even if you choose not to pursue certification, assessing your own company’s sustainability practices this way can be useful if your goal is to make your company more environmentally and socially conscious in its practices.