The Evolution of the B Corp Standard: the Future of Sustainable Business
As a sustainability consultancy and B Leader, we are keenly observing the evolving B Corp certification standards. In 2022, B Lab initiated a review of its performance requirements and launched a preliminary consultation, gathering insights from over 1,000 stakeholders on potential enhancements. This January (2024), B Lab introduced the second consultation phase with an updated draft of the standards. We are excited to explore this iteration, which seeks to substantially advance inclusivity, equity, and sustainability in business practices.
The framework
The draft standards propose a dual framework of Foundation and Performance requirements. The Foundation segment evaluates a company's eligibility for B Corp certification. This includes completing the legal requirement for stakeholder governance commitment, signing B Lab's Declaration of Interdependence, conducting a Risk Assessment to align with B Lab's Theory of Change, and assessing the Impact Business Model to gauge the company's positive influence. These prerequisites form the cornerstone for appraising a firm's dedication to sustainable and ethical operations. Completing the Foundation stage as an initial step is strategically advantageous for companies. It ensures that they meet the fundamental criteria before progressing further, thereby streamlining the process and minimizing the risk of time wastage due to potential non-compliance with these foundational elements.
The Performance section of the draft standards meticulously examines specific areas of impact, representing a significant evolution from the current five-category framework (Governance, Workers, Community, Environment, and Customers). In alignment with the current global challenges, the draft broadens its scope to include eight critical areas: Purpose & Stakeholder Governance, Workplace Culture, Fair Wages, Justice Equity Diversity and Inclusion (JEDI), Human Rights, Climate Action, Environmental Stewardship, and Government Affairs & Collective Action. These areas are assessed through various lenses such as a company’s governance, strategy, impact measurement, target setting, monitoring, and public communication.
Equity and flexibility
Each aspect of the assessment is meticulously adapted to fit the unique characteristics of each company, taking into account factors like company size, industry sector, and geographic location. The draft standard updates the criteria for assessing company size, shifting from solely worker count to either worker count or revenue, depending on which is higher. This change, addresses size misrepresentation in companies with extensive outsourcing. Furthermore, the introduction of new location categories—categorized by the degree of operational barriers—promises a more equitable and adaptable assessment process. This nuanced categorization thoughtfully takes into account the unique challenges and opportunities presented by varied societal dynamics, legal frameworks, geographic limitations, and resource availability. It's crucial, however, to monitor how these changes are implemented in practice to ensure they do not become loopholes that companies might exploit to bypass stringent sustainability standards.
Differentiating and improving
Another notable shift in the draft standards is the approach to the scoring methodology. Under the current framework, companies are required to accumulate at least 80 points distributed across five categories, granting them considerable latitude in deciding where to earn these points. While this flexibility is beneficial, it inadvertently permits companies to achieve certification despite possibly underperforming or even causing negative impacts in certain categories. The draft standards offer two distinct avenues for companies to distinguish and enhance their performance. Firstly, through their achievements in the eight designated impact areas, companies are not only expected to meet all baseline requirements but also have the opportunity to excel in specific domains. This approach incentivizes businesses to go beyond the minimum standards, fostering excellence in certain impact areas. Secondly, differentiation and improvement can be realized through the implementation of an Impact Business Model. This model allows companies to not just comply with the basic criteria, but to innovate and elevate their sustainability practices. However, it's worth debating whether integrating an Impact Business Model from the outset ought to be a core requirement for B Corp certification, given its role in fostering sustainable business leadership.
Finally, while B Lab has historically promoted the concept of continuous improvement, its integration into the current standard was not as explicit. The new draft standard, however, addresses this by mandating that companies establish a definitive set of improvement objectives. More importantly, these companies must show tangible progress towards these goals as a condition for recertification. This approach underscores the importance of ongoing development rather than just meeting the initial certification criteria.
In summary
The evolving B Corp standards mark a significant step in the certification process, reflecting a deeper understanding of the diverse challenges and opportunities in various business sectors and sizes. However, areas like the Impact Business Model could be further refined to set a higher bar for sustainability leadership.
We encourage our readers to review and provide feedback on the draft standards. Your collaborative input is crucial for refining these standards to robustly support businesses in their sustainable and ethical endeavors.
Would you like to know how we can help you with becoming a B Corp? Please visit our website or reach out to Elise (elise@2impact.nl).
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