A bridge to a new, renewed and renewable corporate future
The current climate calamity is driving humankind’s survival into a corpse-like state. B-Corps, enterprises which incorporate sustainability values into their conduct, are giving life to a movement of hope. These fair-minded businesses towards employees, customers, suppliers, the local community and the environment, have been growing in numbers not just because of their mission-driven goals but also due to the advantages the B-Corp certification confers. The reader is hereby invited to be seduced by the allure of this status in the passionate fight against corporate injustice.
Certified B corporations are enterprises verified by B-Lab, a global nonprofit organization that assesses the overall positive impact of companies based on how they create value for non-shareholding stakeholders, such as their employees, customers, suppliers, the local community and the environment.
The first B-Corporations were certified in 2007, and the number of firms has been growing ever since: nowadays, there are 3928 certified B-corporations within 150 industries and 74 countries. Currently, most B-Corps are privately-held small and medium-sized businesses, even though any company, no matter its size, legal structure or industry, can become one. Among the many certified B-Corporations, there are globally renowned brands such as Ben and Jerry’s, Patagonia, Alpro or ecoBirdy. In Portugal, there is, for instance, Agri Marketplace, Sair da Casca, Grosvenor Investments and BioRumo.
The certification process has several stages. First, companies need to complete the B-Lab assessment (or B-Impact assessment – BIA), composed of questions related to the evaluated areas (Governance, Workers, Community and Environment) and achieve a minimum score of 80 out of 200. After completing the BIA, B Lab will review it and analyse documentation to validate the responses for the sake of transparency. To maintain certification, B Corps update their BIA every three years.
Fig. 1: Examples of certified B-Corporations.
B-corps are legally required to take into consideration the impact of their actions on all their stakeholders, proceeding with this change by updating their Articles of Incorporation and amending governing documents to incorporate mission-aligned goals. They also have to support B-Lab’s public policy objectives of passing legislation in the company’s location. According to its structure, country and state/province of creation, companies have a given allowable timeline to implement the B-Corp Agreement and sign a contract to complete the certification process. For instance, companies with less than 10 employees need to achieve the legal requirements before getting the certification, while the remaining are granted extra time afterwards to conclude it. All the aforementioned steps show that a firm is pursuing a governance ideology distinct from the traditional shareholder-centred corporations.
To finalise the certification, companies sign the B-Corp Declaration of Interdependence, the B-Corp Agreement and pay the annual fees, which are calculated according to revenue and region and are based on principles of inclusivity, transparency and fairness. Fees only cover a portion of B-Lab’s operating expenses: 40% of these are covered via philanthropy and the remainder comes from earned revenue streams, including B-Corp certification. B-Lab costs associated with the accreditation consist of verification, reviewing the process, developing the standards behind the certification, technology platforms, licensing fees to grow the “B” brand, services and marketing platforms, and costs associated with the growth engagement efforts towards a growing global movement.
Fig. 2: Example of a B-Impact Assessment Report, with the scores of the four evaluated criteria.
There are several catalysts to the investment in such certification. The ever-growing number of certified firms is not only propelled by leaders who are motivated to make a shift directed at a more conscientious way of conducting business. The B-Corp status is synonymous with publicly stating to be an organisation focused on both shareholder and stakeholder success. Possessing this crystal clear identity helps companies communicate their values to customers and stand out from the industry norm. Large established firms have been intensifying their social responsibility efforts. As this happens, small businesses which have been committed to environmental and social causes for longer wish to prove their authenticity as advocates for these values. It also helps consumers to correctly identify companies and products that are truly aligned with those responsibilities. This reasoning suggests that increasing efforts of more conventional and profit-driven companies to be deemed as green and “good” are driving the emergence of B-Corporations. Another reason for the increasing emergence of B-corps would be the belief that the current sustainability crisis is being caused by the way businesses are conducted. Firms that share this belief have the incentive to engage in certification since it is in line with their purpose. The prevalence of large competitors with persistent practices solely aimed at maximising profits also motivates the emergence of certified firms as it pushes fair-minded businesses to counteract this socially nocuous modus operandi.
Fig. 3: The sustainable development goals B-Corps must comply with.
When signing the declaration of independence, B-corps state the belief that business must be conducted “as if people and place mattered. (…) and thus” they are “responsible for each other and future generations”. This applies very directly to the environment. The movement is currently taking action by promoting the adoption of certain measures by companies, such as declaring the current state of affairs as a climate emergency, engaging their board and teams in science-based facts regarding the implications of their business in the environment, having even created a playbook as a guide. They also push for the acceleration of carbon reduction to meet the global goals of a 1,5oC average temperature increase and the development of a net-zero plan to achieve carbon neutrality between 2025-2050. The B-Corp Climate Collective plays a significant role as a global community dedicated to perfect the knowledge on this front. Climate advocacy and updating standards are substantial parts of their policy. Acknowledging that individual voluntary action is not sufficient to tackle the dimension of the current climate emergency is the trigger to use a collective voice on key issues and to the involvement in public movements. The climate collective is always updating the standards that are deemed appropriate so the issues are addressed most effectively.
The increasing heterogeneity of corporate society poses challenges to the dominance of shareholder-centred entities: they cease to be the default organisational form for businesses, becoming one of the many alternatives; thus, ensuring long-term competitiveness will probably require a different strategy, more aligned with sustainability. The future seems to hold a change in the fundamental building blocks of business as the present already displays a shift in the corporate landscape.
B Corp Climate Collective | Certified B Corporation | Homepage. https://www.bcorpclimatecollective.org/
B Impact Assessment | Certified B Corporation | Homepage. https://bimpactassessment.net/pt-pt/start-b-impact-assessment
B Lab/Sistema B Global Network (2019, December 10), 500+ B Corps Commit to Net Zero by 2030. https://bcorporation.net/news/500-b-corps-commit-net-zero-2030
Certified B Corporation | Homepage. https://bcorporation.net/
Karlesky, Matthew J.; Kim, Suntae; Myers, Christopher G.; Schifeling, Todd (2016, June 17). Why Companies Are Becoming B Corporations. Harvard Business Review. https://hbr.org/2016/06/why-companies-are-becoming-b-corporations
Legal Requirements | Certified B Corporation | Homepage. https://bcorporation.eu/certification/legal-requirements