what is a b-corp?
b-corps are businesses that want to make a profit while also improving the world around them. this includes the environment (locally and globally), their staff and customers, and society at large. in other words, b-corps are for-profit businesses that strive to make the world a better place. when making business decisions, b-corps need to consider how these will impact the community and the environment.
what are the benefits of becoming a b-corp?
becoming a certified b-corp demonstrates to customers, employees, other stakeholders and other businesses that you are committed to improving the world around you. other benefits of becoming a b-corp include:
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encouraging social responsibility - the transparent standards required of b-corps show customers how your business is making a difference
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attracting and retaining talented staff - with a strong focus on employee welfare and employee-centric workplace culture, b-corps attract and retain talented staff
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attracting like-minded investors - by highlighting how the business is striving to improve society and the environment
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collaborating with like-minded businesses - by becoming a b-corp, a business joins a network of like-minded businesses
how does a business become a b-corp?
to become a b-corp a business needs to become certified. to become certified, a business is assessed by b lab (the not-for-profit organisation behind the b-corp movement) to determine whether it meets the required standards. this process involves completing an impact assessment, meeting the requirements for certification and passing the review and verification process.
impact assessment
the first step in becoming a certified b-corp is completing b-corp impact assessment (bia). the bia is used to measure, check and improve a business’ social and environmental performance. the questions asked will depend on the size, location, industry and complexity of the business. the bia covers the following areas:
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governance (eg the business’ mission, engagement with stakeholders and code of ethics)
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workers (eg career development and staff health, wellness and safety)
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environment (eg the business’ environmental management systems and water, waste and energy usage)
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community (eg the business’ supply chain management and diversity)
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customers (eg the business’ customer feedback or complaint procedures and customer wellbeing)
to be successful, a business must score at least 80 points on the bia.
it is recommended that businesses provide supporting documentation when completing a bia. examples include:
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relevant employee and customer policies
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supplier invoices
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any raw data used for calculations
requirements for certification
to become a b-corp, a business must comply with the necessary accountability requirements. this can be done by incorporating required wording into the business’ governing documents (eg articles of association). this includes:
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the business’ commitment to having a material positive impact on the environment and society as a whole, and
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the business considering the impact of its actions and decisions on all stakeholders (eg shareholders, staff, customers, society, and the environment)
this is done to clearly set out and protect the business’ mission. for more information and the required wording, see b lab’s guidance.
review and verification
once a business’ bia has reached a score of at least 80, the application can be submitted to b lab, where it will be reviewed and evaluated. this will involve background checks on your business and a review of your business structure and bia score. during this part of the process, you may be asked to provide more information.
once the review is complete, a business moves on to the verification stage. this involves completing the next steps as instructed by b lab (eg uploading supporting documents). once all next steps have been completed, your assessment will be reviewed and all supporting documents verified. if during this process, a business’ bia score drops below 80, improvements can be made to improve the score.
after a business achieves a verified score of at least 80, it can officially become a b-corp by paying its annual certification fee (more below) and signing a b-corp agreement.
for more information and a rough timeline of the process, see b lab’s guidance.
who can become a b-corp?
most businesses can become a b-corp if they are for-profit (ie not-for-profit organisations and charities are not eligible) and have been operating for at least 1 year. this means that private companies, public companies, sole traders, partnerships, llps and even cooperatives may become b-corps.
pending b-corps
startups and other early-stage companies that have not yet been trading for 1 year can become pending b-corps. this involves:
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meeting the b-corp accountability requirements (as set out above)
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completing a prospective bia, which is not sent to b lab (to ensure the company understands what is required to become certified and to encourage them to put in place the necessary policies and practices as they grow)
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paying a registration fee (this enables companies to engage in community events, use the pending b-corp logo, and connect with other b-corps)
note that sole traders cannot become pending b-corps.
for more information, read b lab’s guidance.
large and complex businesses
special rules apply to large and/or complex businesses. this applies to:
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businesses with a revenue of more than $1 billion
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complex businesses (eg with many subsidiaries (ie companies controlled by holding companies) or locations in different counties) with a revenue of more than $100 million
however, generally, businesses tend to be large and/or complex if they:
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operate in 2 or more industries
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operate in more than 4 countries
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have more than 4 subsidiaries
the b-corporation process for large/complex businesses involves, but is not limited to:
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submitting an application, evaluating the business’ readiness and needs and identifying any risk areas
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a risk screen to review any sensitive or controversial aspects of the businesses performance
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an analysis of the provided documents by b lab to identify the best way for the business to become a b-corp
for more information, read b lab’s guidance.
how much does it cost to become a b-corp?
to ensure their commitment to the b-corp verification process, businesses need to pay a one-off submission fee of £250 (plus vat). this fee covers both b-corp and pending b-corp applications. for pending b-corps, this submission fee covers the 12 month period in which they prepare their bia.
to remain a certified b-corp, businesses need to pay a yearly certification fee. this fee is based on the business’ total annual turnover (ie sales). to remain a certified b-corp, businesses also need to update their impact assessment every 3 years.
