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Understanding B Corporations, and how their profit/purpose balance impacts society, is a key advantage for any UK SME. So what is B Corp, and how do you get certified?
First, you should understand that the B Corp methodology is based on the corporate-grade Global Reporting Institute (GRI) framework, which is integral to Environment, Social, and Governance reporting, or ESG for short. Used by all major corporations, and increasingly even by larger SMEs, this is an approach which quantifies exactly how a business is being operated, and so it enables customers and investors to see if the company aligns with their values. B Corp does the same, but in an approach relevant to the smaller business.
A certified B Corporation, or B Corp, is a profit-driven corporation that has received certification for its dedication to business operations that foster beneficial environmental and social transformations. Businesses of various types, including limited companies and partnerships, can apply for B Corp certification. A unifying thread amongst them all is their dualistic approach to achieving profit whilst serving a purpose and driving positive changes within their respective communities.
Certification for B Corporations in the United Kingdom is facilitated by B Lab UK, a charitable organisation established in 2015. The certification process involves an examination of five key areas within an organisation’s operations: governance, worker relations, community engagement, environmental practices, and customer relations. The assessment process takes place via an online form comprising approximately 200 questions, uniquely tailored to different industry sectors. As of this date, over 1,200 B Corps operate within the UK, including about 50 within the built environment sector, and more are currently progressing towards certification.
Attaining B Corp certification isn’t a straightforward process; it involves a comprehensive certification procedure that verifies a business’s adherence to the highest standards of social and environmental performance. The global non-profit organisation, B Lab, grants the certification if a company meets these rigorous standards.
Shareholders of a B Corp play a crucial role in preserving the company’s B Corp status. Apart from their financial responsibilities, they also ensure that the business meets its obligations towards benefiting people and the environment. Key areas evaluated during the certification process include the balance of profit and purpose, transparency in supply chains, labour practices and ingredient sourcing, hiring procedures, environmental impact and sustainability, as well as legal accountability.
At present, there are in excess of 4,000 certified B Corps spanning across 77 diverse countries. Each company is identified by a B Corp logo which signifies to customers that they are engaging with a company that adheres to the highest standards in business practices.
The primary goal of a B Corporation is to instigate social and environmental transformation via ethical business practices. B Corps are actively involved in reducing inequality, lessening poverty levels, enhancing environmental sustainability, and fortifying communities.
Certified B Corporations are legally obliged to consider their company’s impact on their immediate environment, which includes their employees, customers, suppliers, the community within which they operate, and the wider environment. Their operation is guided by a “Declaration of Interdependence”, which underlines the principles of change, the importance of people and place in business operations, an aspiration to cause no harm and offer benefit to all, and the recognition of mutual dependency and responsibility for future generations.
B Corporations are more prevalent than you might assume. Many widely recognised brands, such as Ben & Jerry’s Ice Cream, are certified B Corps. Here are some other commonly known B Corporations and the practices that have earned them their B Corp Certification:
Beeswax Wrap Co.: Known for its reusable and plastic-free alternatives to cling film and sandwich bags, all its products are handcrafted in the Cotswolds using local beeswax. The company offers its employees a living wage and a suite of benefits, including paid volunteering days.
Better World Books: More than just a second-hand book retailer, for every book purchased, Better World Books donates to those in need. It also funds literacy grants, fundraises for libraries, and ensures unwanted books are reused and recycled.
Delphis Eco: This eco-friendly cleaning product manufacturer is the first UK brand to create packaging entirely from domestic recycled plastic milk bottles. Its toxin-free products are made with biodegradable plant-based ingredients.
Eco Union: This is the UK’s first brand offering eco-friendly and sustainably sourced decorating products, including paint trays, brushes, and other decorating tools.
Emma Bridgewater: A well-known British homeware brand specialising in handmade and hand-painted pottery collections, Emma Bridgewater infuses a sense of ‘cottagecore’ into your home.
To obtain B Corp certification, a company must undergo an intensive certification process. B Lab assesses the company’s impact on their employees, customers, community, and environment, and scores the company in a B Impact Report. The company must score at least 80 in every impact category to gain certification. Furthermore, the company must have been in operation for at least a year to be eligible for the B Lab assessment.
The process of becoming a B Corp involves several steps:
Step 1: B Impact Assessment and Disclosure Questionnaire: This series of around 200 questions about your company covers its size, sector, and market. At the end of the assessment, companies must disclose any sensitive practices, fines, and sanctions related to their business practices.
Step 2: Legal Requirements Compliance: Companies must amend their corporate bylaws to legally balance profit and purpose, offering legal protection to directors and officers to consider all stakeholders’ interests.
Step 3: Assessment Review: After submission, a company representative can schedule a review time to provide documentation and clarify any ambiguous responses.
Step 4: Additional Document Submission: B Lab may request more documentation based on the responses to certain questions.
Step 5: Background Check: Most of the time, B Lab will perform a background check on the company using public records, news sources, and searches for company names and executives.
Once certified, B Corps must update their BIA every three years and recertify to ensure the continued adherence to the ethical business practices that earned them the B Corp Certification.
Becoming a Certified B Corp brings numerous advantages. Besides the societal and environmental benefits from committing to ethical business practices, companies often experience the following:
1. Credibility, Trust, and Loyalty: Being B Corp Certified means adhering to strict legal practices, fostering trust and loyalty from customers.
2. Attractiveness to Investors: Investors often seek worthy causes, making a B Corp an attractive investment option aligning with their principles.
3. Greater Company Control: Unlike traditional corporations, B Corporations commit to more than profit, giving owners more control over their company’s direction.
4. Employee Recruitment: B Corps are committed to good business practices, including hiring and employee treatment. This helps attract employees who value working for a company making a positive impact.
5. Financial Savings Through Waste Reduction: B Corps’ commitment to environmental sustainability often leads to financial savings by reducing waste.
While the role of consumer demand in driving companies towards B Corp status is indeed significant, it’s worth noting that only about a third of B Corps are involved in direct selling to consumers. The majority are businesses that provide services to other businesses.
In the nascent stages of the B Corp movement in the UK, the primary stakeholders were predominantly impact investors. However, as time progressed, an increasing number of mainstream investors and companies started to take notice and engage. This evolution is something that can be charted and it indicates that there’s a growing interest in acquiring B Corp certification amongst diverse businesses.
This trend becomes even more apparent as influential institutions like Coutts, known as the Queen’s bank, and the prominent city law firm, Mishcon de Reya, publicly flaunt their B Corp status on social media platforms. Such high-profile endorsements are likely to inspire more professional services companies to pursue and acquire B Corp certification.
ESG Pro – leaders in corporate ESG reporting – also assist businesses with the B Corp journey. Because of their incredible knowledge of the GRI, and the three pillars of ESG, they have an in-house team of lawyers, social experts, and environmental professionals who help clients from every sector to achieve their B Corp status faster than one would normally expect.
With complete B Corp support packages starting at just £2,250, (read more here) there’s no reason for any business not to be enhancing its reputation and getting started with a programme which attracts new customers!