Click the links below to read our top 13 frequently asked questions about B Corps:
What are B Corporations and why do we need them?
B Corps are for profit businesses which operate for the benefit of both shareholders and stakeholders.
B Corporations, or B Corps for short, have created a different vision for the purpose of business. They are reinventing business to operate for people and planet as well as profit.
Around the world the purpose of business is being rethought. It is no longer good enough just to maximise returns to a shareholder, regardless of social & environmental consequences. This is the future: today’s most exciting businesses have moved on from this outdated idea, and have taken responsibility for their social & environmental impact.
B Corps formally operate for the benefit of both shareholders and other stakeholders. B Corps are certified by the non-profit B Lab to take responsibility for, and meet rigorous standards of social and environmental performance, accountability, and transparency. This leads to deep change within organisations which are robust in the face of new ownership, new management and new employees.
Is B Corp relevant to me?
Any for profit business can access the free online assessment and start their journey to becoming a B Corp.
The B Corp assessment is a tool that any business can use to make this transition. And as a B Corp, you are part of the global demonstration that business can succeed commercially, whilst also formally using its awesome power to nurture and restore our society and our planet.
Is the B Corp community growing?
The B Corp movement is growing globally - fuelled by the interest of millennials, conscious consumers, responsible investors, multi-national and public company trailblazers and future-focused policy makers. Today, there is a growing community of more than 2,300 certified B Corps from 67 countries and over 130 industries working together toward 1 unifying goal: to reinvent business.
What does it really mean to become a B Corp?
Read here for what this certification has meant for Lily’s Kitchen, a fast growing organic pet-food company. Or here to read about Forster Communications story as a purpose led PR company and why B Corp certification was a natural fit for them. Please contact us if you would like any help or to discuss it at firstname.lastname@example.org.
Is Danone really going to become a B Corp?
Danone – and other big companies – are on the B Corp journey. Danone’s Chief Executive Officer, Emmanuel Faber, has publicly committed to a longer term goal of certifying Danone’s global operations as a B Corp; in the meantime, a number of Danone’s subsidiaries have already certified as B Corps, and many others are going through the process of measuring their environmental and social impact with a view to certification as well.
B Lab has created the Multinational and Public Markets Advisory Council (MPMAC), a multi-stakeholder advisory body tasked with recommending a meaningful and manageable path to certification for Multinational Public Companies. Danone has been involved in this process and its findings are due to be released in early 2018.
I’ve heard that many US states have passed laws to create a legal form called Benefit Corporations. B Corps? Benefit Corporations? What is the difference?
B Corp is a certification. Benefit Corporation is a legal form.
In the US, company law operates at a state level, and for-profit company law tends to be inflexible, forcing directors to maximise shareholder value irrespective of any other consideration. Therefore, B Lab has campaigned to pass laws to create a new legal company form called Benefit Corporation legislation. This changes the purpose of the company so that it operates not just for shareholders, but also for workers, the community, and the environment, ranking them alongside shareholders, and not subordinate to them. This law has now been passed in 33 US states and in Italy and is under consideration in several other countries, including Argentina and Australia.
All Certified B Corps in the US must, if possible, adopt a corporate governance structure that requires accountability to all stakeholders, and not just shareholders. Under the US system, some companies (such as limited liability companies) may be able to do this with a simple change to their operating documents. But for other US entities (such as corporations formed in Delaware and certain other states), the only way to adopt stakeholder governance is to convert to a Benefit Corporation, and for those companies, certification does require conversion to a Benefit Corporation.
In addition to the B Corps that have converted in order to achieve certification, thousands of US businesses that are not certified have chosen to use the benefit corporation structure in order to create a stakeholder-centric governance structure.
In the UK, the Companies Act (2006) is more flexible, enabling businesses to operate for the wider purpose of all stakeholders - although it is not enforcing these considerations. It is therefore possible within the UK Companies Act for B Corps to meet the legal requirement by amending their Articles of Association to embed the commitment to treat all stakeholders' interests equally. The effect is identical to that of the US legal requirement laid out in the Benefit Corporation legislation. B Lab UK created a Policy Council chaired by B Corp Bates Wells Braithwaite which has established this UK Legal Requirement. For details on the legal requirement that UK B Corps have to meet (by including these into their Company Articles) please see here.
Is there Benefit Corporation legislation in the UK?
Not yet! But we’re working on it…
B Lab UK is working with the UK Government to create a set of model articles that makes it frictionless for entrepreneurs and corporates to adopt the B Corp legal requirement. B Lab UK seeks to build on the recommendation of the Government’s Mission Led Business Review which was for Government to explore the creation of a Benefit company legal form. Currently, this is work in progress.
What role does Government have in supporting the B Corp movement?
Government is part of the solution.
Government can support the movement of B Corps by matching the facts about the working poor, the inequitable distribution of proceeds gained from business, with the opportunity to support a wider base of businesses that operate in everyone’s interests, not just the few that might be shareholders or directors. Government has the power to create policy and legislative frameworks that endorse this as the default way for businesses to operate. There are three areas in which Government could influence the shape of our economy in favour of many, not a few:
- By procuring goods and services from companies, such as B Corps and social enterprise and businesses, which are focused on and are able to account for the broader social and environmental impact they create. The Welsh Government has led the way globally here by enacting the Wellbeing of Future Generations law. This requires that all procurement decisions from public bodies consider the implications on current and future communities and citizens. B Lab UK will continue to lobby for this long term, inclusive approach to be implemented and accounted for in public procurement strategies.
- By creating a new legal form in primary legislation which is designed to serve the interests of all, not a few.
- By ensuring that companies measure their impact on society and the environment and report on it to their customers, clients, and to all their stakeholders. This enables them to feel authentically served by the company they work for, shop with, invest in or partner with. By combining support for certification of B Corps with improved accountability of all companies, it will become easier to identify those companies that are committed to creating benefit from all from those who merely talk about it. Through this approach, we expect that businesses that create a negative impact will be exposed and forced to reform.
Seriously, what is the difference between a B Corp and a Social Enterprise?
We’re different, but highly aligned and sing from the same song sheet.
First of all, let’s define B Corps (see question 1). B Corps are for–profit businesses which commit to create a material positive impact on society and the environment through their operations. They may certify as a B Corp by earning points on the B Impact Assessment either / both by directly addressing a social or environmental need as their core revenue stream; (i.e. through what they do - such as providing a service which tackles a particular social or environmental need e.g. Big Issue); and / or by how they do business (such as how they support their staff, their community and whether and how they measure and seek to reduce their environmental footprint etc in their operations, e.g. COOK Foods).
There are points in the assessment accorded to both of these dimensions and there are many permutations in how the threshold score of 80 points can be achieved. This allows for a broad range of businesses from over 131 sectors to be part of the B Corp movement.
In the UK, we are fortunate to have such a developed concept of social enterprise and an active community of businesses who are focused on achieving better outcomes around social and environmental areas. For further details on the criteria to meet the UK social enterprise definition, including the required use of profits and asset locks, see the SEUK website.
So whilst there may certainly be some social enterprises that also certify as B Corps, the majority of B Corps in the UK would not self-classify as social enterprises under the UK definition. B Lab’s focus is building on the powerful examples of social enterprises and extending it to support mainstream businesses that give the same rigour to their social and environmental impact as they do to their financial returns. We see this as a great opportunity to make a difference at scale and by doing so, to reinvent the role of business in society.
Are B Corps mostly new companies?
Some B Corps are new. Some are old. Some are in between.
One of the strengths of the B Corp movement is that it can apply to companies of any size and age. However, it is true that we see a growth in early stage companies who want to embed this approach into their structures from the start. There are also famous brands such as Patagonia and COOK Foods who have been committed to social and environmental impact since their inception, long before B Corps existed, and have joined the B Corp movement over the last decade.
The UK B Corp community is spread right across the spectrum of age and size. Young entrepreneurs are excited to find a way to combine their passion for achieving something broader than profit with a strong robust financial model. For details of companies in our community please see here. Other businesses use the B Impact Assessment to make changes to their business operations and purpose, with the view to certify in the future.
How easy is it for a B Corp to raise capital or be purchased by a larger mission led company? Can being a B Corp help you scale?
Yes, being a B Corp can help you scale.
US tertiary education company Laureate was the first B Corp to go public and raise capital via an Initial Public Offering (IPO) in 2017. It raised $430m through Nasdaq and a further $380m from private equity firms such as KKR. The B Corp certification was seen as an attraction as the value of the impact focus was recognised by investors.
We also see an interest in comparatively smaller, newer B Corps, (such as Pukka Herbs and People against Dirty), being purchased by larger more traditional companies (such as Unilever and SC Johnson respectively). This benefits both parties: the purchaser recognises the value of the B Corp certification in attracting and retaining talent and in its appeal to a wider customer base, and the purchased company is offered a route to exit whilst ensuring that the mission of the company is protected
Which are the biggest B Corps?
KeHe, Laureate Education, Natura – to name a few.
US organic food company KeHe, US tertiary education company Laureate Education (mentioned above) and Brazilian cosmetics company Natura are three of the largest B Corps. Natura has a revenue of over $4bn, over 1.4 million consultants and over 10,000 direct employees. It has recently purchased the mission aligned The Body Shop and also owns the Aesop brand.Also please refer back to question 3 for more details on the MPMAC around the increasing interest from larger and public companies in the certification process.
Could an oil company become a B Corp?
Any business can become a B Corp as long as it meets the criteria.
The B Impact Assessment enables a business to measure and manage its environmental and social impact. The assessment and review process delves further using the Disclosure Questionnaire and our own Due Diligence to ensure that there is no material breach of the interdependence code that must be signed for certification. This code commits B Corps to creating a positive impact for people and planet whilst generating profits.
Our Theory of Change is that any company that is committed to creating social and environmental impact, whatever their previous activities, can consider certification. B Lab needs to assess whether an oil company has already put in place an alternative which creates a positive impact on the planet, such as substituting renewable energy sources for fossil fuels. B Lab will be considering how significant this is in its entire business operations, the extent to which this transition has already taken place, and whether the culture and processes are in place to ensure that this direction of travel is maintained and enhanced. We would not expect such a transition to happen quickly but it would be a journey we would welcome any company to go on.
For more on a future scenario where Exxon is a B Corp – check out this Forbes article from Paul Klein. of a Benefit company legal form.