Related entities
Certifying subsidiaries and other corporate units gives new and existing Certified B Corporations more opportunities to scale or exit while maintaining a high level of social and environmental performance, accountability, and transparency.
B Corporation Certification entails both a performance requirement
B Corporation Certification entails both a performance requirement—B Corps must complete the B Impact Assessment and earn a reviewed minimum score of 80 points—and an accountability requirement to legally consider stakeholders in the company’s decision-making.
Since only entities can meet the dual requirement of performance and accountability, B Lab only certifies entities, not business divisions, brands, or units. If your company is or has a Subsidiary, Franchise, Division, or other affiliated entities, review the guidelines below to determine next steps towards B Corporation Certification.
As B Corporation Certification is designed to assess a company across the entire scope of its operations, companies pursuing Certification that own subsidiaries must include all wholly- or majority-owned subsidiaries in the Certification process.
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Certify Separately
In this case, the company would have a single Certification with only one profile listing on bcorporation.net. The company’s structure will determine how many B Impact Assessments are necessary.
If aspects of the company like governance, procurement, and other operations are centrally managed with easily aggregated data, the company may be eligible to complete one collective B Impact Assessment. If the reverse is true, subsidiaries should complete their own B Impact Assessments and complete the review process separately. The overall combined score for the entire entity will be a weighted average based on revenue or number of employees. In order to certify, the weighted average must be 80 or above. Subsidiaries that would not meet the 80-point bar on their own will likely not be eligible to use the Certified B Corp logo and intellectual property.
The B Corporation Certification annual fee includes the review and verification of one B Impact Assessment. There will be an additional verification fee for each additional assessment review required for the Certification. The annual Certification fee will be based on combined revenue. The verification cost per subsidiary is based on the subsidiary’s annual revenue:
- Less than $100 million; $500 fee
- Greater than $100 million; $1,000 fee
- Less than $500 million; $2,500 fee
- Greater than $500 million; $5,000 fee
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Certify Together
In this case, the company would have a single Certification with only one profile listing on bcorporation.net. The company’s structure will determine how many B Impact Assessments are necessary.
If aspects of the company like governance, procurement, and other operations are centrally managed with easily aggregated data, the company may be eligible to complete one collective B Impact Assessment. If the reverse is true, subsidiaries should complete their own B Impact Assessments and complete the review process separately. The overall combined score for the entire entity will be a weighted average based on revenue or number of employees. In order to certify, the weighted average must be 80 or above. Subsidiaries that would not meet the 80-point bar on their own will likely not be eligible to use the Certified B Corp logo and intellectual property.
The B Corporation Certification annual fee includes the review and verification of one B Impact Assessment. There will be an additional verification fee for each additional assessment review required for the Certification. The annual Certification fee will be based on combined revenue. The verification cost per subsidiary is based on the subsidiary’s annual revenue:
- Less than $100 million; $500 fee
- Greater than $100 million; $1,000 fee
- Less than $500 million; $2,500 fee
- Greater than $500 million; $5,000 fee
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Branding Guidelines for Parent Companies
In this case, the company would have a single Certification with only one profile listing on bcorporation.net. The company’s structure will determine how many B Impact Assessments are necessary.
If aspects of the company like governance, procurement, and other operations are centrally managed with easily aggregated data, the company may be eligible to complete one collective B Impact Assessment. If the reverse is true, subsidiaries should complete their own B Impact Assessments and complete the review process separately. The overall combined score for the entire entity will be a weighted average based on revenue or number of employees. In order to certify, the weighted average must be 80 or above. Subsidiaries that would not meet the 80-point bar on their own will likely not be eligible to use the Certified B Corp logo and intellectual property.
The B Corporation Certification annual fee includes the review and verification of one B Impact Assessment. There will be an additional verification fee for each additional assessment review required for the Certification. The annual Certification fee will be based on combined revenue. The verification cost per subsidiary is based on the subsidiary’s annual revenue:
- Less than $100 million; $500 fee
- Greater than $100 million; $1,000 fee
- Less than $500 million; $2,500 fee
- Greater than $500 million; $5,000 fee
Are you a Parent Company with Subsidiaries?
Remember, Parent companies are not eligible for Certification unless these subsidiary entities are included in their certification process.
Subsidiaries can sometimes certify independently of their parent company if the parent is not interested or able to certify immediately
Subsidiaries are eligible to certify on their own if they are able to demonstrate that they are operationally independent of their parent and/or sibling companies. This requirement is in place as the B Corp Certification is fundamentally intended to holistically assess the social and environmental performance of a complete business. “Independence” allows B Lab to determine what constitutes a “complete and distinct business” for related entities.
To learn more about how B Lab assesses the independence of subsidiaries in relation to their parent companies, click here. In certain cases, maintaining a subsidiary’s B Corp Certification comes with requirements for the parent company. A subsidiary’s ability to certify independently depends in part on whether or not the subsidiary has the same name as its parent company.
In this case, “same name” means the subsidiary’s name is either identical to the parent’s, differentiated exclusively by geography (e.g. Ace Spain), or corporate type (e.g. Ace Inc, Ace LLC) or by other descriptors that is not substantial enough to create differentiation in the market (as determined by B Lab).
A subsidiary with a similar name to the parent company that is meaningfully differentiated by industry (e.g. Ace Automotive) would not be considered to have the “same name.” If you’re unsure of how your company’s name affects your pursuit of B Corp Certification, get in touch with B Lab at support@bcorporation.net. Company Headquarters that are distinct subsidiaries are not eligible to certify on their own.
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Subsidiaries with the Same Name as their Parent
Wholly-owned subsidiaries, majority-owned subsidiaries with a parent company that earns >$1B in annual revenue and public companies with a >$100M market capitalization are required to make non-sensitive answers of their full B Impact Assessment transparent on their the company’s B Corp Profile Page. To ensure the information on the assessment is accurate, B Lab requires that these companies undergo a more rigorous review process, regardless of size. This requirement is in place in order to balance the fact that the B Corp legal requirement to adopt stakeholder governance may be less meaningful for a wholly-owned subsidiary that typically has a single shareholder. Public transparency provides the company with a tangible mechanism to be accountable to interested stakeholders.
Wholly-owned subsidiaries, majority-owned subsidiaries with a parent company that earns >$1B in annual revenue, public companies with a >$100M market capitalization and private companies that earn >$1B in annual revenue are subject to a mandatory Site Review each 3-year certification term at the company’s expense. For subsidiaries that generate greater than $500 MM in annual revenue, this Site Review will be conducted prior to the companies initial certification. Site Review are conducted at B Lab’s discretion and typically occur during a company’s initial certification and recertification years.
If the parent company has revenues in excess of $1 billion and the subsidiary applying for Certification has the same name, but is not wholly-owned, it is subject to the same transparency requirements as wholly-owned subsidiaries.
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Subsidiaries with Different Names from their Parent
Wholly-owned subsidiaries, majority-owned subsidiaries with a parent company that earns >$1B in annual revenue and public companies with a >$100M market capitalization are required to make non-sensitive answers of their full B Impact Assessment transparent on their the company’s B Corp Profile Page. To ensure the information on the assessment is accurate, B Lab requires that these companies undergo a more rigorous review process, regardless of size. This requirement is in place in order to balance the fact that the B Corp legal requirement to adopt stakeholder governance may be less meaningful for a wholly-owned subsidiary that typically has a single shareholder. Public transparency provides the company with a tangible mechanism to be accountable to interested stakeholders.
Wholly-owned subsidiaries, majority-owned subsidiaries with a parent company that earns >$1B in annual revenue, public companies with a >$100M market capitalization and private companies that earn >$1B in annual revenue are subject to a mandatory Site Review each 3-year certification term at the company’s expense. For subsidiaries that generate greater than $500 MM in annual revenue, this Site Review will be conducted prior to the companies initial certification. Site Review are conducted at B Lab’s discretion and typically occur during a company’s initial certification and recertification years.
If the parent company has revenues in excess of $1 billion and the subsidiary applying for Certification has the same name, but is not wholly-owned, it is subject to the same transparency requirements as wholly-owned subsidiaries.
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Transparency and Verification Guidelines
Wholly-owned subsidiaries, majority-owned subsidiaries with a parent company that earns >$1B in annual revenue and public companies with a >$100M market capitalization are required to make non-sensitive answers of their full B Impact Assessment transparent on their the company’s B Corp Profile Page. To ensure the information on the assessment is accurate, B Lab requires that these companies undergo a more rigorous review process, regardless of size. This requirement is in place in order to balance the fact that the B Corp legal requirement to adopt stakeholder governance may be less meaningful for a wholly-owned subsidiary that typically has a single shareholder. Public transparency provides the company with a tangible mechanism to be accountable to interested stakeholders.
Wholly-owned subsidiaries, majority-owned subsidiaries with a parent company that earns >$1B in annual revenue, public companies with a >$100M market capitalization and private companies that earn >$1B in annual revenue are subject to a mandatory Site Review each 3-year certification term at the company’s expense. For subsidiaries that generate greater than $500 MM in annual revenue, this Site Review will be conducted prior to the companies initial certification. Site Review are conducted at B Lab’s discretion and typically occur during a company’s initial certification and recertification years.
If the parent company has revenues in excess of $1 billion and the subsidiary applying for Certification has the same name, but is not wholly-owned, it is subject to the same transparency requirements as wholly-owned subsidiaries.
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Branding Guidelines for Subsidiaries
Wholly-owned subsidiaries, majority-owned subsidiaries with a parent company that earns >$1B in annual revenue and public companies with a >$100M market capitalization are required to make non-sensitive answers of their full B Impact Assessment transparent on their the company’s B Corp Profile Page. To ensure the information on the assessment is accurate, B Lab requires that these companies undergo a more rigorous review process, regardless of size. This requirement is in place in order to balance the fact that the B Corp legal requirement to adopt stakeholder governance may be less meaningful for a wholly-owned subsidiary that typically has a single shareholder. Public transparency provides the company with a tangible mechanism to be accountable to interested stakeholders.
Wholly-owned subsidiaries, majority-owned subsidiaries with a parent company that earns >$1B in annual revenue, public companies with a >$100M market capitalization and private companies that earn >$1B in annual revenue are subject to a mandatory Site Review each 3-year certification term at the company’s expense. For subsidiaries that generate greater than $500 MM in annual revenue, this Site Review will be conducted prior to the companies initial certification. Site Review are conducted at B Lab’s discretion and typically occur during a company’s initial certification and recertification years.
If the parent company has revenues in excess of $1 billion and the subsidiary applying for Certification has the same name, but is not wholly-owned, it is subject to the same transparency requirements as wholly-owned subsidiaries.
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Affiliated Entities with the Same Name without a Common Parent
Affiliated entities with the same name without a common parent can certify independently only if the entity seeking certification has a separate website and is located in a geographically distinct region from its related entities with the same name. In this case, “same name” means the names are either identical or differentiated exclusively by geography, industry (e.g. Ace Spain or Ace Auto), or corporate type (e.g. Inc, LLC).
Brand guidelines
The B Corporation Intellectual Property, including but not limited to the name Certified B Corporation™ and the B Corporation Logo™, can only be used by the entities that are Certified and not by the affiliated entities. Use of the B Corp intellectual property should be clearly applied to the distinct certified entity.
If the certified company sells products or services outside of its distinct geographic location of operations and there is an affiliated company with the same name where the company’s products/services are sold, the B Corp Intellectual Property can only be used in the geographic location of the company certifying.
Franchisors are eligible to certify
If the Franchisor has geographic distinction and operates stores or operating entities, they can use the Certified B Corp IP at those sites; otherwise, they can only use it at the Corporate level and on the Corporate webpage.
Independent Franchisee Certification
The B Corporation Intellectual Property, including but not limited to the name Certified B Corporation™ and the B Corporation™ Seal, can only be used by the entities that are Certified and not by any non-Certified parent, subsidiaries, or related entities, including those that share the same name. Use of the B Corp intellectual property should be clearly applied to the distinct certified entity.
Examples:
- Ace Solar UK is a Certified B Corporation
- Ben & Jerry’s is a Certified B Corporation, but their parent company, Unilever, is not.
If the certified subsidiary sells products or services outside of its distinct geographic location of operations and there is an affiliated company with the same name where the company’s products/services are sold, the B Corp Intellectual Property can only be used in the geographic location of the company certifying. This applies to affiliated entities without a common parent, subsidiaries of the same parent, and franchises of a non-certified franchisor.
If all of Ace Solar UK’s products are sold and labeled for the UK, the subsidiary may use the Certified B Corp seal on its products in UK.
However, if Ace Solar UK also sells products in Spain, and Ace Solar products sold in Spain are also sold by companies not Certified, Ace Solar UK may not use the Certified B Corp seal on products sold in Spain.
Brands, divisions, and affiliated entities (including subsidiaries) of a parent company that is a Certified B Corp with a different name than the certified parent may only use the Certified B Corp Intellectual Property if they meet the minimum verified performance requirement independently.
How to improve your score
B Corps are required to score a minimum of 80 points on the B Impact Assessment. It’s time to review your assessment, find and execute on improvements.
