Related Entities
Subsidiaries
Subsidiaries can sometimes certify independently of their parent company if the parent is not willing 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 because B Corp Certification is fundamentally intended to holistically assess the social and environmental performance of a complete business.
Therefore, B Lab needs to determine that a subsidiary seeking independent certification is a ‘complete and distinct’ business; this includes being a distinct legal entity, having its own set of Directors, exercising control over its products/services and running its own financial accounts.
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 are not substantial enough to create differentiation in the market (as determined by B Lab).
If you’re unsure of how your company’s name affects your pursuit of B Corp Certification, get in touch with B Lab UK.
Subsidiaries with the same name as their parent
Subsidiaries with the same name as their parent company may certify independently if the subsidiary is in a distinct geography, has a separate website and is operationally independent.
However, to alleviate brand confusion or risk the credibility of the B Corp brand, parent companies (if <$1bn revenue) with the same name as B Corp Certified subsidiaries are required to:
- Within 3 years, publicly announce an intention to certify as a B Corp
- Within 6 years, achieve B Corp Certification
Parent companies (if >$1bn revenue) would, on the other hand, be required to, within 3 years, join the B Movement Builder programme.
Subsidiaries with different names from their parent
If the subsidiary has a wholly different name from their parent (e.g. Ben & Jerry’s and Unilever), then the subsidiary may certify independently. Parent companies with different names from their B Corp Certified subsidiaries do not need to pursue certification to maintain their subsidiaries’ certification.
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 capitalisation are required to make non-sensitive answers of their full B Impact Assessment transparent on their the company’s B Impact Report 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 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 capitalisation 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 $500m in annual revenue, this site review will be conducted prior to the company's initial certification. Site reviews are conducted at B Lab’s discretion and typically occur during a company’s initial certification and recertification years.
Branding guidelines for subsidiaries
Example: Ace Solar UK is a Certified B Corporation
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 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.
If a B Corp 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 that is certified. This applies to affiliated entities without a common parent, subsidiaries of the same parent, and franchises of a non-certified franchisor.
Example: If all of Ace Solar UK’s products are sold and labelled for the UK, the subsidiary may use the Certified B Corp logo on its products in the UK. However, if Ace Solar UK also sells products in Spain, and Ace Solar products sold in Spain are also sold by a different Ace subsidiary that is not certified, Ace Solar UK may not use the Certified B Corp seal on products sold in Spain.
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 for affiliated entities
Example: Ace Solar UK is a Certified B Corporation
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.
Example: If all of Ace Solar UK’s products are sold and labeled for UK, it may use the Certified B Corp seal on its products in UK. However, if it sells products in Spain as well, and there are Ace Solar products sold in Spain by affiliated companies that are not Certified B Corps, Ace Solar UK may only use the Certified B Corp seal on products sold in UK.
Franchises
B Lab is developing new guidelines for franchises and therefore, a moratorium is currently in place. This moratorium will apply to the certification of franchisor entities that do not own 51% or more of global franchise store locations, in particular if the franchisor operates in the same market/s where there are independently owned franchisees (and the majority of locations in that market are excluded from scope as independently owned franchisees) and therefore are not mandated to certify within scope/alongside a franchisor.
This moratorium is to take immediate effect on companies that meet these criteria. It does not mean that B Lab will never certify franchises, but we will be working on evaluating and updating our franchisor/franchisee rules and guidelines, to account for companies that operate in this manner, and to provide a meaningful path forward toward certification.
Franchisors that own and/or directly operate greater than 50% of franchise locations remain eligible to pursue B Corp Certification at this time.
Independent franchisee certification
Example: Ace Solar UK is a Certified B Corporation
Example: Ben & Jerry’s is a Certified B Corporation, but their parent company, Unilever, is not.
The B Corp 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 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.
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.
Example: 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.
