Your burning questions about B Corp answered

Most importantly, becoming a B Corp is a way for your business to officially commit to prioritizing positive social and environmental change within your operations and business model. But B Corp is more than a ‘label’ alone. The B Impact Assessment (BIA) is a powerful tool that can measure a company’s entire social and environmental impact. By working on B Corp (re)certification through the BIA, a company can set improvement goals, create more positive social and environmental impact, and track performance over time.

Additionally, becoming B Corp certified has numerous benefits from a business perspective. It can help you increase consumer trust and loyalty, attract and retain talented employees who share the same values, and access funding from investors who prioritize social and environmental causes. Also, you’ll join a community of like-minded businesses who all share the belief that business can contribute to solving social and environmental problems. Ultimately, becoming a B Corp can help your business achieve its mission and purpose while increasing the positive impact it makes on the world. In this blogpost here we dive deeper into the benefits of becoming a B Corp.

The BIA is a comprehensive tool that assesses a company’s impact on its governance, workers, community, environment, and customers. The tool helps businesses identify areas for improvement and implement best practices in sustainability and social responsibility. The BIA is a score-based assessment, where each answer to a question gets a score, and the ‘more sustainable’ your answer, the higher your score. When a company submits its filled-in assessment with 80+ points, it is eligible to move forward with the B Corp certification. Some companies use the BIA tool but are not certified as B Corps. They use the BIA as a management tool to track, manage, and improve their social and environmental impact. This way they benefit from the assessments’ insights by using the tool to identify areas for improvement and thus enhancing their sustainability practices. However, it’s important to note that without certification, companies do not have the same level of accountability and transparency as certified B Corps, which undergo a rigorous certification process and commit to using their business as a force for good.

Impact Business Models (IBMs) are one of the three underlying aspects of a company’s social and environmental performance that are assessed in the B Impact Assessment, along with the questions about a company’s operations and the disclosure questionnaire. Most companies have a total of 140 operational points available to earn in the BIA, distributed across five different impact areas: Governance, Workers, Community, Environment, and Customers. The IBMs in the assessment go a level deeper than the operational questions by identifying and evaluating whether and how a company’s business model is designed to create a specific positive social and/or environmental impact. For instance, the company’s business model may consist of a product or service that is beneficial to a community, may relate to a particular process or activity such as workforce training or local supply chains, or may concern the structure of the business, such as a distributive, worker-focused ownership model. An Impact Business Model is focused on benefiting a specific stakeholder group with a specific positive benefit or outcome, rather than a ‘general’ overall positive impact. Each IBM section can be worth up to 30 points, but IBMs are difficult to achieve. Most companies completing the BIA therefore have 0-2 IBMs. When considering whether your company has an IBM, it is helpful to consider the underlying principles of an Impact Business Model — they should be specific, material, verifiable, lasting, and extraordinary.

The B Corp certification and verification process doesn’t have a one-size-fits-all timeline, as it varies depending on the size and complexity of each business. The first step of the process is filling out the BIA, which can take a couple of weeks for small businesses to several months or longer for larger or more complex companies. During this time the assessment can be saved and revisited for easy access. The time it takes to then submit the assessment will depend on the company’s initial baseline score and whether improvements are needed to reach 80+ points. With the changing standard to be released in 2024, this will work a little differently. Then it will depend on the level of compliance you already have with the requirements in the standard. After completing the B Impact Assessment, eligible companies interested in pursuing certification undergo a review process with B Lab to verify the data in their B Impact Assessment. The review takes place in five to six stages, to get a more detailed timeline overview for these stages click here.

As you can see, the length of the entire B Corp certification and verification process can vary. Small to medium-sized companies can expect to wait around 6-8 months from beginning the B Impact Assessment to announcing your B Corp certification to the world, while larger multinationals or companies with many related entities may face a longer verification process. Companies operating in controversial industries may also expect a longer wait time.

This is often a complex question. If you’re a subsidiary and want to get B Corp certification, you can do this separately from your parent company. If a subsidiary is operationally independent, it can have its own separate B Impact Assessment, adherence to the B Corp legal requirement, and profile page on www.bcorporation.net if certified. However, there are additional requirements, and you need to make sure you can demonstrate operational independence from your parent and other potential connecting companies. B Lab only certifies entities, not business divisions, brands, or units individually. If your company is highly interrelated with other entities, such as a parent company, it is often more advisable to look at B Corp certification at a parent company level. Learn more about interrelated entities here.

Good to know: if you share a name with a parent company or sister companies you can certify separately but the other entities will need to commit to B Corp certification too. An example here is Unilever New Zealand. This rule is there to avoid brand confusion about what exactly is certified and what is not. If you do decide to certify as a subsidiary that shares a name as their parent or sister company than those who share a name should commit to certification themselves and make a commitment public within three years and achieve certification within six years after date of the subsidiary becoming certified.

In all cases, a parent company relates to your process in becoming a B Corp. The relationship you have with your parent company is reviewed in the ‘Governance’ category in the B Corp assessment.

B Corps that have earned certification are required to share their B Impact Assessment overall scores and category scores on their public profiles on B Lab Global’s website. For public companies and their subsidiaries there are additional transparency requirements, including the publication of their entire B Impact Assessment. Sensitive information like revenue will be redacted. Companies that have material items on their Disclosure Questionnaire may also be subject to transparency requirements, which could involve the disclosure of that information. The Terrace as well as B Lab directly support companies in their transparent B Corp communication.

Involving different stakeholders throughout the B Corp certification process is a valuable way to build support, create a sense of ownership, and demonstrate the company’s commitment to creating positive social and environmental impact. However, how to involve stakeholders can be complex, and is specific to each company. At the Terrace, we advise companies to develop an engagement plan before, during and after the B Corp certification process. For instance, it is important to identify and address potential risks that investors may perceive, to inform your company’s board or investors regarding becoming a B Corp. At The Terrace we also advise to build engagement internally at all levels of the organization by developing communication campaigns to involve employees.

Effective communication with stakeholders about the certification process is important. However, at The Terrace we advise to involve stakeholders in the certification process itself as well. During the assessment various stakeholders such as employees, group holdings, suppliers, customers and landlords can deliver valuable input to help create a complete and comprehensive BIA. In addition, it can be very beneficial to involve stakeholders in the creation of an action plan to improve the company’s sustainability score. This can be done for example by working with internal working groups, investors or management to identify action points, or larger impact projects. When executing the action plan, it’s can also be important to involve suppliers, such as by facilitating impact projects that aim to improve the company’s impact as well as that of its suppliers with shared goals to work on.

We also notice there’s an evolution in the B Corp movement, with the inclusion of large enterprises and sustainability becoming more mainstream. In short: we don’t think it negatively influences the value of being part of the B Corp community. We support large enterprises being a part of the solution towards sustainability. For our entire thought train: you should read our blog Large enterprises joining the B Corp movement.

As a company, you can get certified and recertified without a consultant. However, clients find that hiring a consultant can be beneficial because of the complexity of filling in the BIA, communications with the B Lab analysts and collecting all the documentation that is required. Our B Leaders can help you with efficiently going through the entire certification process, and avoiding any pitfalls to help you successfully achieve the goal of getting certified. The Terrace can also support your company in strategizing concrete action plans for improvement opportunities to recertify as a B Corp with a better score. There are three levels of involvement that we can provide for a B Corp journey: We can be the coordinator where we help employees at a company to capture the content and fill in the BIA themselves. We can also be the co-creator, where we separate the workload and help co-manage different action points and gather input from internal stakeholders. Lastly, we can be the implementor where we will be responsible for the implementation of the improvement plan, taking away burden of internal teams. Here we can help steer the development of initiatives and policies.