Sought-after certification faces criticism as more multinationals are awarded ethical status
Since the first “B Corp” status was awarded in 2007, the number of companies that have received the certification for their environmental and social efforts has risen rapidly.
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The original B Corp mission was “to change the way capitalism works in order to save the world”, said Business Chief. But “the ecosystem” behind the initiative “is now under scrutiny,” said the Financial Times (FT), as critics say the movement is getting further away from its founding principles.
What is a B Corp?
B Corps are businesses that “are committed to acting as a force for good – declaring planet, people and profit as equally important”, said Jenny Costa, founder of the B Corp-certified business Rubies in the Rubble, in The Grocer. The certification indicates that a company meets a certain number of ethical criteria.
According to its website, B Corp began in 2006 “with the idea that a different kind of economy was not only possible, but necessary”. Companies are assessed by the certifying body, B Lab, which determines whether an organisation meets the required “standards of social and environmental performance, transparency, and accountability”.
There are now around 6,500 certified B Corps globally operating in more than 160 sectors. Well-known brands include Ben & Jerry’s ice cream, clothing brand Patagonia and Natura & Co, the parent company of Body Shop and Aesop.
How do companies become a B Corp?
Companies fill out a “B impact assessment” (BIA), which examines five areas: governance, workers, environment, community and customers. Points are scored based on the information provided – if 80 or more points are achieved, and a company passes the disclosure questionnaire review, then the verification process begins.
This process “can be long and expensive”, said the FT – and retaining the status comes at a cost. The amount varies by company and region, but can cost “anywhere between $500 and $50,000 each year”. Companies are required to incorporate the B Corp commitment into their mission statements, and the certificate has to be reviewed every three years.
The UK is one of B Lab’s “fastest-growing regions”, said the FT. London was named the B Corp “capital of the world” last year, said City A.M., when it became home to more than 1,000 certified businesses.
What are the benefits?
B Corp sets out to be “a widely recognised gold standard” of balancing “profit with purpose”, said the FT. Certification is “good PR” – “both for the business and the movement”.
Companies frequently display their B Corp credentials “in the same way they might advertise organic or Fairtrade status”, the paper continued, which can help them appeal to socially and environmentally conscious shoppers.
It’s not only consumers that the status can help to attract. Younger workers “have never been more switched on to the notion of company purpose and culture”, said The Drum. Having B Corp status “could soon feel like a pre-requisite for being a credible employer”.
Are there drawbacks?
“There are limits to the certification,” the FT continued. Companies might commit to paying employees “a fair wage but there is no requirement to extend this further down the supply chain”, for example.
B Lab is looking to “resolve some of the issues” that mean companies are “able to rapidly meet the minimum points requirements”. Currently, a firm can “pick and choose which criteria apply to them”, but the certifying body plans to “force B Corps to be more prescriptive about where they stand on 10 specific topics”, including human rights and fair wages.
Smaller companies “who were early adopters” of B Crop’s standards are “concerned” that there’s a push to make big multinational companies “‘less bad’ rather than to be transformationally ‘good’”.
Can there be too many B Corps?
The issue isn’t necessarily the number of B Corps; it’s whether the rigour of the certification process can be maintained as more businesses seek the status. Many of the initial B Corps “were either small or medium-sized, with bold, purpose-driven agendas”, said Raconteur. Now, around 90 are multinationals.
B Lab co-founder Bart Houlahan told the FT that the number of companies looking to achieve B Corp status “continues to accelerate” – and while he feels “incredibly excited” about that, he also wants to be “incredibly careful”. “How do we scale with integrity while keeping the rigour and credibility of the certification?” he asked.
The certification last year of Nespresso, a subsidiary of Nestlé, “was the straw that broke the camel’s back for many in the movement”, said Raconteur. Critics say the farmers in its supply chains are “earning poverty incomes” and that the brand’s coffee capsules “create huge amounts of waste”, said the FT.
But the “pockets of dissent” are “small compared to the swelling enthusiasm elsewhere”, said the paper, and the number of companies that choose to give up their B Corp status is “minimal”.
Dr Malu Villela, a senior research associate at the University of Bristol, told Raconteur that the movement “needs to step back and critically reassess its purpose and how far it is living up to its potential”. To be “radical enough”, the new certification model shouldn’t let companies “pick and choose what standards suit their business”.
B Lab should, she thinks, not just help B Corp members to “build social capital, but to help build change within the network and beyond”.
