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B Corp Certification: How to demonstrate your company’s ESG credentials

With over 6,000 B Corps worldwide, including household names such as Patagonia and Ben and Jerrys, the B Corp symbol is quickly becoming a powerful signifier that a business is committed to ESG.

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Published 8 December 2022

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In recent years, demonstrating a commitment to Environmental and Social Governance (“ESG”) has become central to the ability of companies to maintain customer engagement and potentially attract investment. However, due to the lack of consensus regarding ESG, many companies have been accused of greenwashing or paying lip service to this area. One increasingly popular method of demonstrating substantive ESG credentials is for companies to become B Corp certified, enabling them to place the B Corp logo on their marketing materials and products. With over 6,000 B Corps worldwide, including household names such as Patagonia and Ben and Jerrys, the B Corp symbol is quickly becoming a powerful signifier that a business is committed to ESG.

B Corp Certification is undertaken by the not-for-profit organisation B Lab, which was formed in 2006 with the purpose of designing standards and programs to shift the focus of companies towards addressing the fundamental challenges of the modern world. For that purpose, B Lab has developed the B lab impact assessment, a point based holistic review of a company’s environmental and social impact. To achieve certification as a B Corp a company must achieve the high minimum score of 80 in the impact assessment, displaying a commitment to ESG. In addition to satisfying the impact assessment, a key foundation of B Corp certification is for a company to implement stakeholder governance. This requires a company to enable its’ directors to consider wider interests beyond profit, such as those of employees and the environment, when pursuing the development of their business. As such, an important part of the application will be enshrining key ESG principles into the applicant company’s constitution.

The route to certification is increasingly strenuous depending on the size of the applying company, in order to recognise the outsized impact some multinational companies can have in contribution to ESG. All companies must obtain at least 80 points on the B Lab impact assessment and complete a confidential disclosure questionnaire declaring any potentially sensitive practices, fines or sanctions which may require remediation to achieve certification. Following this, a company must commit to amending their articles of association to give effect to stakeholder governance. Certification can take from just a few months to several years depending on whether a company wishes to maximise its score in the impact assessment.

Having done so before, should your company be considering starting the process of applying for B Corp certification, Collyer Bristow are well placed to assist with making the requisite constitutional changes required to achieve your aim.

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Shorter Reads

B Corp Certification: How to demonstrate your company’s ESG credentials

With over 6,000 B Corps worldwide, including household names such as Patagonia and Ben and Jerrys, the B Corp symbol is quickly becoming a powerful signifier that a business is committed to ESG.

Published 8 December 2022

Associated sectors / services

Authors

In recent years, demonstrating a commitment to Environmental and Social Governance (“ESG”) has become central to the ability of companies to maintain customer engagement and potentially attract investment. However, due to the lack of consensus regarding ESG, many companies have been accused of greenwashing or paying lip service to this area. One increasingly popular method of demonstrating substantive ESG credentials is for companies to become B Corp certified, enabling them to place the B Corp logo on their marketing materials and products. With over 6,000 B Corps worldwide, including household names such as Patagonia and Ben and Jerrys, the B Corp symbol is quickly becoming a powerful signifier that a business is committed to ESG.

B Corp Certification is undertaken by the not-for-profit organisation B Lab, which was formed in 2006 with the purpose of designing standards and programs to shift the focus of companies towards addressing the fundamental challenges of the modern world. For that purpose, B Lab has developed the B lab impact assessment, a point based holistic review of a company’s environmental and social impact. To achieve certification as a B Corp a company must achieve the high minimum score of 80 in the impact assessment, displaying a commitment to ESG. In addition to satisfying the impact assessment, a key foundation of B Corp certification is for a company to implement stakeholder governance. This requires a company to enable its’ directors to consider wider interests beyond profit, such as those of employees and the environment, when pursuing the development of their business. As such, an important part of the application will be enshrining key ESG principles into the applicant company’s constitution.

The route to certification is increasingly strenuous depending on the size of the applying company, in order to recognise the outsized impact some multinational companies can have in contribution to ESG. All companies must obtain at least 80 points on the B Lab impact assessment and complete a confidential disclosure questionnaire declaring any potentially sensitive practices, fines or sanctions which may require remediation to achieve certification. Following this, a company must commit to amending their articles of association to give effect to stakeholder governance. Certification can take from just a few months to several years depending on whether a company wishes to maximise its score in the impact assessment.

Having done so before, should your company be considering starting the process of applying for B Corp certification, Collyer Bristow are well placed to assist with making the requisite constitutional changes required to achieve your aim.

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