Towards a new stage of B Corp certification (Part II)

What was the stakeholder consultation like? 1,051 people gave their views on the impact, attainability, and clarity of the new standards.

«The results of the consultation help us to understand where the second version of the new standards, to be published later this month, is heading.»

In September 2022, the first draft of the new B Corp standards was released for preliminary consultation. This consultation sought the views of stakeholders through surveys, virtual focus groups and expert interviews with a total of 1,051 participants from B Corp companies and the general public (researchers, academics, consultancies and other experts).

The consultation focused on gathering stakeholder feedback on three variables of the standards (impact, attainability, and clarity), both at a general level of the new standard and at a specific level for each of the 10 performance themes.

What are the views of stakeholders? The main results of the consultation show a positive view on the approach of the new standards, although there is considerable concern about the increased requirements.

Conclusions of the stakeholder consultation are:

Confirmation of the ambition and impact of the new standards. Overall, most respondents (+85%) indicated that the new standards represent a high level of social and environmental performance and will help make significant progress on the most pressing challenges.

Greater clarity, but with hesitation. More than 70% of respondents agree or strongly agree that the new standards bring greater clarity to what it means to be a B Corp and could help reduce the risk of greenwashing, although 15% are still hesitant (for reasons such as too open-ended, complex vocabulary…). It is worth highlighting that the level of disagreement is higher among already B Corp certified companies (11%) than among non-certified ones (5%).

«Concerns arise around the possibility that the new standards – given their difficulty and the additional resource intensity and documentation burden they require – will leave smaller companies out of the loop »

Varying levels of attainability, especially according to size, region and whether the company is already B Corp certified. Although most people think that the new standards are attainable for companies, there is concern about the factual possibilities of meeting the level of requirements. 28% of the companies already certified as B Corp consider that they may not be able to comply with the new standards or do not know; and 44% of non-certified companies disagree, strongly disagree, or do not know whether they will be able to comply with this new version of the standards.

Concerns arise around the possibility that the new standards – given their difficulty and the additional resource intensity and documentation burden they require – will leave out of the loop smaller companies (those with zero employees, self-employed or very small companies), service companies, companies in developing countries (“Global South”) or very early-stage companies on their way to impact whose motivation is continuous improvement.

Maintaining the scorecard. Companies believe that the scorecard should be maintained as it is valuable in differentiating levels of performance between companies, motivating continuous improvement and linking incentives and recognition.

Need to evolve how Impact Business Models (IBMs) are reflected. 45% of people do not agree or do not know their opinion on how “Impact Business Models” are reflected in the first version of the standard. The main reasons are that without this distinctive and recognisable element, the new B Corp certification can be seen as too operationalised (like a checklist) and with less impact on the core business of companies.

What changes are being considered in the second version? Most of the mandatory compliance topics will contain contextualisation adjustments and more clarity on the actions to be implemented.

Based on the concerns shown, the areas of improvement identified for the evolution of the new B Corp standards point towards:

• Contextualisation of standards for companies with structural challenges such as small size, few resources, lower capacity, etc.
• Developing additional requirements tailored to large and multinational companies, taking into account factors such as parent-subsidiary relationships, supply chain implementation, interoperability with other sustainability standards, and matching ambition to the greater resources available to these companies.
• Improvement of performance requirements clarity (supporting content, definitions, application guidance, compliance criteria, etc.).
• The inclusion of a scoring system. In this sense, B Lab is exploring a future scoring model that will use a scale of 0 to 5 to score each requirement within the topics and that will be linked to the achievement of specific compliance criteria.
• The incorporation of “business model assessment” as a requirement for certification. This requirement would apply to all companies as a first step in the certification framework and process. It would include existing questions in the BIA and potentially additional questions that would address other attributes (e.g. how purpose is integrated into the business design and how the company’s financial model is designed to create positive impact).

Of the 10 themes that represent the minimum set of key areas for action to be integrated into corporate strategies, B Lab is working to improve the performance requirements by assessing the adequacy of the following aspects:

«Contextualising the standards for companies with structural challenges, developing additional requirements tailored to large and multinational companies, improving the clarity of performance requirements, incorporating a scoring system and making the “Business Model Assessment” a requirement of certification are the main topics subject to evolution»

1. Stakeholder governance and purpose: include more conceptual guidance on what purpose or risk assessment is; how to align and translate the statutory commitment to stakeholder governance into a public statement of purpose; and how to identify, prioritise and engage stakeholders who may be affected by a company’s decisions.
2. Employee engagement: renaming it ‘workplace culture’ to make it clearer and more accessible; and recalibrating the requirements to include workplace dialogue as a key means of improving culture.
3. Living wage: consider an alternative way for companies to meet the wealth distribution requirements, given that some companies are disadvantaged by structural barriers that prevent them from paying a family living wage to all workers, or by the limitations on criteria in countries where there is no formal living wage calculation.
4. Justice, Equity, Diversity and Inclusion (JEDI): further specify JEDI requirements to provide better guidance to companies, while providing more clarity on what kind of data collection is expected in relation to diversity and inclusion, taking into account geographical capabilities.
5. Human Rights: Recalibrate human rights requirements for smaller and/or service companies to ensure requirements remain proportionate and fair.
6. Climate action: Tailored to specific contexts (size, service companies, etc.) and allow all companies to demonstrate climate action taken in the last two years in line with the company’s climate transition plan.
7. Circularity and environmental management: Rewrite the circularity requirements to indicate the hierarchy of actions.
8. Collective actions: clarify some of the actions and consider using a specific output or outcome as an impact indicator.
9. Impact management: change the name to “Complementary Issues” and redefine the scope to focus only on assessing and acting on BIA issues that are not related to the 10 B Corp certification issues.
10. Risk Standards: consider how to make the Risk Standards more explicit about what is and is not charitable lobbying, and potentially include requirements for transparent corporate political activities and financial management.
11. Management systems: potentially include a new topic on management systems, adding requirements for the systems a company must have in place to support enterprise risk management and ongoing compliance with B Corp certification requirements.

What comes next? The results of this consultation will be used to develop the second version of the new standards, which will be subject to a second public consultation and testing from September-October 2023.

The results of this consultation will be used to develop the second version of the standards, which will be published and subject to a second consultation in September-October 2023.

B Lab will then consolidate a final version of the new standards and submit it for final internal review by its governing bodies. Once confirmed, the implementation and transition timelines will be communicated in advance to all companies interested in B Corp certification. Based on current information, the new standards are expected to be tested in 2024 and become effective on 1 January 2025.

To address the evolution of B Corp certification, R4S can help companies analyse the new performance requirements for B Corp certification and plan and prioritise the work needed to address the gaps identified, including support for initiatives and projects planned within a timeline aligned with the re-certification process.