What Does Certified B Corporation Mean?

Posted by Daniel Cain on

As I’ve looked more into what actually works when trying to make a positive impact on the environment, I kept seeing many companies designated as “B Corporations”. So I started looking for companies with this label when making choices on what to buy for our house.

But as I better understand this emerging model, I’ve also learned more about the appeal of greenwashing - or efforts to make products seem more environmentally friendly than they actually are to convince consumers who are trying to make responsible choices to buy their product. So although I am generally supportive of the B Corp model, my analytical side forces me to delve into what it really means and whether or not it will make a measurably positive impact on the planet and its inhabitants.

In a series of two blog posts I’ll explore what it means to be called a B Corporation, how companies who apply to become a B Corporation are assessed, what motivates a company to pursue the designation, and some thoughts on areas for potential improvement in the system.

Before we get started, here is a busy-person summary of my first blog post so you can get the gist up front:

  • Certified B Corporations are different than Benefit Corporations.  As suggested by the name, the first one is certified by an outside group called B Labs.
  • Certified B Corporations are self-assessed and then the data is verified by a 3rd party non-profit, called B Lab, and must reach a minimum score.
  • The assessment covers four main areas where a business must have a positive impact: 1) employees, 2) communities, 3) customers, and the 4) environment.
  • B Lab's standards have impressive breadth, delving into the four areas above in detail.

Let's start with a story:  The other day was unseasonably warm here in DC, the government was shutdown so I had time, and I decided to strap on the bike rack, load up the kids bikes, and go on a nice long bike ride with the kids after their half-day of school.

It was a spectacular winter day, with frozen marshes, bird life galore, and peaceful quietness whizzing by at 12 miles an hour.

During the ride I was struck by two, very different thoughts:

First, the natural beauty and bountiful wildlife renewed my spirit, especially seeing two bald eagles up close on separate occasions during a short ride.  Secondly, and much more disappointing, was the ubiquitous and inescapable intrusion of trash, mostly plastic, seeping into the beautiful landscape (and soon after, very likely washing into the river we were riding beside).

Photo by Samuel Zeller on Unsplash

It made me wonder, do the companies that produce this packaging ever wonder where their waste ends up?  When a company decides to make a consumer product, do they ever consider the impact it will have, beyond how much money they’ll make?

I knew from my work at Recycled & Renewed that there are some companies out there who are thinking about their impact to the environment, to people, to communities, and who can be held accountable for any negative impact they cause - B (or Benefit) Corporations.

Some of my favorite companies - Patagonia, Preserve, ChicoBags, Klean Kanteen, and Ethique are all B Corporations.  So should you cast your vote for B Corporations? I needed to find out more before I could say for sure.


 

What is a Certified B Corporation?

Benefit Corporations have been in the news lately.  Senator Elizabeth Warren recently introduced a bill that would require U.S. corporations to basically change their structure to be more like Benefit Corporations.  

So what does that mean?  There are Certified B Corporations and Benefit Corporations.  Certified B Corporations are companies that apply and are certified by a 3rd party non-profit (called B Lab) according to a set of standards.  These standards assess whether the company is considering their impact on others and the world.

The B Corp label seeks to provide proof that a company is pursuing the so-called triple bottom-line:  a positive profit, and a positive impact on people, and the planet. Companies even make changes to their corporate charter to incorporate the interests of all stakeholders into the fiduciary duties of directors and officers.

There are also un-certified B Corporations, which I have typically seen referred to as Benefit Corporations.  These are similar, but different in key ways.  

The biggest differences are their performance, in terms of environmental and social impact, are not assessed by a 3rd party.  In this post I’ll be talking about Certified B Corporations. Also another important difference is Certified B Corporations have to pay an annual fee, to the certifying body, based on their size.

What makes a B Corporation different?

So what makes a Certified B Corporation different from your average rapacious, resource devouring, evil corporation, such as the ones searingly parodied by Steve Cutts in the video below?


First off, besides changing its governance structure to reflect the responsibility to consider the impact of its behavior on other stakeholders, besides shareholders, they need to assess themselves.  To be a Certified B Corporation, a company must complete an assessment called the B Impact Assessment. Next a 3rd party non-profit called B Labs will verify the information and score the company. If the company gets a “passing grade” (80 points), it is basically a B Corp (there is also a disclosure questionnaire).

The assessment covers four main areas where a business must have a positive impact: 1) employees, 2) communities, 3) customers, and the 4) environment.

B Lab has a helpful tool to explore what areas are measured, called the Standards Navigator.  You can see that in each of the four areas above, plus a few others (e.g., Governance), they focus on multiple dimensions.  

For instance, in the Environment section, it includes questions on Air & Climate, Land & Life, Water, among others.  Specific questions in the Air & Climate section ask about the amount of renewable energy used, where their electricity comes from, whether they offset their carbon usage, and how much energy did the company use in the last 12 months, among many others.

In Community there is a section on Supply Chain Poverty Alleviation.  This section has questions about other companies they do business with and how well those workers are treated.  There are questions about Diversity & Inclusion, such as the number of contracts with woman and/or minority-owned businesses.  

It is impressive how comprehensive the assessment is, with 15 distinct areas being covered.  You can actually find all the raw scores of B Corps at data.world (this does not include the answers to the questions, just the scores assigned by B Lab...more on that in my next post where I’ll cover some criticism of Certified B Corporations).

 Photo credits in order of appearance:

Photo by Samuel Zeller on Unsplash


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