How the new B Lab Standards requirements are tailored to each company's context?

We’ve maintained the universality of the goals in each topic of the new B Lab Standards, making the standards actionable and relevant for companies in all kinds of operating contexts, all across the globe.

To achieve this, we’ve designed the following tailoring strategies that recognise the uneven ground current and aspiring B Corps are built on.    

1. Differentiated sub-requirements based on company size and sector

2. Sub-requirements that provide different options or are inherently context-based or have tailored guidance

3. Equity Mechanism for Countries/Territories

This article describes how each of these strategies works to make the B Lab Standards applicable in any company’s context.

Differentiated sub-requirements apply, depending on each company’s size and sector

All sub-requirements in the draft standards are differentiated by size, sector, and (in some instances) industry. We’ve designed the sub-requirements so that their number and rigor increase as a company’s size increases. 

Here are two examples of sector and size differentiation, respectively.

• In the Environmental Stewardship & Circularity Impact Topic, companies in the “Service sector with minor footprint” category have fewer sub-requirements focusing on operational impact, as their main impact comes from the types of clients and projects they take on. Instead, for specific industries within the service sector with minor footprint, there is a sub-requirement around client and project engagement. 

• In the Human Rights Impact Topic, to achieve human rights objectives in the supply chain, smaller companies are expected to consider human rights in their procurement decisions. For larger companies, the requirements are more rigorous — they are asked to develop a supplier engagement and monitoring approach and take action with their suppliers, among other expectations.

Size categories are updated to consider workers and revenue 

While defining a company’s size using its number of workers is a simple approach, it doesn’t always accurately capture the true nature of a company. For example, a company that outsources labor will cut its number of workers without necessarily reducing other variables, such as revenue or profit. 

To account for these cases, the new Standards determine the size of each company using a combination of revenue and the number of workers, as shown in the table below. 

Companies are assigned to the size category corresponding to their number of workers or revenue — whichever is higher. 

We developed these size classifications using data from existing B Corps. FTE stands for full-time equivalent.

Additional requirements apply for Large and Multinational Enterprises

The new B Lab Standards require large and multinational enterprises to ensure that they comply with social, environmental, and stakeholder governance practices reflecting their bigger impact. 

For instance, X Large (“extra large”) and XX Large (“extra extra large”) companies are asked to:

• have a time-bound plan to trace the origin and potential environmental and human rights impacts of their high-risk raw materials

• publicly share their gender wage gap

• integrate social and environmental performance targets in existing incentive remuneration schemes for the executive team.

We’ve also integrated the Baseline Requirements for Multinational Companies over USD $5 billion in revenue and adjusted them where necessary, following the new size categories in the table above. 

The integrated Baseline Requirements, depending on their nature, may apply to XX Large, X Large, or in some cases to smaller companies as well (e.g. Human Rights Policy), with compliance criteria adjusted to the company’s size and impact.

This means the Baseline Requirements will no longer be called out separately, as there are many other sub-requirements that apply to the largest companies throughout all topics. With the new size approach, we’ve also removed a separate USD$5 billion revenue category.

Acknowledging the complexity of corporate families, and to support independently certifying subsidiaries to apply the sub-requirements, we’ve added an interpretation note to all sub-requirements.

Size selection and scoping considerations for corporate families

When determining the right size categories in the new Standards, companies in corporate families should evaluate the scope of their operations, including the size of their corporate group, control and ownership of entities, and total combined revenue. 

Please note, we’re currently developing the scoping requirements in relation to these size categories as part of the work to develop a new assurance system for the Standards. B Lab aims to communicate new scoping requirements in 2025.

Sector definitions

Companies should evaluate their sector in the new Standards according to the following definitions: 

Agriculture

A company that either:

• earns over 10% of its revenue from products grown on its farm or agro-processing facility, from managing land to grow and harvest crops, or from raising and managing livestock

• sources the majority of its raw materials directly from growers or livestock producers.

Companies in the agriculture sector include, for example:

• vegetable farms

• coffee plantations or roasters

• tree planting companies

• livestock farms or ranches.

Manufacturing

A company that earns over 10% of its revenue from products it makes, either for direct sale or for sale by another company or brand. Manufacturing involves transforming input materials into a new product. The manufactured product may not be the final product.

Companies in the manufacturing sector include, for example:

• food and beverage producers

• assembly lines

• apparel manufacturers.

Services with minor footprint

A company that earns 90% or more of its revenue from services without selling physical products or requiring a physical location for delivery. These companies do not operate retail, wholesale, or manufacturing facilities.

Services with minor footprints include, for example:

• law firms

• marketing and communications agencies

• software companies.

This was previously named "Services with Minor Environmental footprint". The definition and its application remain the same.

Services with significant footprint

A company that earns 90% or more of its revenue from services that involve significant machinery or equipment, or require a specific operational location (often key to delivering the service).

Services with significant footprint include, for example:

• hotels

• restaurants

• landscaping companies

• universities.

This was previously named "Services with Significant Environmental footprint". The definition and its application remain the same.

Wholesale/Retail

A company that earns over 10% of its revenue from selling physical products, but does not own or operate the manufacturing processes or facilities that produce them. This includes companies that design products but outsource their production.

Wholesale/retail companies include, for example:

• grocery stores

• e-commerce retailers

• consumer goods companies that do not manufacture their own products

• wholesalers of physical goods.

Note that the sector definitions have not changed from version 6 of the B Impact Assessment, except for livestock companies, which are now considered under the agricultural sector in the new Standards.

Some sub-requirements give options, are inherently context-based, or have tailored guidance

Another way in which the Standards are tailored for companies’ context is by providing options to choose from. While companies will now be required to meet all of the requirements that apply to them (rather than the previous points-based certification approach), some parts of the Standards let them choose how to meet those requirements.

For example:

• In GACA2.1, the company has five options to choose from for collective action to advance social or environmental impacts.

• In JEDI2.1, the company chooses and implements two JEDI actions out of 19 options. 

• In FW2.8, the company chooses one of three fair wage practices to implement for its lowest-paid employees.

Other sub-requirements are inherently context-based, or allow companies to meet them using context-specific information. 

For example:

• the options under FW2.8 allow companies to choose from paying workers a living wage or a collectively bargained wage, depending on the employee's location

• in HR1.1, which requires a public commitment to respecting human rights, the company may adapt its language if it operates in a country where using the term “human rights” threatens the safety of its workers

• in ESC1.5, the company may rely on national and regional data available from local authorities or non-governmental organizations to assess whether its facilities are in or near, and negatively affecting, ecologically sensitive areas.

Equity mechanisms distinguish countries and territories with operational barriers

Depending on where they operate, companies are subject to different societal dynamics, regulation, geographical constraints, and availability of resources. In short, they face unequal conditions based on their locations, which affect their ability to operate and meet the B Lab Standards. 

The Equity Mechanism acknowledges this by allowing some companies to opt out of 10–15% of sub-requirements, depending on where they are based. Accounting for historical and existing inequalities between countries and territories makes the Standards more equitable.

We recognise that there are also inequalities within countries and territories. However, implementing this mechanism at the sub-national level would be too complex and costly.

Under the Equity Mechanism, each company’s location determines how many sub-requirements it can opt out of. Countries and territories are divided into three groups:

• Countries and territories with fewer operational barriers must meet all applicable sub-requirements. 

• Countries and territories with some operational barriers may opt out of 10% of applicable sub-requirements.

• Countries and territories with more operational barriers may opt out of 15% of applicable sub-requirements.

Companies may only opt out of sub-requirements marked as “eligible for equity”. 

How to calculate the number of sub-requirements your company may opt out of

To calculate the number of sub-requirements a company can opt out of under the Equity Mechanism, follow these steps:

1. Determine the total number of applicable sub-requirements: first, determine the total number of sub-requirements applicable to your company in each period.

•  For example, when first applying for certification, the total number is simply the number of Y0 sub-requirements. In Year 5, the total number is the sum of Y0, Y3, and Y5 sub-requirements.

2. Apply the opt-out percentage: multiply the total number of applicable sub-requirements by the opt-out percentage allowed for your location (either 10% or 15%).

• For instance, if a company needs to comply with a total of 40 sub-requirements in Year 3, and their location allows a 15% opt-out, they can justify opting out of 6 sub-requirements from the entire set of applicable requirements (Y0+Y3). 

3. Round to the nearest whole number: if the calculation results in a decimal number of sub-requirements, round to the nearest whole number.

• A decimal portion of 0.5 or greater is rounded up (e.g., a calculated opt-out of 1.5 sub-requirements means the company can opt out of 2).

• A decimal portion less than 0.5 is rounded down (e.g., a calculated opt-out of 2.3 sub-requirements means the company can opt out of 2).

How each country and territory is classified under the Equity Mechanism

Countries and territories are classified according to the list below. This list applies only for the Equity Mechanism, and does not indicate whether B Corp Certification is possible in any listed country or territory.

To learn more about the methodology we used to classify countries under the new Standards Equity Mechanism, see the How are countries classified under the new Equity Mechanism for Countries and Territories?