The
Purpose and Stakeholder Governance (PSG) Impact Topic guides companies to embed a social or environmental purpose and stakeholder-centric approach at the core of their governance and operations. It requires companies to align their strategy with a public purpose to make meaningful positive impact, involve stakeholders in decision-making, adequately respond to grievances, ensure leadership accountability for social and environmental performance, and report transparently on progress.
Why This Matters
One of the core aspects of B Corp Certification and B Lab’s Theory of Change is the B Corp legal requirement – a change in a company’s legal governance structure to require the consideration of stakeholders in its decision making. As that legal change is not available in all jurisdictions, it is important to ensure that companies act on both the letter and spirit of that legal change, whether available or not. This means aligning a company's corporate purpose with positive social and environmental goals, creating governance structures to fulfill those goals, considering impacts on stakeholders, and establishing responsible and transparent communications on its progress. These pillars are essential to what it means to be a B Corp and to achieve an equitable, inclusive, and regenerative economy.
1. Purpose Statement
Companies have a publicly available purpose statement that aligns with the B Corp legal requirement and guides the company’s business strategy. A purpose statement clearly communicates the specific positive impact the company intends to make on society or the environment, or both, to its stakeholders.
PSG1 The company establishes a public purpose to make a meaningful positive impact. |
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PSG1.1 The company establishes a public purpose to make a meaningful positive impact. | All companies | Year 0 Year 3 Year 5 |
2. Stakeholder Governance
Companies are expected to practice stakeholder governance by considering the impact of their decisions on all stakeholders, including workers, suppliers, customers, investors, the community, and the environment. They implement appropriate mechanisms and practices scaled to their size.
PSG2 The company considers its impacts on stakeholders in decision-making. |
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PSG2.1 The company has a mechanism to consider or involve its stakeholders and represent their interests in decision-making. | All Companies Without Workers, Micro, Small, and Medium companies. | Year 0 Year 3 Year 5 |
PSG2.2 The company has a stakeholder governance policy. | All Large, Extra Large and Extra Extra Large companies. | Year 0 Year 3 Year 5 |
PSG2.3 The company conducts regular materiality assessment to assess and identify material topics. | All Large, Extra Large and Extra Extra Large companies. | Year 0 Year 3 Year 5 |
PSG2.4 The company identifies material topics not addressed in the B Lab Standard, sets targets, and reports progress annually. | All Large, Extra Large and Extra Extra Large companies. | Year 0 Year 3 Year 5 |
PSG2.5 The company considers its stakeholders when making decisions about dividends and stock buybacks. | All Extra Extra Large companies | Year 3 Year 5 |
3. Stakeholder Grievance Procedure
Companies support stakeholders by having grievance mechanisms in place and following through on any complaints. To ensure stakeholders have a clear and accessible way to raise concerns and seek resolution about the company’s social, environmental, or governance issues.
PSG3 The company has adequate procedures to address stakeholder grievances. |
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PSG3.1 The company has a publicly accessible grievance procedure allowing stakeholders to safely raise grievances and seek resolutions. | All Companies Without Workers, Micro, Small, and Medium companies. | Year 0 Year 3 Year 5 |
PSG3.2 The company tracks grievances and assigns accountability for resolving them. | All Micro, Small and Medium companies | Year 0 Year 3 Year 5 |
PSG3.3 The company has a publicly accessible grievance procedure allowing stakeholders to safely raise grievances and seek resolutions. | All Large, Extra Large and Extra Extra Large companies
| Year 0 Year 3 Year 5 |
PSG3.4 The company tracks grievances, assigns accountability for resolving them and reports internally to the highest governing body and publicly to stakeholders. | All Large, Extra Large and Extra Extra Large companies. | Year 0 Year 3 Year 5 |
4. Responsible Marketing & Public Relations
Companies adopt principles or formal policies for responsible marketing and public relations, scaled by company size. This includes accurately reflecting their social and environmental impact and considering the broader impact of their marketing and public relations’ practices on society and the environment.
PSG4 The company engages in responsible marketing and public relations. |
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PSG4.1 The company has principles for responsible marketing and public relations practices. | All Micro and Small companies
| Year 0 Year 3 Year 5 |
PSG4.2 The company has a responsible marketing and public relations policy overseen by the executive team or highest governing body. | All Medium, Large, Extra Large and Extra Extra Large companies | Year 0 Year 3 Year 5 |
5. Leadership Oversight & Accountability
Companies integrate social and environmental accountability into their governance and leadership structures. Leadership at all levels is responsible for upholding the company’s purpose, impact performance, and stakeholder governance.
PSG5 The company’s social and environmental impact and stakeholder considerations are monitored by the highest governing body and integrated throughout the company. |
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PSG5.1 The highest governing body monitors the company's purpose, social and environmental impact, and stakeholder considerations. | All Micro, Small, Medium, Large, Extra Large and Extra Extra Large companies
| Year 0 Year 3 Year 5 |
PSG5.2 Requirements to monitor the company's purpose, social and environmental impact, and stakeholder considerations are enshrined in the highest governing body's terms of reference. | All Large, Extra Large and Extra Extra Large companies
| Year 0 Year 3 Year 5 |
PSG5.3 All members of the executive team have at least one annual target tied to the company’s social or environmental performance. | All Large, Extra Large and Extra Extra Large companies | Year 3 Year 5 |
PSG5.4 If the company has an existing incentive remuneration scheme for the executive team, it integrates social and environmental performance targets. | All Large, Extra Large and Extra Extra Large companies | Year 3 Year 5 |
PSG5.5 The company includes social or environmental performance targets in performance reviews for managers. | All Extra Extra Large companies | Year 3 Year 5 |
6. Sustainability Reporting
Companies transparently report on their social and environmental performance. This enables accountability and stakeholder trust.
PSG6 The company is transparent about its social and environmental performance. |
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PSG6.1 The company reports its social and environmental performance annually and publicly, with approval from the highest governing body. | All Large and Extra Large companies
| Year 3 Year 5 |
PSG6.2 The company reports its social and environmental performance annually and publicly using a third-party standard. | All Extra Extra Large companies
| Year 3 Year 5 |
PSG6.3 The company assesses workers’ capability to enact its social and environmental strategy. | All Large, Extra Large and Extra Extra Large companies | Year 3 Year 5 |
Appendix
Further Resources
Topic | Resources |
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Purpose Statement | |
Stakeholder Governance | AA1000 Stakeholder Engagement Standard, 2015 (AccountAbility) [EN] Stakeholder Governance resources (Interdependence Coalition) [EN] Materiality Assessment Implementation Guidance - 23 August 2023 (EFRAG) [EN]
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Stakeholder Grievance Accountability | People and planet in business: A simple guide to how small and micro companies can start or strengthen their due diligence, 2023 (Fairtrade International, B Lab) [EN] Remediation and Grievance Mechanisms (Business for Human Rights) [EN]
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Responsible Marketing & Public relations | The Environment: Misleading Claims and Social Responsibility in Advertising: Advertising Guidance (non-broadcast and broadcast), 2023 [EN] 2022 Strengthened Code of Practice on Disinformation (European Commission) [EN]
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Leadership Accountability | Purpose Governance Guidelines for Boards, 2024 (Canadian Purpose Economy Project) [EN] A Board’s Guide to ESG and Incentives: Effectively Identifying Top ESG Priorities (Semler Insight) [EN]
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Non-financial Reporting | GRI Reporting Standards (GRI) [EN] United Nations Guiding Principles Reporting Framework - Assurance Guidance - guidance on Human Rights reporting, 2017 (Shift, Mazars) [EN]
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Release 1 - 11 July, 2025 - based on B Lab Standard v1.0 - © B Lab 2025