What Is a Sustainability Management System and Why it Matters

Modified on Tue, 14 Oct at 11:41 AM

Introduction

For years, the B Corp Certification process has evaluated how companies manage their environmental, social, and governance (ESG) responsibilities across their operations. While B Lab did not previously label this approach as a specific “system,” our standards have always expected companies to have a structured and consistent way of managing sustainability.

With B Lab’s V2.1 standards and revised certification model, we are now formalizing this expectation using the term Sustainability Management System (SMS). This concept is not a new requirement—it simply provides clearer language to describe what strong sustainability governance already looks like in practice. The purpose of this article is to explain the concept and show how it applies to companies of different sizes and structures.

In simple terms: a Sustainability Management System is how your company organizes, oversees, and improves its sustainability efforts across the entire business.

What Is a Sustainability Management System?

A Sustainability Management System is the framework through which a company coordinates its policies, processes, and day-to-day practices to manage ESG responsibilities. It ensures that sustainability is not treated as isolated projects, but as an integrated part of how the company operates.

Management systems provide a structured approach for setting goals, implementing actions, tracking progress, and improving performance over time. With a well-functioning SMS, a company can continuously identify its impacts, prioritize areas for improvement, monitor performance, and engage stakeholders in a systematic and measurable way. A single SMS is particularly valuable for multi-site companies, as it ensures that every location complies with the same policies and practices established at headquarters.

B Lab has aligned its certification scheme with ISO 17021-1, the international standard for management system certification. This alignment means that the B Lab Standards operate as a sustainability management system, requiring companies to have a clear, auditable process for enforcing ESG policies across all operations.

How Company Size Shapes an SMS

The SMS is not a new concept for most companies. Many already have sustainability policies and practices in place; the goal is to consolidate these into a single, coordinated system. This ensures all sustainability activities are aligned with company objectives and consistently applied across the organization.

The structure of an SMS depends on size, resources, and maturity:

Small companies may rely on simple tools, such as spreadsheets or shared folders, to track energy usage, waste reduction, or community engagement. Their sustainability efforts may be driven by a small team or even a single person, and processes may be simpler and less formalized.
Large companies often operate with dedicated sustainability teams, sophisticated ESG software, and formal reporting processes. They may manage complex priorities such as net-zero goals, supply chain emissions, climate risk, and biodiversity strategies. Their SMS is more likely to include internal audits, dashboards, and automated tracking to ensure compliance and enable continuous improvement across multiple sites.

Regardless of size, all effective sustainability management systems share certain foundational elements:

Governance: Clearly defined roles, responsibilities, and decision-making authority over sustainability policies, procedures, goals, objectives, and budgets.
Objectives and Action Plan: Well-defined sustainability goals supported by a structured action plan, including specific steps, timelines, and key performance indicators (KPIs).
Policies and Procedures: Documented sustainability-related policies and operational procedures applicable across relevant areas of the organization.

Why it Matters for B Corp Certification

A Sustainability Management System is a key element of B Corp Certification, helping companies manage ESG responsibilities effectively, ensure consistent application across all operations, and drive continuous improvement year over year.

The B Corp Certification is based on a single, company-wide sustainability management system. Policies and procedures must be applied consistently across all entities or sites within the certification scope.

At the application stage, B Lab will ask questions to confirm that the company operates under a single SMS, which helps determine the scope of the certification. Companies that operate under multiple independent management systems may need separate certifications for each system.

The audit for B Corp Certification expects that companies operate under a single SMS and have uniform policies and practices for all of their operations. For example, if a company presents a human rights policy during an audit, that policy should cover all operations and sites. If one site has not implemented the policy or does not follow the baseline set by headquarters, this would be recorded as a non-conformity, and the corporate function at HQ would be responsible for remediation. Similarly, if the audit requires data on human rights impacts, these should be consolidated at the group level, combining inputs from all relevant sites into a single tracking system.

Conducting internal audits to ensure alignment with the single SMS is considered best practice for multi-site companies. Internal audits allow organizations to regularly assess compliance with corporate policies, address discrepancies proactively, and prepare for the B Corp Certification audit.

Frequently Asked Questions

Can one SMS cover multiple locations?
Yes. An effective SMS is designed to cover multiple sites, provided that the headquarters sets and enforces group-wide policies for all sites to follow. It would be best practice for the company to conduct internal audits of their sites to ensure compliance with the policies and procedures set by the headquarters.

How do I know if my company has an SMS?
The first step is to familiarize yourself with B Lab’s V2.1 standards, which provide a framework for what a company’s sustainability management system should include. By assessing your organization against these standards, you can identify which elements are already in place and where gaps may exist. This process offers a clear view of how effective and comprehensive your SMS currently is.

How do I know if my company operates under a single or multiple SMS?

A single SMS exists when a company adopts a centralized approach to setting goals, implementing actions, tracking progress, and continuously improving performance across all its operations. In such a system, corporate policies are established by the headquarters and enforced consistently throughout every location where the company operates. Local adaptations to policies are permitted, as long as they do not contradict corporate policies and all operations follow a common baseline set by headquarters. If, during self-assessment against the new standards, your company finds that certain sub-requirements are not yet met across all sites, this does not automatically indicate that you operate under multiple management systems—it may simply reflect a non-conformity that will be identified during the audit and require remediation.
Multiple SMS exist when regions or business units operate independently in a decentralized manner. Local regions/fractions of the company have their own executive team with the ability to set and enforce their own policies and procedures with no centralized mechanism for setting and enforcing group policies, and no aggregation of data for centralized reporting.