FAQs: Equity Mechanism

• If my company is applicable for the Equity Mechanism, how is this applied to my certification process?
• Implementation in two phases
• Changes for companies with operations in multiple countries or territories
• Changes to the calculations
• Which companies are impacted? 

If my company is applicable for the Equity Mechanism, how is this applied to my certification process? 

We are changing parts of the Equity Mechanism to align with the expectations of our assurance partners and the Empowering Consumers for the Green Transition Directive.

Implementation in two phases

For at least 2026, companies facing operational barriers due to where they are based use the Equity Mechanism via the Variance Mechanism to opt out of B Lab Standard requirement(s). Read section 4.2.2. Requesting a Variance in the Certification Requirements. The company is then not required to demonstrate conformity with those requirement(s) during the audit. There are two conditions to receiving this type of variance:

1. The company’s sole location (for companies with sites in multiple countries or territories - the location of its central function) is a country or territory with “some barriers” (e.g. Brazil) or “more barriers” (e.g. Kenya). The full list is available in the article How the new B Lab Standards requirements are tailored to each company's context?

2. The company requests a variance for a sub-requirement that is eligible for the Equity Mechanism. Under each sub-requirement, there is a field “Eligible for equity mechanism?” with either a “Yes” or “No”.

B Lab is exploring how to integrate the Equity Mechanism into B Impact. This would replace the initial approach of using the Variance Mechanism. The exact timeline for this work is still in progress.

Changes for companies with operations in multiple countries or territories

In order to operationalize the Equity Mechanism we have to simplify its application to contexts where one company’s scope covers multiple countries or territories.  Effective January 1, 2027, the Equity Mechanism applies based on the location of the company's central function.

Examples

• A company based in Kenya that only has site(s) within that country is eligible for the Equity Mechanism.

• A company with its central function in Brazil is eligible for the Equity Mechanism, even if it has sites in Canada and Germany.

• A company with its central function in Germany is not eligible for the Equity Mechanism, even if it has sites in Brazil and Kenya.

In all cases, the company’s sole location or location of their central function as stated in their certification scope is what determines the eligibility and the number of sub-requirements they can opt out of. The full list is available in the article How are the new B Lab Standards requirements are tailored to each company's context?

Changes to the calculations

Instead of expressing how many sub-requirements a company can skip using percentages (10 or 15%), we now state an absolute number (e.g. Small can opt out of three sub-requirements at Year 0). This is clearer and avoids the company making their own calculation.

In the article How the new B Lab Standards requirements are tailored to each company's context?, companies can see exactly how many sub-requirements they can opt out of in Years 0, 3, and 5.

Which companies are impacted? 

Eligible companies certifying in at least 2026 use the Variance Mechanism to benefit from the Equity Mechanism. This is a temporary solution while we work on integrating the Equity Mechanism into B Impact.

Companies with their central function in a country or territory “with fewer operational barriers”, but with sites in a country or territory with “some” or “more operational barriers” are not eligible for the Equity Mechanism.