PSG1.1: How to make an authentic purpose statement

• What PSG 1.1 requires in the new standards 
• Where socialwashing and greenwashing risks arise
• When does this apply?
• How to document your purpose statement in B Impact 
• Link between the Legal Requirement and PSG 1

This article explains how to meet the first requirement of the Purpose & Stakeholder and Governance Impact Topic (PSG 1.1). Under PSG 1.1, your company must establish a publicly available purpose statement – explaining why the company exists – that clearly sets out the specific positive impact your business aims to create for society and/or the environment, and that meaningfully guides your strategy and governance. A strong purpose statement should: 

• Have business relevance and act as a guiding principle for the company’s business and day-to-day operations, and not only be reliant on philanthropic contributions or side projects

• Be supported by concrete policies, key performance indicators and oversight mechanisms so that it is actionable and monitored rather than purely aspirational. 

What PSG 1.1 requires in the new standards 

PSG 1.1 is part of the Purpose & Stakeholder Governance Impact Topic, which guides companies to embed a social or environmental purpose and a stakeholder‑centric approach into governance and operations. Under PSG 1.1, companies must have a publicly available purpose statement that:

• Clearly describes the specific positive and meaningful impact the company intends to create for society and/or the environment.

• Has business relevance and is integrated into the company’s strategy (or is supported by a statement that explains that relevance and integration).

• Is publicly available on the company’s webpage.

• Is approved by the company’s highest governing body.

The intent is to ensure that purpose, while aspirational, is actionable and monitored at the highest level of governance.

Where socialwashing and greenwashing risks arise

Risks of socialwashing or greenwashing arise when there is a gap between what the company claims publicly and what it does in practice. Within PSG, these risks are treated as governance and systems issues, not just communication mistakes, because they undermine stakeholder trust and accountability.

Risks are particularly high when a purpose statement:

• Uses vague or generic language that could apply to any company, overstates the undertaking and/or implies that the results have already been achieved. For example, a statement such as “We aim to make the world better” is unlikely to meet the bar, as it does not articulate what kind of impact.

• Is unrealistic. Purpose that is too bold for the company to act on or has no business relevance, can be considered misleading and fall under irresponsible communication.

• Is disconnected from strategy and governance. A purpose statement that is only used in external marketing, without links to internal policies, KPIs, budgets or leadership oversight, increases the risk of socialwashing/greenwashing. 

• Contradicts other disclosures or performance. Inconsistencies between the purpose statement and information in grievance procedures (PSG 3), responsible marketing policies (PSG 4) or sustainability reporting (PSG 6) are likely to be flagged during verification as credibility issues. 

• Is too narrow. A public purpose that focuses solely on a positive niche (e.g. a single product line), or a single customer segment,, cannot act as a guiding principle for the entire business 

Because PSG 1.1 is closely linked to requirements on responsible communications, governance oversight, and public reporting, inconsistencies across these areas are likely to be flagged during verification.

When does this apply?

PSG 1.1 applies to all companies from Year 0 under the V2 Standards, regardless of size or sector. It is particularly relevant when companies:

• Prepare for initial certification or recertification under the new standards

• Update governance documents to meet the Foundation Requirements (FR2)

• Review and align public-facing materials (website, impact reports, communications) before submitting the B Impact Assessment

Companies are expected to finalise and publish their purpose statement before submitting the  self-assessment on B Impact so that assessment responses are consistent with what is publicly available. This also supports later requirements on leadership oversight (PSG 5) and sustainability reporting (PSG 6), which depend on a clear starting point for “public purpose.”

How to document your purpose statement in B Impact 

In practice, a PSG1.1-compliant purpose statement should:

1. Be public and easy to find

Make it publicly accessible and easy to find (for example, on an “About us” or “Our Purpose” page linked from the homepage).

2. Clearly express a specific positive impact

Describe the concrete societal and/or environmental value your company intends to create, rather than only general customer benefits, or internal values. It should be bold enough to make a significant difference but still realistic for the company to implement. Tip: Check if your purpose statement could be linked to any of the Sustainable Development Goals. Think beyond customers to how the company can positively impact society.

3. Have clear business relevance 

Connect directly to your core products, services, customers and value chain, so that the company can actually act on it and use it as a guiding principle for its business model. Tip: Tie the purpose to the legacy story of the company.

4. Approved by the highest governing body

Ensure that you can document the approval of your purpose statement by your highest governing body.

5. Upload evidence in B Impact

 For PSG 1.1 in B Impact, upload:

• A PDF or screenshot of the webpage featuring the purpose statement A supporting statement if the purpose statement does not detail business relevance.

• If the company has no public website – any official public information, such as digital or printed brochures, or content hosted on another organization's website. 

• Company strategy roadmap, with indication of how the purpose statement is integrated into the business through overall objectives and KPI's related to the purpose.

• Meeting minutes or a formal letter from the highest governing body approving the purpose statement. Internal policy on communicating the approval.

6. Ensure consistency across PSG requirements

To meet PSG 1.1 and avoid socialwashing or greenwashing risks, your purpose statement should not be assessed in isolation. Across the standards, B Lab treats these risks as systemic governance issues, not just communication errors.

They arise when purpose:

• is disconnected from governance oversight (PSG 5),

• is not supported by targets or public reporting (PSG 6),

• is communicated irresponsibly or disproportionately (PSG 4), or

• cannot be challenged or tested by stakeholders through engagement or grievance mechanisms (PSG 2 & 3).

This is why PSG 1.1 explicitly requires your public purpose to be consistent with how your company manages social and environmental performance across the PSG requirements.

7. Encouraged good practice: reporting on progress toward purpose

Beyond the minimum requirements, the standards encourage companies to report regularly on progress toward their purpose in annual impact or sustainability reports. 

This helps:

• Demonstrate that the public purpose is being translated into concrete actions and outcomes.

• Provide stakeholders with transparent information about both positive contributions and areas for improvement.

• Strengthen the link between PSG 1.1 (public purpose), PSG 5 (governance oversight) and PSG 6 (reporting and transparency).

Over time, this cycle, defining a clear public purpose, embedding it in governance and strategy, and reporting transparently on progress, reduces socialwashing and greenwashing risks and reinforces the credibility of B Corp Certification.

Link between the Legal Requirement and PSG 1

The B Corp Legal Requirement (Foundation Requirement 2) asks companies to evolve their governance so they consider the interests of all stakeholders and adopt a broad purpose to create a “material positive impact on society and the environment.”

PSG 1 focuses on how this is expressed publicly and operationalised: it requires a public purpose that is clearly focused on society, the environment, or both, and integrated into the company’s strategy.

If your company’s legal purpose already meets PSG 1.1 criteria (i.e. it clearly expresses a meaningful positive impact and is implemented through your governance and strategy), the same statement can often satisfy both the Legal Requirement and PSG 1.1.

→ For a deeper dive into this relationship, see the Knowledge Base article Connection between the B Corp Legal Requirement and the PSG 1 Requirement.