Introduction

What is PSG 2.2 in the B Lab Standards V2?

Creating a stakeholder governance policy 

Form and approval of the policy

Mechanisms for stakeholder involvement 

Additional Tips & Suggestions

Definitions & Topics to include in your policy

Stakeholders to include in the process

Introduction

Purpose & Stakeholder Government (PSG) 2.2 requires your company to have a stakeholder governance policy that is communicated to company workers and available for them to access. This policy helps ensure your company considers the impact of its decision-making on its stakeholders and puts the B Corp legal requirement into practice. 

What is PSG 2.2 in the B Lab Standards V2?

Under the Purpose & Stakeholder Government Impact Topic (PSG), PSG 2.2 is a Year 0 requirement for Large, XL, and XXL companies. For these companies, meeting and maintaining the B Corp certification requires creating a policy (or policies) that explain how stakeholder consideration is being operationalized and making that policy accessible to all company workers (for example, by putting it on the company’s internal website). 

To meet PSG 2.2, your company’s stakeholder governance policy must:

• Define what it means to be a company with a stakeholder governance model.

  • The company can, for instance, use a definition built on the B Corp legal requirement, emphasizing the consideration of the impact of decisions on all stakeholders.

• Outline the criteria for identifying and prioritizing stakeholders.

  • Also include a map of your stakeholders.

• Describe how decision-makers across the company consider stakeholders.

  • You may connect this to the different engagement mechanisms and how it is ensured that the input from stakeholders is considered in decision-making.

• Explain how the company delivers value to stakeholders by considering their interests.

  • You may include a brief explanation of how your company's stakeholder governance model is valuable to your stakeholders. This connects to your explanation of what stakeholder governance model means to you.

• Lay out the mechanisms to encourage regular stakeholder engagement.

  • It is expected that you map your key stakeholder groups. While it is not required to outline the individual actions that you do per stakeholder group within the policy itself, it would be expected to include the engagement mechanisms that exist (e.g. customer surveys, stakeholder forums, complaints procedures) and guardrails for decision making that considers these stakeholders and any related positive and negative impacts. 

  • The stakeholder groups that need to be covered are:

    • Workers of the company or its subsidiaries

    • Suppliers

    • Customers

    • Investors

    • The community where offices or facilities of the company, its subsidiaries, its suppliers, or its investments are located

    • The local or global environment.

  • You can use different stakeholder engagement mechanisms flexibly, as long as all the stakeholders listed above are covered.

• Be approved by the highest governing body.

• Be communicated to company workers and made available for them to access.

Creating a stakeholder governance policy 

Form and approval of the policy

• Your highest governing body must review and approve the policy.

  • References to the highest governing body mean those within the company’s scope of certification.

• The company may cover elements of the policy in different policies and procedures for decision-makers (i.e., not in a single stakeholder governance document) — as long as they are all approved by the highest governing body. For instance, elements may be covered by a Code of Conduct & Ethics Policy, People & Culture Policy, Procurement Policy, or a Grievance Procedure.

Mechanisms for stakeholder involvement 

Different mechanisms may be used to cover different stakeholder groups — for example, a worker representation mechanism for workers and an External Advisory Board for customers.

Dialogue and engagement

• Running regular formal discussions with representatives of stakeholders (e.g. a worker representation mechanism, stakeholder forums, focus groups, surveys, or community meetings). The highest governing body would oversee these dialogues and your company would use these conversations to inform its strategies and goals.

• Establishing a multi-stakeholder task force or another form of ongoing collaboration to co-develop and further the company’s purpose or social or environmental solutions.

Advisory structures

• Creating an External Advisory Board (including stakeholders or experts) that advises the highest governing body.

• Forming a sustainability committee or stakeholder committee (with company purpose or social or environmental expertise) that includes a member of the highest governing body or reports to the highest governing body.

Governance-level representation

• Appointing a dedicated person to stakeholder interests (e.g. as Chief Stakeholder Governance). The appointed person is in the highest governing body or reports to the highest governing body.

• Having a member of the highest governing body who has purpose, social, or environmental expertise (at least five years of educational and professional experience).

• Involving stakeholders in the highest governing body (e.g. having a seat for nature).

• Appointing an independent director to represent stakeholders on the highest governing body.

Structural or ownership models

• Switching to a steward-ownership model that focuses on the inclusion of all stakeholder voices.

Additional Tips & Suggestions

Definitions & Topics to include in your policy

We recommend including:

• What stakeholder governance means, in a definition built on the B Corp legal requirement

• Guidance for engaging and collaborating with stakeholders, such as:

  • Supporting stakeholder accessibility (e.g. making engagement materials available in relevant languages)

  • Ensuring stakeholder inclusiveness (e.g. hosting workshops for potentially illiterate stakeholders)

  • Collaborating with stakeholders on the company’s purpose, or on social and environmental targets

• How the company’s social and environmental goals create value or positive impact for stakeholders

• How the company aims to balance stakeholder interests in strategic decision-making

• How the company will encourage regular engagement with stakeholders

• A reference or link to the company’s grievance procedure(s).

Stakeholders to include in the process

Your company could include other stakeholders in the process, such as:

• Local and Indigenous Peoples’ knowledge or traditional knowledge

• Civil society organizations (CSOs)

• Non-governmental organizations (NGOs)

Consider prioritizing stakeholders who may have the least power and voice, or who are least visible to decision-makers, such as:

• Workers and farmers in the supply chain

• Workers of contractors

• Communities impacted by environmental damage

• Indigenous communities

• Youth or people in vulnerable situations.

→ For more guidance on partnering with these types of stakeholders, see The Principles for Partnership with Frontline and Impacted Communities.

When considering the environment, which is deemed a silent stakeholder, the company may rely on reliable or scientific environmental data and/or expert advice to consider its impacts on the environment.

When engaging with stakeholders, acknowledge and consider the role of equity by:

• Offering compensation

• Respecting stakeholders’ time

• Seeking stakeholder input on not only risk mitigation, but also any positive outcomes the company should aim to achieve.