What to do if you experience a scope change

Modified on Mon, 3 Aug at 11:51 AM

Introduction

B Corp Certification assesses a company's sustainability management system across the business as a whole, rather than evaluating an individual product, site, or business unit. To ensure the certification accurately reflects your business, it is important to define the boundaries of your certification through scoping. To learn more about what scoping is and why it is important, see What to know about scoping your company for certification.

Maintaining an accurate certification scope ensures your B Corp Certification accurately reflects your complete business. But what should you do if your company experiences an operational change that may impact your scope?

We understand that companies evolve over time. You may acquire another business, merge with another entity, sell part of your operations, restructure your organisation, or change the way your business is managed. These changes can have an impact on the in-scope entities and operations, or even the size or sector, and mean your Certification Scope may no longer be an accurate picture of your business today. It is therefore important that you inform B Lab when an operational change takes place, whether it be minor or major. This will allow us to update your Certification Scope on B Impact and share it with your Assurance Provider to determine whether any updates to your audit cycle or Certificate are needed.

Types of scope changes

The table below provides examples of changes that may affect your certification scope.

Type of Change	Description	Major/ Minor
Minor Legal or Operational Restructuring	The establishment or dissolution of legal entities, provided these entities do not represent a significant portion of the certified business's core operations.	Minor
Acquisition	The purchase of a legal entity, brand, or business operation that introduces new sites, product lines, or services. This is typically considered minor if the acquired asset is integrated into the acquirer’s existing sustainability management system without disrupting it.	Minor
Rebranding	A change to the main brand’s trading name, without structural or operational modifications.	Minor
Divesting	The disposal, sale or closure of a subsidiary or business unit. This may be the result of winding down operations or transferring them to another party.	Minor
Change in Control	A transaction (such as a merger, equity sale, or asset transfer) where a new person/s or entity/ies acquires majority ownership of the legal entity. This is often major because it frequently triggers material operational changes, new governance, or a complete redesign of the sustainability management system to align with a new parent company.	Major
Merger	Mergers of two fully operational companies typically result in a more significant or material change in the company’s statutory (legal) or operational (e.g. rebranding, new business mode) structure. Because both original companies cease to exist independently, this typically results in immediate, encompassing changes to the business model, statutory structure, and sustainability management system.	Major
Major Legal or Operational Restructuring	The closure or creation of legal entities that leads to shutting down the main operational entity, or a significant redistribution of business units. This includes integration into an affiliated entity where the company loses its independent operational status and undergoes significant management system changes.	Major
Initial Public Offering (IPO)	The transition of a company from private to public ownership by listing its shares on the open stock market, which introduces strict new regulatory, governance, and reporting requirements.	Major

All types of changes – whether it be a small site added, or a major legal restructuring – should be reported to B Lab.

Reporting a minor scope change

All minor scope changes should be reported directly in B Impact through the Certification setup page. Update the Scoping: Related Entities and Scoping: Customize your assessment sections of setup and select “Submit setup” to report your updated scope.

Changes to scope should be reported to B Lab as soon as possible, and at most within 6 months of the change taking place (as stated in section 4.1.8 of the Certification Process Requirements for B Corps).

Reporting a major scope change

Major scope changes typically have more of a significant impact on a company, and should be reported as soon as possible to B Lab to assess eligibility and any impacts on the audit.

Major changes should be reported to B Lab prior to the change taking place, or immediately after (as referenced in the B Lab Agreement section 1.1.6.2). You should report major scope changes to B Lab via the email address: scopeupdate@bcorporation.net. This is to ensure B Lab can carry out a review of the degree of change and any impact to the certification.

Reporting a change in size, industry or sector

Your company’s financial year data is used to determine your track size, sector and industry. Section 4 of setup (Scoping: Customize your assessment) has questions about your last fiscal year’s revenue, employee full-time equivalency figures, and the industry and sector that best aligns with your business model. This information should be kept up-to-date – update this section on an annual basis, and within six months from the latest completed fiscal year. You’ll receive a reminder through B Impact every year to update your fiscal year (FY) data.

The only time when you don’t need to be concerned about updating your latest fiscal year data is when you are actively proceeding to assessment and audit, and have a verified scope which is issued with a ‘valid until’ date that is 12 months from the date of the issuance. This validity period is given to your company in order to ‘freeze’ the scoping results and allow you to proceed to audit without the moving guardrails of track change. Therefore if your company experiences a new fiscal year during this validity period, you do not need to update this information on B Impact.

What happens after you report a scope change

After you report a scope change, B Lab will share your updated information with your Assurance Provider. Because only the legal entities and sites listed on your Certificate of Conformity are authorized to use the B Corp intellectual property (IP), your certificate must be updated before the B Corp IP can be used in relation to any new operations.

To issue a new certificate, the Assurance Provider will either move your next scheduled audit earlier to expand the certification scope, or schedule a “special audit” to take place prior to your next scheduled audit. The special audit could be a simple desktop review, a virtual site review, or a physical onsite review, depending on the materiality of the site(s) affected by the scope change. The Assurance Provider will use their own materiality framework to determine what audit is appropriate based on their risk assessment (4.1.8.6).

After the special audit, the Assurance Provider will issue a new Certificate of Conformity. Only once the new operations have been added to the Certificate, and any associated brands have been approved through a brand review by B Lab, will you be able to use the B Corp IP in association with those new operations.

In summary

To summarise, reporting operational changes affecting your certification scope to B Lab is an important part of monitoring and maintaining your certification. These changes may take place outside of the regular review cycle so it is important to remember the 6-month rule for any minor changes, and reach out proactively if there are major changes to ensure your certificate can be updated and you continue using the B Corp IP.