The B Impact Assessment relies on third party standards to inform and verify different topics. Within relevant portions of B Impact Assessment, companies can therefore receive credit based on third-party certifications they have earned. It is necessary to distinguish certifications from membership networks, as well as to confirm that a certification is credible and sufficiently addresses the relevant topic featured in the BIA. Below are the guidelines of B Lab’s process to give credit for third-party certifications.

B Lab’s Credible Certification Process

• Any third-party certification that is a full member of ISEAL automatically receives credit in the B Impact Assessment. 

• Our team looks for the following to determine if a certification is eligible to receive credit in the B Impact Assessment:

  • Governance: 

    • The structure of the organization is made transparent (Is information about the composition of the governing body, how it operates and makes decisions available on the website (e.g. funders, owners, governance system, members, its business model and funding sources)?

  • Standards:

    • The standards setting organization has a clearly defined, public-facing mission statement or vision statement that focuses on a specific social or environmental issue/area/practice of concern

    • The standard setting organization has a clear statement on the objective of the certification and the information it is claiming to verify

    • The organization has a mechanism in place to manage conflict of interest

    • Transparency: 

      • The standards (questions) are available to the public 

      • There is a minimum performance required to achieve certification (minimum score or separation of certified and non-certified entities) 

      • There is a clear explanation of the requirements to achieve certification (what is the minimum score, how does scoring work)

  • Verification:

    • The information in the assessment is verified for accuracy by the certifying organization or an approved third party

    • Comprehensive information about the verification requirements is publicly available (interviews, documentation, etc.)

Some examples of certifications that receive credit in the B Impact Assessment, for specific topics, are:

If your company has another product or practice that is certified by a different third party certification, we may be able to conduct research internally to determine if that certification can earn credit within the B Impact Assessment. Until that review is complete, we recommend answering any questions conservatively. 

TABLE OF CONTENTS

• Impacts of COVID-19 on Data Reporting in the BIA
• General Principle 
• Reporting Guidance
  • Questions Based on a Last Fiscal Year (Derived from Financials):
  • Questions Based on Last Twelve Months (Not Derived from Financials)
  • Qualitative questions related to practices, policies and operating procedures
  • Physical locations (offices, warehouses, factories etc)
  • Impacts of fluctuating BIA scores on recertifying B Corps
• For general non COVID-related guidance on reporting data in the BIA
  
  

Impacts of COVID-19 on Data Reporting in the BIA

B lab recognizes that COVID-19 has had a profound impact on society and the B Corp Community. We understand that users of the B Impact Assessment have many questions about the impacts of COVID-19 on their businesses and how that may affect reporting of company information in the BIA. The purpose of this general guidance is to reinforce the importance of reflecting the current state of a business in the BIA even when the financial, social and environmental performance of the business may have been affected by COVID-19. Beyond this general guidance, you will find more nuanced information in the sections below. While this document aims to help users we recognize that it may not answer all questions. In cases where the guidance does not suffice and it prevents you from completing the BIA, please contact your Global Partner representative, the Standards Analyst assigned to your company or submit a ticket.

General Principle 

The BIA and the B Corp Certification process (including Recertification) aim to reflect a company’s social and environmental impact at a specific moment in time. We recognize that this impact can change over time and it is the objective of the BIA to reflect a company’s impact journey, providing useful insights into a company’s impact that allow better informed decision making. With this in mind, and recognizing that the impacts of COVID-19 have tragically been far-reaching and devastating for many, the BIA should reflect the current operating reality of the business for which it is used. Companies are not permitted to adjust BIA responses to reflect ‘pre-COVID’ conditions in order to show what the business looked like before COVID-related impacts. By accurately representing the current state of a business in the BIA company leaders can use this knowledge to better understand the impacts of the global pandemic on their businesses. Furthermore, this data will be tremendously useful to B Lab in monitoring the current state of the B Corp Community as a whole and the impact of COVID-19 on this community of impactful businesses. Finally, by having this data, B Lab will be in a unique position to report on how companies with high social and environmental performance are performing during this unprecedented global crisis. If your company’s Recertification process has been negatively affected by COVID-19 in terms of your BIA score being below the 80 required to maintain Certification, please read below for information on accommodations.  

Reporting Guidance

Questions Based on a Last Fiscal Year (Derived from Financials):

Please report as normal, using the previously completed fiscal year for any finance-related questions (e.g. product revenues, supplier costs). It is understood that COVID-19 has negatively impacted many companies’ finances but please note that the BIA does not penalize a company based on absolute revenue or profits figures. Revenue and profit, and how they can be impactful, are evaluated on a percentage basis.

Questions Based on Last Twelve Months (Not Derived from Financials): 

Many questions in the BIA use different time frames. A question might reference a specific point in time (e.g. a singular date such as ‘today’) or a time frame such as ‘the last twelve months’. This is especially relevant for Workers Metrics where we ask for the number of workers employed at the company ‘today’ (or in reality when completion of the BIA was started). However, when looking at worker number growth over time, the question will stipulate a timeframe such as ‘the last  12 months’ for analysis. This timeframe should not be adjusted to report on a period of time that was not affected by COVID-19, it should reflect the time period preceding the completion or submission of the BIA. We understand that some companies may increase or decrease in size or employee number due to COVID-19 and we kindly request that these changes are reported in the BIA in cases where the reporting time frame was affected by COVID-19.

More specifically, the BIA user needs to choose a point in time that is used as an anchor point from which data is collected. For example, if a user completed the BIA on June 1st 2020, the date that might be chosen as an anchor point to report on "current" workers metrics should be May 31st, 2020. The date used to complete "number of workers 12 months ago" should then be May 31st, 2019. In this case, the  ‘previous 12 months’ reporting period is June 1st, 2019, to May 31st, 2020.

We do however recognize that it takes time to complete the BIA and so your anchor point is not likely to be the day before you submit your BIA. So, for example if you submitted your BIA on May 31st 2020 but actively started answering the questions on April 1st 2020 the anchor point should be March 31st and the ‘previous 12 months’ should be April 1st 2019 to March 31st 2020.

In sum, please use a consistent time frame when completing the BIA but refrain from specifically choosing a timeframe to report on because it was not affected by COVID-19. 

Qualitative questions related to practices, policies and operating procedures: 

These questions should also reflect the current state of the business in that the answer options selected should match the operating procedures as they currently are implemented. If the way different aspects of your business operate have changed, please do indicate this in answer selections.

Physical locations (offices, warehouses, factories etc): 

If your business maintains its operating locations throughout the pandemic (ie. still paying rent or have not sold assets) please do report on them even if staff presence has temporarily decreased or stopped altogether. For example, environmental metrics should continue to be monitored in spite of changing consumption, and any practices that exist to manage these facilities are still considered applicable in the BIA even if they are temporarily experiencing lighter implementation (but will resume ‘normal’ operation in the future). Conversely, if your business has closed any locations or facilities permanently, or has moved to a remote staff model this should also be reflected in the BIA.

Impacts of fluctuating BIA scores on recertifying B Corps: 

If your company’s BIA score has fallen below the 80 point minimum required to maintain certification (ie. complete Recertification successfully) B Lab will work with your company to seek an accommodation that takes into account your business’ circumstances (eg. an extension on the Improvement Period that allows a recertifying B Corp with <80 points to work for longer on finding score improvements to reach the required 80 points).

For general non COVID-related guidance on reporting data in the BIA please refer to the Knowledge Base Articles below:

Choosing your Assessment Track: Size, Sector, and Location

Calculating Your Full-time Equivalency (FTE) Workforce to Determine Your Track Size

Defining the Scope of and Completing the Workers Impact Area

TABLE OF CONTENTS

• 1. What is a living wage?
• 2. Answering the living wage questions in the B Impact Assessment
• 2.1 Accepted living wage accreditations
• 2.2 Using living wage benchmarks
  • 2.2.1 What is a benchmark?
  • 2.2.2 How do I choose a benchmark?
  • 2.2.3 Individual and family living wage
  • 2.2.4 Family size assumptions
  • 2.2.6 Additional considerations for choosing benchmarks
  • 2.2.7  Putting benchmarks into context
• 2.3 Calculating prevailing wages
  • 2.3.1 How to calculate prevailing wages
  • 2.3.2 Principles for including extra wage components
  • 2.3.3 USA health insurance
  • 2.3.4 Examples
• 3. Special circumstances
  • 3.1 Minimum wage higher than living wage
  • 3.2 Collective bargaining agreements
  • 3.3 Other special circumstances
• 4. Other questions referring to living wage in the B Impact Assessment

  • 4.1. Initiatives to increase wages and benefits

• 5. External resources

1. What is a living wage?

In short, a living wage allows someone to afford a decent standard of living for them and their family. The Global Living Wage Coalition offers a more elaborate definition:

The remuneration received for a standard workweek by a worker in a particular place sufficient to afford a decent standard of living for the worker and her or his family. Elements of a decent standard of living include food, water, housing, education, health care, transportation, clothing, and other essential needs including provision for unexpected events. (Global Living Wage Coalition)

A living wage is a human right and different to a minimum wage, although they have similar intentions. Whereas minimum wages are set by governments, living wages are usually researched by specialist organizations. In most countries around the world, the minimum wage is not actually enough to afford a decent standard of living, which gave rise to the living wage movement.

Related terms:

• Living income is the same as a living wage but then for self-employed people as opposed to employees (e.g. smallholder farmers).

• Market wage refers to what is commonly paid in the market. It does not reflect what a person actually needs and is therefore not the same as a living wage.

• Collectively-bargained wages are those negotiated by a union. They come from collective bargaining agreements, which are legally binding and can apply to a single employer or a whole sector. They are an important means for workers to negotiate better wages and working conditions. In some countries, collective bargaining agreements set legal minimum wages. Ideally a collectively-bargained wage represents a living wage, but in practice this does not always happen.

• Fair wage is a more loosely used term, however it usually refers to the payment of a living wage, fair wage governance, collectively-bargained wages, and/or equitable pay outcomes (e.g. equal pay for equal work). Fair Wage is therefore broader in definition than living wage.

2. Answering the living wage questions in the B Impact Assessment

To answer the questions, companies must calculate if they are paying their workers a living wage. There are two sides to this calculation: what should workers be paid (‘benchmark’) and what are workers paid (‘prevailing wage’)?

2.1 Accepted living wage accreditations

There are external organizations that accredit companies for paying a living wage. If a company has one of the following accreditations then they will receive points for one or both living wage questions. We refer to this as an ‘equivalence’. In such cases, B Lab will verify the authenticity of the accreditation, rather than verifying the implementation of living wages.

All accreditations are optional; none are mandatory for B Corp certification.

Note that most accreditations are location-specific, meaning the equivalence is also location-specific. Companies with workers in multiple locations will either need multiple accreditations or demonstrate the implementation of living wages in countries that are not covered by the accreditations.

Equivalences are subject to change should there be any material change to the methodology of an accreditation body.

If companies have a living wage accreditation that is not listed above and they would like B Lab to consider its equivalence, then they can request this via their B Lab contact person.

2.2 Using living wage benchmarks

2.2.1 What is a benchmark?

A living wage benchmark is a figure that represents what a living wage is in a particular location at a particular time. They are usually expressed as a monetary rate, such as USD per month. There are various organizations researching and publishing living wage benchmarks. Whilst offering vital information to companies, it can be confusing to understand how they vary and which one to choose. Here are some ways in which the benchmark providers vary:

• Coverage: whilst some provide benchmarks for a single province or country, others provide benchmarks for multiple countries

• Fees: whilst some benchmarks are available to the public for free, others must be purchased

• Accreditation: some benchmark providers also offer accreditation (see 2.1)

• Definitions: most benchmark providers use comparable definitions, however there are differences (e.g. not all include child care costs and there are different assumptions of what constitutes a family)

• Research methodologies: organizations vary in how they collect data to calculate benchmarks (to varying degrees they use field research, public datasets and computations)

B Lab’s approach is to accept benchmarks that meet a minimum threshold. It is important that they are created by credible and independent organizations with rigorous methodologies. To this aim, we accept benchmarks that have been recognized by the IDH Recognition Process For Living Wage Benchmark Methodologies. However, because some benchmark providers have not applied for recognition by IDH, there remain some useful ones that we accept in addition. As of March 2022, IDH has recognized five benchmarks: Anker Full-Fledged, WageIndicator Typical Family, Anker Reference Value, Fair Wage Network Typical Family and Living Wage for US Monthly (listed in order of when they were recognized).

Whilst we advocate for benchmarks to be free and publicly available, we recognize that researching and calculating benchmarks is costly and global coverage is difficult to achieve with publicly-funded benchmarks alone. We also recognize that not all (aspiring) B Corps have (free) benchmarks for their locations, or that some may find it difficult to pay for benchmarks. Therefore, companies will not be required to purchase benchmark data. 

2.2.2 How do I choose a benchmark?

Given the variance among the benchmarks listed above, B Lab has developed location-specific guidance. Table 2 shows the accepted benchmarks, split into primary and secondary. Primary benchmarks should be used by default. Secondary benchmarks are available for special situations. For example, larger companies with workers in many countries may prefer a single living wage benchmark provider. Further considerations on choosing a benchmark are listed in 2.2.6. In any case, secondary benchmarks should not be used as a means to pay lower living wages.

Some benchmarks offer their data in multiple formats, where only some are accepted by B Lab. These are specified below in table 3, see right-hand column ‘Limitations to what B Lab accepts’.

Note, in both tables, benchmarks within one cell are listed in alphabetical order. The vertical order does not signify a hierarchy or preference.

Whereas the table above shows the accepted benchmarks, the table below shows any limitations within each benchmark that apply.

If companies know or use a benchmark that is not listed above and they would like B Lab to consider it, then they can request this via their B Lab contact person.

2.2.3 Individual and family living wage

In the B Impact Assessment, companies can get points for paying a ‘living wage for individuals’. Whilst B Lab recognizes that a living wage is for an individual and their family, this question remains in the B Impact Assessment to maintain consistency over time, and more importantly, continue differentiating company performance on wages.

Some benchmarks only provide figures based on a family. In such cases, and where a company pays below this benchmark, they have two options:

1. Pay a family living wage and earn points for both questions (individual and family).

2. Select N/A for the ‘living wage for individuals’ question and <75% for the ‘living wage for families’ question.

2.2.4 Family size assumptions

Family sizes vary. The number of dependents varies as does the number of wage earners, all of which affects living wage calculations. The benchmark providers listed above have different approaches to this. Some (e.g. MIT), provide the user with options, whereas others make assumptions on what a family looks like. Living Wage for US, for example, assumes 1.7565 wage earners per family, based on the national employment rate, and assumes two children and two adults in a family.

Any limitations to what companies may use for the B Impact Assessment are listed in table 3 above under the column ‘Limitations to what B Lab accepts’. Note that where benchmark providers provide options, companies are expected to select the appropriate one(s).

2.2.5 Using the IDH Living Wage Identifier Tool

This online tool shows which methodologies offer benchmarks for your location. These benchmarks meet a methodological threshold (see here for more info). As of March 2022, IDH has recognized five benchmark methodologies, so only those are included. The order in which they are presented within the tool does not signify any preference or priority from IDH’s perspective. Other benchmarks may not be included because they did not apply for recognition.

Use of this tool is optional.

2.2.6 Additional considerations for choosing benchmarks

Alongside the guidance in 2.2.2, companies may take the following into consideration when choosing benchmarks:

• Use location-specific benchmarks (or as precise location as possible)

• Nearest location to where workers are located

• Most comparable location to where workers are located (e.g. similarly rural or similar city size)

• Age of benchmark research (more recent is likely to be more accurate)

• Methodological preference - as mentioned above there are differences between the benchmarks. Companies and sectors may therefore prefer one benchmark over another.

• Urban benchmarks may be used for workers in rural locations if there is no rural benchmark. Urban benchmarks tend to be higher than rural ones, so this tends to be in the workers’ favor and therefore permitted.

2.2.7  Putting benchmarks into context

Human needs are complex, both in theory and practice. So whilst it is valuable to translate this human right into concrete numbers, we must remember that they are based on many assumptions and there will always be an inherent complexity. Also, most benchmark providers regularly update their methodologies to become more accurate and to integrate evolving ideas of what constitutes a decent standard of living. So we must not treat living wage benchmarks as perfect. With this in mind, companies should sense-check living wage benchmark data with their workers.

In addition, unions should play an active role in implementing living wages. In addition to sense-checking the benchmarks, unions can use them in their negotiations. Benchmarks can serve as external validation of living wage gaps. Under no circumstance should implementing living wages hinder or disable unions to negotiate their wages. In sum, benchmarks should be used together with unions and not instead of unions.

2.3 Calculating prevailing wages

‘Prevailing wages’ describes the complete ‘package’ that an employer gives a worker. It can also be called remuneration. They include the base wage and other components, such as in-kind benefits, bonuses and allowances. Not all components are used for calculating prevailing wages. It is important that both the prevailing wage and benchmark are accurate as this ensures the calculated gap is as close to reality as possible. In other words, only through accurate calculations can employers confidently determine if workers are paid a living wage.

B Lab’s guidance on calculating prevailing wages builds on the Anker methodology.

2.3.1 How to calculate prevailing wages

When calculating prevailing wages it is important to be consistent across workers and with your chosen living wage benchmark. Usually, calculations are based on gross wages per month. The currency will depend on the country. Ensure consistency in the following ways:

• Pay period: if for example wages are paid weekly, then multiply by 52 and divide by twelve to obtain the monthly figure. Similarly, if there are bonuses or allowances paid yearly, then divide this by twelve.

• Standard hours: assume full-time work, where the number of hours matches what is used in the living wage benchmark and the local understanding of full-time work. This is usually around 40 hours per week. So for example, if someone works one day a week, their wage should be multiplied by five to calculate their full-time wage.

• Taxes: taxes are usually included in living wage benchmarks, meaning companies should calculate prevailing wages including taxes as well (ie. gross, or before tax is applied)

Below are two ways to simplify the calculation process.

• The prevailing wage includes all wage components. However, it is worth checking if base wages by themselves already meet the living wage benchmark, because this means no further calculations are needed. Therefore this may save you time. If the base wage does not equate to a living wage, then add other wage components based on the principles below (2.3.2).

• When calculating prevailing wages, start with the lowest paid workers. This is the quickest way to reveal whether there are workers or worker groups paid below a living wage.

2.3.2 Principles for including extra wage components

When calculating prevailing wages, an employer may include any component that is:

• Relevant for a person and their families’ life essentials, such as housing, food or education. Any work-related costs are excluded. Also, only include costs that are included as a cost category in the chosen benchmark (e.g. if the benchmark does not account for child care, then do not include child care vouchers).

• Predictable - the worker knows what to expect and when, allowing them to organize and plan their finances (e.g. a fixed monthly allowance, or bonuses determined by policy as opposed to management discretion)

• Usable - the worker must be able to use it easily (e.g. paid in cash as opposed to gift voucher for an obscure shop)

• Accessible - received within a year, so that it can contribute to weekly or monthly costs

• Earned in standard hours - so that workers do not rely on overtime work

In addition:

• For in-kind benefits, employers only include their contribution, not the retail value (e.g. cost to produce cafeteria lunch and not what the food retails for; special conditions apply for health insurance in the US, see 2.3.3).

• Any single wage component (other than the base wage or tips), may not account for more than 20% of the total wage or remuneration. For example, if a housing allowance equals 30% of total remuneration, then only 20% of the allowance may be included for the calculation. This is to avoid one component distorting the calculations.

2.3.3 USA health insurance

For all countries, health insurance may be included when calculating the prevailing wage only if health insurance is included as a cost category in the chosen benchmark. 

Healthcare in the USA is unique because it is relatively expensive and often tied to employment. As such, a special calculation applies. Employers may include the cost saving to the worker as part of the prevailing wage. This calculation assumes the worker has employer-provided health insurance and that a family plan is provided. The calculation still applies if the employer offers multiple plans with varying degrees of coverage (e.g. individual, individual plus partner, individual plus family).

B Lab is working on an approach for employer-provided individual health insurance plans. Whilst we work on this, these companies will not be able to include health insurance contributions in the prevailing wage calculation when completing the B Impact Assessment. One work-around for such companies is to obtain Living Wage for US accreditation, which B Lab accepts as per table 1 in section 2.1.

For companies that provide family health insurance plans, the calculation is (1) - (2) = (3)

   (1) Cost of health insurance premiums as per living wage benchmark

-  (2) Cost to worker for health insurance premiums

= (3) Cost saving that may be included in the prevailing wage calculation

Conditions and guidance for each calculation component:

(1) Cost of health insurance premiums as per living wage benchmark

• Go to Living Wage for US, find your location and use the cost listed under ‘Health Insurance Premiums’ and not ‘Healthcare (out of pocket)’. Note, ‘Medical’ costs listed in MIT’s calculator aggregates premiums and out-of-pocket expenses, and therefore should not be used.

(2) Cost to worker for health insurance premiums

• Use cost for a family plan covering four people, even if different plans are offered to employees (as the cost assumes a family of four as well)

• Use the most advantageous plan for workers at the entry/lower level; and use cost for a silver plan or better

• Use the same cost for all workers (i.e. there is no need to identify the specific cost per worker)

(3) Cost saving that may be included in the prevailing wage calculation

• If the result is negative, then count as 0

2.3.4 Examples

The table below is intended as guidance. Wage-related terminology varies per company, sector and country, so it is possible the terms below do not correspond with all companies’ contexts.

3. Special circumstances

3.1 Minimum wage higher than living wage

For a minority of locations,  the legal minimum wage is higher than the living wage; though this depends on which benchmark is used to define the living wage. B Lab does not provide a list of these locations because it inevitably changes over time as a result of macroeconomic changes. Living wage benchmark providers are in a better position to provide the most up-to-date information.

Since December 2023, WageIndicator Foundation provides a free online tool that confirms the locations where the minimum wage equals a living wage according to their own living wage estimates. B Lab accepts results from the two ‘Region’ tabs. B Lab does not accept country averages and therefore results from the ‘Country’ tabs are not to be used.

It is possible that the tool contradicts what other benchmarks say. This happens because they each have their own methodologies that sometimes produce different results. For the BIA, prioritize ‘primary benchmarks’ over ‘secondary benchmarks’ (see table 2 for an overview of both groups). WageIndicator is a secondary benchmark and so their tool is also considered secondary. So before using this tool, check if a primary benchmark applies. If there is no primary benchmark, then this tool may be used. We prioritize primary benchmarks because they are better at capturing local specifics, making them better estimators of what a living wage is.

For example, for New Zealand, companies use the benchmark from Living Wage Movement Aotearoa New Zealand (primary) and not the results of the mentioned tool, which is from WageIndicator (secondary). Australia, on the other hand, has no primary benchmark, and so the tool may be used. Like New Zealand, this tool should not be used for the USA, Singapore, Ireland and the UK because those locations have primary benchmarks.

3.2 Collective bargaining agreements

Collective bargaining agreements (CBA, see ‘related terms’ under section 1 for the definition) represent people’s fundamental right to bargain collectively. B Lab supports their use. However, CBAs sometimes derive from inequitable processes and do not always result in living wages. This variance in quality would entail assessing each CBA on a case-by-case basis, which B Lab is not in a position to do. Therefore, CBAs will currently not be accepted as living wage benchmarks.

The one exception for a CBA to be accepted by B Lab is to be recognized through the IDH Recognition Process For Living Wage Benchmark Methodologies (see 2.2.1).

Companies whose workers are subject to CBAs have three options:

1. Use a living wage benchmark accepted by B Lab (see 2.2.2)

2. Mark the living wage questions as N/A if there is no free benchmark

3. Encourage the CBA initiators to pursue recognition by IDH

3.3 Other special circumstances

• No (free) benchmark: If the majority (>50%) of workers are in locations without free accepted benchmarks, then you may select N/A. If the majority of workers are in locations with free accepted benchmarks, then your company answers the living wage questions. The denominator used to calculate the % of workers receiving a living wage then excludes workers that are in locations with no free benchmarks.

• Partial coverage: It is possible that a company previously got certified based on partial coverage of workers by the accepted benchmarks at that time (e.g. workers in USA covered and workers in France not covered by benchmarks, therefore the living wage responses were based on the USA workers only). Even though B Lab is now accepting benchmarks that cover almost all countries around the world, companies will not be required to apply them in this unique situation. In other words, companies in this situation may continue applying the same approach as before, though they are encouraged to pay and demonstrate paying a living wage for all workers.

• Always voluntary: Like all questions in the B Impact Assessment, companies are not required to implement living wages. Companies may always respond with the first option (no points).

• Remote workers: The applicable living wage benchmark is determined by where the worker is registered for tax purposes. This may not be the same as their home location.

• Recertifying: Companies that are recertifying in version 6 and previously responded N/A due to no benchmarks being accepted by B Lab in their regions of operations may select N/A again (valid only for one recertification term).

4. Other questions referring to living wage in the B Impact Assessment

Beyond the two operational questions in the Worker impact area focusing on living wages, there are several other questions that refer to living wages in the B Impact Assessment. The updates in this article apply to those questions as well.

4.1. Initiatives to increase wages and benefits

Examples of initiatives companies can take to increase wages and benefits recognized in the question "Initiatives to increase wages and benefits": 

• Provide support or resources above the legal minimum for collective bargaining efforts by trade unions

• Support labor unions to calculate a living wage (e.g. by connecting them with resources or funding research)

• Play an active role in existing living wage initiatives (see, for example, 'Membership or multi-stakeholder initiatives' under section 5. External resources of the Knowledge Base Article)

• Set up a new living wage initiative (e.g. organize learning events or set up a working group among peer companies)

• Play an active role in advocating or lobbying for legislative advancements, including minimum wage or benefit increases

• Participate in or facilitate living wage research (e.g. by piloting new approaches or methodologies)

• Commission living wage research and making the data public

5. External resources

International standards and frameworks:

• Universal Declaration of Human Rights (article 25.1)

• International Covenant on Economic, Social and Cultural Rights (Article 7)

Defining a living wage:

• Global Living Wage Coalition

• Anker Methodology (see chapter 2, section 1)

• WageIndicator’s visual explanation

Calculating prevailing wages:

• Anker methodology (see chapter 15)

• Salary Matrix - IDH

Reporting on living wage:

• Accounting for a Living Wage - Shift

Implementing living wages for workers:

• Living Wage Benchmark Reference Sheet Achieving the Living Wage Ambition: Reference Sheet and Implementation Guidance - UN Global Compact (también disponible en Español)

• Living Wage - Patagonia

Implementing living wages in the supply chain:

• Living Wages in Global Supply Chains - Ethical Trading Initiative

• Paying living wage in the electronic supply chain - Fairphone

• Living Wage - Patagonia

• Steps Towards a Living Wage in Global Supply Chains - Oxfam

• Living Wage Action Guide - IDH

• Living wage case study examples - IDH

• Align Tool - FairFood

Membership or multi-stakeholder initiatives active on living wage globally:

• ACT

• AIM-Progress

• Fair Labor Association

• IDH

• Global Living Wage Coalition

• UN Global Compact

• UK Living Wage Foundation

Other resources:

• AIM-Progress Living Wage Playbook

• WageIndicator’s FAQ

• The International Labour Organization and the Living Wage: A Historical Perspective

• The Case for Living Wages - Business Fights Poverty

The purpose of the B Impact Assessment is to allow businesses to measure and manage the social and environmental performance of their whole business by providing an easy to use, insightful, and standardized framework for measuring the business’s impact on its stakeholders.

The assessment is intended to help businesses:

1. Assess – Assess your company’s current impact performance on stakeholders affected by your company,  as measured through 50-250 educational questions examining your company’s policies, practices, outputs, business models, and positive outcomes .  

2. Compare – Review and compare your company’s B Impact Report, which provides an objective rating of your company’s current performance.  The B Impact Report also contains benchmarking information so that companies can compare their impact to that of thousands of other businesses using the BIA. 

3. Improve – Access a customized improvement report, and best practice examples and resource guides, and set and track performance goals to prioritize and implement new ways to improve impact.  

The B Impact Assessment is the exclusive assessment tool used to verify that a company meets the  performance requirement to become a Certified B Corp . It also meets the necessary statutory qualifications for benefit corporations to meet reporting and transparency requirements. Many other companies use the B Impact Assessment at various stages of their sustainability journey to assess, compare, and improve their impact.

As a comprehensive impact management tool, the B Impact Assessment is categorized into five distinct impact areas that represent the company’s Governance and four key stakeholder groups: Workers, Community, Environment, and Customers.

• Governance evaluates a company's overall mission, engagement around its social/environmental impact, ethics, and transparency. This section also evaluates the ability of a company to protect their mission and formally consider stakeholders in decision making through their corporate structure (e.g. benefit corporation) or corporate governing documents.

• Workers evaluates a company’s contributions to its employees’ financial security, health & safety, wellness, career development, and engagement & satisfaction. In addition, this section recognizes business models designed to benefit workers, such as companies that are at least 40% owned by non-executive employees and those that have workforce development programs to support individuals with barriers to employment.

• Community evaluates a company’s engagement with and impact on the communities in which it operates, hires from, and sources from. Topics include diversity, equity & inclusion, economic impact, civic engagement, charitable giving, and supply chain management. In addition, this section recognizes business models that are designed to address specific community-oriented problems, such as poverty alleviation through fair trade sourcing or distribution via microenterprises, producer cooperative models, locally focused economic development, and formal charitable giving commitments.

• Environment evaluates a company’s overall environmental management practices as well as its impact on the air, climate, water, land, and biodiversity. This includes the direct impact of a company’s operations and, when applicable its supply chain and distribution channels. This section also recognizes companies with environmentally innovative production processes and those that sell products or services that have a positive environmental impact. Some examples might include products and services that create renewable energy, reduce consumption or waste, conserve land or wildlife, provide less toxic alternatives to the market, or educate people about environmental problems.

• Customers evaluates a company’s stewardship of its customers through the quality of its products and services, ethical marketing, data privacy and security, and feedback channels. In addition, this section recognizes products or services that are designed to address a particular social problem for or through its customers, such as health or educational products, arts & media products, serving underserved customers/clients, and services that improve the social impact of other businesses or organizations.

Each of these sections evaluates the impact of a company's operations and business model impact on the stakeholder. You can read more about the distinction between operational impact and Impact Business Models here.

Impact Business Models (IBMs) are the ways that a business is designed to create a specific positive benefit/outcome for one of its stakeholders. They may be based on their product, a particular process or activity, or the structure of the business. Impact Business Models are one of the three underlying aspects of a company’s social and environmental performance that are assessed in the B Impact Assessment, along with “Operations” and the “Disclosure Questionnaire.”

Determining whether your business qualifies for an Impact Business Model is one of the more challenging and nuanced parts of completing the B Impact Assessment.Most companies completing the B Impact Assessment have 0-2 IBMs. It is difficult to earn credit in an IBM, and extremely rare that a company has 3 or more IBMs that are applicable. If you have unlocked 3+ IBM topics in your assessment, it is recommended that you revisit the introductory impact topics and adjust your responses to focus on one or two IBMs that best describe your business model.  

When considering whether your company has an impact business model, it is helpful to consider the underlying principles of an Impact Business Model—they are specific, material, verifiable, lasting, and extraordinary.  

Specific– An Impact Business Model is focused on benefiting a specific stakeholder group with a specific positive benefit / outcome, rather than a “general” overall positive impact that is not specific to a particular beneficiary or not linked to a specific benefit that the stakeholder receives.  

Example: Tricyclos, a company founded in Chile and now headquartered in Brazil, focuses specifically on addressing the problem of waste.  Beyond general commitments to preserving the environment and having a positive impact on stakeholders, its business model includes products and services specifically related to waste recycling and advancing a circular economy.

Material – An Impact Business Model is focused on providing significant benefits to their specified stakeholder beneficiary, not benefits that are negligible.

Example: Eco2librium, a company based in Kenya, provides sustainability solutions in the energy and forestry space.  Through their energy efficient cookstove products, among other beneficial products and services, the company is able to have a material positive environmental impact, including the average reduction of CO2 emissions by 64,000 tons annually (equivalent to removing 6,000 U.S. cars).

Verifiable– An Impact Business Model is documentable and able to be verified, normally through a company’s own marketing materials, research / measurement, and internal data.  

Example: Culture Amp, an employee feedback platform based in Melbourne Australia, has an impact improvement business model because of the ability of its service to enable improvements in the well-being of its client’s employees.  Through the platform, Culture Amp is able to track data that not only identifies opportunities for their clients to improve, but can also demonstrate and verify that improvements have been made and that a positive result has followed.

Lasting– An Impact Business Model, because it is part of the design of the company, is not something that is traditionally alterable.  While a company could transition its business to add or remove Impact Business Models over time, it is frequently not something that can be done in the near term.  Furthermore, having an Impact Business Model is not a part of the business merely as a result of current circumstances, but is built into the nature of the business itself.  

Example: Bombas, an apparel company based in New York, has a Designed to Give Impact Business Model based on their mission is to help those experiencing homelessness. For every item of clothing purchased, Bombas donates a one. Since the company launched, Bombas has donated more than 30 million items to more than 2,500 community organizations.  The company’s ongoing commitment demonstrates the lasting nature of their business model and impact.

Extraordinary - By definition, an Impact Business Model is something that traditional businesses do not have.  As such, any company that has an Impact Business Model is uncommon and extraordinary.

Example: Fairphone, an electronics company based in Amsterdam, produces smartphones focused on four key areas of positive impact - long-lasting design, fair materials, good working conditions, and reuse and recycling.  Compared to competitors in the electronics marketplace, their efforts in these areas truly differentiate the company and their products.

To see a complete summary of all Impact Business Models featured in the BIA, see the document linked at the bottom of the article. To learn more about how Impact Business Models are scored, see here.

The B Impact Assessment is scored to measure a company's social and environmental performance, both overall and within key impact areas. Scoring within the B Impact Assessment is designed to allow comparability and to identify and track opportunities for improvement over time. Scoring evolves with each version of the B Impact Assessment, and is complex and customized based on your company’s specific track.

Scoring in the B Impact Assessment is based on five key themes. It is:

1. Objective: Determined by B Lab’s independent Standards Advisory Council

2. Normalized: All companies can earn the same total points in the assessment

3. Materiality Based: Determined by relative materiality of a particular topic to a company’s sector

4. Outputs/Outcomes Oriented: More heavily weighted towards direct indicators of “impact”

5. Balanced: Comparable scoring for Operational Impact and Impact Business Models, and across different Impact Business Models

To learn more about Operational Impact and Impact Business Models, see here. It is important to remember that the B Impact Assessment is a positive assessment—you are not losing points for any of your answers, only gaining them! 

Total Points Available in the Assessment

Most companies have a total of 140 operational points available in the assessment, distributed across the different impact areas—Governance, Workers, Communities, Environment, and Customers.  The exact value of each impact area varies by sector to reflect different levels of material for the topics covered. Please see the below chart for a score breakdown. Companies on the  zero worker track, however, have a unique scoring structure as a result of their assessment not including a Workers Impact Area and their lower overall operational impact.  To learn more about the scoring of the zero worker track, see this article.

*In previous versions of the BIA before Version 1.6, a scoring cap of 90 points was imposed on Impact Business Model points.  Given the contingent nature of IBMs, in that a company only opts into, and is evaluated and scored only if an IBM is applicable to them, this meant that while the sum total of points across all IBMs would be greater than 90 points, any individual company would stop earning points for the IBMs they earned beyond 90.  In order to more easily communicate our scoring methodology and to recognize the aspirational opportunity of companies adopting multiple Impact Business Models, this 90 point cap was lifted.  

In addition, companies may earn credit in Impact Business Model (IBM) sections if the business is designed to create a specific, positive social and/or environmental impact for one of its stakeholders through one of the assessment’s predefined Impact Business Models. Each IBM section is typically worth 30 points , although there are some exceptions. To learn more about how IBMs are scored in the assessment, click here.

Question Weighting

The specific questions that appear in your assessment depend on your company’s track, which is the sector, size, and geography of your business (click here to learn more on assessment tracks).

Each question is assigned a relative weighting based on how difficult the practice is to implement and the directness of the indicator in assessing a positive impact on workers, communities, environment, and/or customers (click here to learn more assessment impact areas), as determined by B Lab’s independent Standards Advisory Council. For example, there are equally weighted questions, heavily weighted questions, less weighted questions, and unweighted questions. Generally speaking, questions measuring specific outputs and outcomes are more heavily weighted than questions about policies and practices. that you frequently don't need to answer all options to get full credit, that "other" option is weighted less, etc.

The total available points in a given impact topic are then distributed across questions based on their relative weighting within that section. You can see how many points each question is worth at the bottom left corner of the question box. 

Companies earn points for every affirmative response to a question. In certain sections, points are rewarded for calculations and combinations of a number of different questions. So, while certain questions may not be "weighted" on their own, they contribute to the overall score. The assessment is scored automatically and in real time so that at the conclusion of the assessment, it is immediately possible to review the results. It is important to note that if a company downloads their completed assessment in excel these will still show up as 0.0 out of 0.0 despite the back-end calculation

Unlike questions related to Operations, which focus on the operational performance of your company on its stakeholders as it is managed and operated on a day to day basis, Impact Business Models go a level deeper by identifying and evaluating whether and how a company is designed to create specific positive social and/or environmental impact. Impact Business Models are captured under Reports in BIA Performance. See below for an example of a company’s Impact Business Model score in the Environment section.

While the different types of Impact Business Models inevitably create some variabilities in how they work and the questions that a company will see, there are also common scoring structures .

The maximum number of points available within one individual Impact Business Model is typically 30 points. A few exceptions are identified below.  

Intensity and Magnitude

Once a company has correctly gone through the gating questions and identified that they may have an Impact Business Model, the questions within the model itself are designed to evaluate the performance and potential impact of that particular model.  Most Impact Business Models begin by asking a series of questions that differentiate companies by the “intensity” of the impact business model, which is used to differentiate different levels of potential impact and best practices for companies with that model.  

After questions about the intensity of the model, questions will then generally measure the relative magnitude of the impact business model, generally as a percentage of the overall business that is oriented to the model. For most IBMs, particularly the beneficial products and services, twenty five out of the thirty possible points is focused on the intensity and relative magnitude calculation described above. In some, there are additional “parts” that further split the IBM into underlying sections of scoring, with different scoring methods varying. 

In the Product and Services IBMs (found in the Environment and Customer section), the scores are determined via calculated questions. These questions are automatically calculated based on answers to other questions in the B Impact Assessment (that are themselves unweighted). The first key question used to calculate an IBM score in these impact topics is Revenue Last Year, found in the Governance section under “Governance Metrics”. The response to this question will dictate the scoring calculations later in the assessment. 

Impact Measurement and Management 

Weighted impact management questions generally begin with a framing question that outlines the many different ways a company can be managing the impact of the model.  Based on the answers to this question, a company will see more detailed questions that dive further into impact management and the rate of positive outcomes demonstrated, totaling up to five points of the model.  

Additional unweighted questions in each Impact Business Model are also included.  While these questions do not factor into a company’s score, they do provide a mechanism for companies to share and track raw data regarding their impact business model, particularly the overall scale or reach of beneficiaries served through the Impact Business Model.  In order to provide a comparable measure of performance across companies, the scoring of the assessment, particularly in this context, has been designed as scale neutral.

Finally, most Impact Business Models feature specific questions asking in more detail how your company is actively managing the outcomes produced by the particular model, including questions about having a theory of change related to the IBM, tracking beneficiary data, managing negative or unintended consequences, and producing both near and long term positive outcomes. These questions, and the structure of Impact Business Models on the whole (particularly the beneficial products and services models), have been designed to cover and be generally aligned with the dimensions of impact outlined in the Impact Management Project.  

Example of an Impact Management Question