Frequently Asked Questions - Key Changes to B Lab's New Standards

Modified on Fri, 18 Apr at 12:53 PM

This article provides an overview on the Key Changes to the New Standards.

See our guide on Certifying on the New Standards for more information.

TABLE OF CONTENTS

Impact Topics & Requirements
Managing Eligibility and Risk in the New Standards
Scoring & Performance recognition
- Q: Why is there no score on the new standards? We were a highest-scoring B Corp, with the new standards and now we don’t have a score.
- Q: The second consultation report indicated that B Lab would recognize strong performance on Impact Topic requirements through an 'exceeds' category. Is this still being developed?
Impact Business Models
- Q: Why are companies with Impact Business Models not recognized in the new standards?
- Q: Why isn’t B Lab implementing the IBM approach published in the second consultation report?

Impact Topics & Requirements

Q: What motivated the updates to the B Corp standards? Are they in response to industry trends, environmental shifts, or stakeholder feedback?

A: Evolving of the standards for B Corp Certification is baked into our DNA at B Lab. We regularly update the standards which are informed by research and multi-stakeholder input; they have been updated six times since B Corp Certification launched more than 18 years ago.

In December 2020, we announced a further review of the standards for B Corp Certification aiming to understand whether more specific performance requirements on key topics could ensure that B Corp Certification continues to differentiate leading companies using business as a force for good.

This current update evolves what it means to be a B Corp, making the requirements for certification clearer than ever and ensuring that certification addresses the social and environmental challenges of today and tomorrow.

Learnings from company self-assessments, the development of verification processes, and the implementation of the new standards may lead to further improvements to the standards. We’ll make sure to let you know in advance when a major update is coming.

Q: Is B Lab evolving the standards due to large, multinational organizations joining the community?

A: We recognise the importance of having companies of all sizes in the B Corp community. Large companies need to be part of this movement; they have significant impact and as they improve their impact performance, they help deliver on our Theory of Change. However, B Lab’s standards are not changing to accommodate large companies; the new standards introduce more rigorous performance requirements, which are applied to all B Corps. Larger companies generally have to answer more (and more difficult) questions and meet higher requirements for verification, transparency, and additional factors in order to certify. The sub-requirements in the latest draft standards consider the impact of large and multinational enterprises to ensure that they comply with social, environmental and stakeholder governance practices reflecting their impact. The sub-requirements have been drafted in a way that their number and rigor increase as a company’s size increases.

Q: What are the new Impact Topics and how do they raise the bar for businesses and push business accountability?

A: B Corps must now meet performance standards across seven ‘Impact Topics’:

Purpose & Stakeholder Governance: Act in accordance with a defined purpose and embed stakeholder governance in decision-making, and create governance structures to monitor purpose, social, and environmental performance.
Climate Action: Develop an action plan to support limiting global warming to 1.5°C, and, for larger companies, include GHG emissions and validated science-based targets.
Human Rights: Understand how their operations and value chain may involve negative human rights impacts and take action to prevent and mitigate negative impacts.
Fair Work: Provide good quality jobs and have positive workplace cultures, implement fair wage practices, and incorporate worker feedback in decision-making.
Environmental Stewardship & Circularity: Assess their environmental impacts and take meaningful action to minimize them in their operations and value chain.
Justice, Equity, Diversity & Inclusion: Foster inclusive and diverse workplaces and their value chains, and contribute meaningfully to just and equitable communities.
Government Affairs & Collective Action: Engage in collective efforts to drive systemic change, advocate for policies that create positive social and environmental outcomes, and, for the largest companies, publicly share their country-by-country tax reports.

In addition, B Corps must also meet Foundation Requirements:

Meet Eligibility Requirements for B Corp Certification: A company must be legally incorporated, in operation for at least 12 months, and comply with local and national laws.
Commit to Stakeholder Governance: Companies must adopt the B Corp Legal Requirement, ensuring accountability to all stakeholders. This involved embedding stakeholder governance principles into legal frameworks and signing the B Corp Declaration of Interdependence.
Conduct a Risk Assessment: Companies will create risk profiles using B Lab’s risk profiling tool. This process determines the number of additional due-diligence sub-requirements that the company must meet as part of the B Corp certification process.

A: B Lab has continuously evolved its certification standards to raise the bar for responsible business. The latest updates provide greater clarity and consistency, ensuring companies focus on the most impactful business actions. These new standards establish a stronger, more transparent foundation for all businesses committed to building an inclusive, equitable, and regenerative global economy.

The updated standards introduce increased performance expectations in environmental and social impact areas that demand urgent action. Companies are expected to conduct human rights due diligence, take action to prevent and mitigate their impact on the environment and biodiversity, implement climate action plans to help reduce global GHG emissions, provide quality jobs and cultivate positive workplace cultures and support just, equitable, inclusive, and diverse workplaces. Additionally, businesses should manage products and services that contribute to a circular economy and engage in collective action to amplify social and environmental impacts.

Managing Eligibility and Risk in the New Standards

Q. How is a company’s negative impact addressed in the new standards?

A: A company's negative impacts are addressed through the Foundation Requirements and various Impact Topics.

Based on a company’s risk profile, they may need to meet additional due diligence sub-requirements in the Impact Topics (particularly PSG, ESC, and HR). This ensures due diligence expectations are proportionate to the company’s risk profile and size. A summary of each B Corp’s risk profile will be displayed on its public profile. FR3.1 applies to all company sizes, except those without workers and micro companies. These smallest companies are exempt, recognizing their inherently lower risk profiles.

Negative impacts are also addressed in other Foundation Requirements and Impact Topics. For example, FR1.3 requires companies to comply with local and national laws and regulations. Furthermore, the HR and ESC Impact Topics require companies to take action to prevent and mitigate their social and environmental negative impacts.

Q: Which industries are no longer eligible for certification in the new standards?

A: Under the new Foundation Requirements (FR 1.2), we’re applying more stringent eligibility criteria. A company cannot certify if they generate 1% or more of their annual revenue from activities that harm stakeholders, including:

Fossil fuel production
Gambling
Pornography
Prisons and detention centers (including prison or detention center labor)
Tobacco
Weapons

Marketing, PR, and consulting firms must ensure that no more than 1% of their total revenue comes from each of these ineligible industries, since their work can contribute to the negative impacts of these industries. This is a stricter rule than shared in the second consultation, where these firms could previously generate up to 5% of their revenue from fossil fuels alone.

For financial services companies, less than 1% of the company’s assets under management are in the listed industries.

For electric utilities and power generation companies, less than 50% of their energy mix can come from fossil fuels.

Q: Companies in some industries have been paused (end of page here), awaiting new standards development. Are these companies now able to proceed with certification?

A: If a company is not classified as an ineligible industry, as defined by Foundation Requirement (FR 1.2 - see previous FAQ), they are permitted to pursue B Corp certification. This means any company will need to be verified as meeting the new standard requirements including potential additional due diligence requirements based on a company’s risk profile and size to become a Certified B Corp.

Q: How do the new standards align with other impact management/sustainability schemes, frameworks, and regulations?

A: Recognizing the pressures businesses face today, the standards highlight how data and methodologies from other certification schemes, sustainability-related frameworks and disclosure reporting, including ESRS, GRI and CDP, are aligned and contribute to meeting our standards.

This information is captured under the Interoperability section of the new standards. Recognizing that voluntary and regulatory frameworks are dynamic and regularly updated, B Lab is committed to regularly updating the interoperability section in the assessment to ensure aligned data points are up to date.

Note: Interoperability data points related to The European Sustainability Reporting Standards (ESRS) will be updated once the EU Omnibus is available.

Scoring & Performance recognition

Q: Why is there no score on the new standards? We were a highest-scoring B Corp, with the new standards and now we don’t have a score.

A: We’re changing how we recognise company performance. Under the new standards, ‘meeting the bar’ alone demonstrates impactful performance, with companies addressing specific requirements across all seven Impact Topics and committing to ongoing continuous improvement. By moving away from individual point scoring, the focus shifts to collective impact —aligning efforts across industries to tackle the world’s most urgent challenges, together.

However, we recognise the importance of creating standards that are both motivating and engaging. B Lab remains committed to exploring ways to recognise strong impact performance, foster shared learning, and encourage continuous improvement. We will continue to keep the community informed and engaged as this work evolves.

Q: The second consultation report indicated that B Lab would recognize strong performance on Impact Topic requirements through an 'exceeds' category. Is this still being developed?

A: The publication of the standards will not include an “exceed” category for Impact Topic requirements, an option explored during the second consultation to recognize performance beyond the new standards’ requirements. Under the new standards, ‘meeting the bar’ alone demonstrates impactful performance, with companies addressing specific requirements across all seven Impact Topics and committing to ongoing continuous improvement. By moving away from individual point scoring, the focus shifts to collective impact —aligning efforts across industries to tackle the world’s most urgent challenges, together.

As companies transition to the new standards, B Lab is committed to providing our community the time and support needed to understand and adapt to these changes.

However, B Lab remains committed to exploring ways to recognise strong impact performance, foster shared learning, and encourage continuous improvement. We will continue to keep the community informed and engaged as this work evolves. One way B Lab is looking to recognise company impact is through Impact Business Models (see FAQ below) you can sign up here to participate in the Impact Business Model development process.

Impact Business Models

Q: Why are companies with Impact Business Models not recognized in the new standards?

A: Impact Business Models (IBMs) are the ways that a business is designed to create a specific positive outcome for a stakeholder group, for example, a company providing services to preserve or restore natural environments, or companies intentionally hiring and training individuals from underemployed populations to support social progress.

IBMs remain essential to our Theory of Change; they play a critical role in system change and hold significant value for many stakeholders. Therefore, B Lab is working on a wider redesign of IBMs to ensure they continue to be as impactful as possible, further exploring how IBMs can be valued both within and beyond B Corp certification, and in accordance with regulations, so their value can be maximized.

We will engage interested stakeholders throughout this process and share regular updates on its progress. You can sign up here to participate in the Impact Business Model development process.

Q: Why isn’t B Lab implementing the IBM approach published in the second consultation report?

A: During stakeholder consultations, we proposed an approach to recognize companies with IBMs through increased flexibility and public recognition. However, the assessment and recognition of Impact Business Models were removed from the Foundation Requirements and initial publication of the new standards. This decision was driven by the implications of emerging regulations, their effects on the content and implementation of the standards, and limited resources to support a quick transition.

Specifically, the EU Empowering Consumer Directives set expectations for certification schemes that would require a significant restructuring of Impact Business Models content so the designed recognition approach could be adopted. Furthermore, the transition to the new standard for companies affected by these regulations must occur by 2026. Given these constraints, it would not be operationally feasible to restructure the content and IBM criteria, implement the necessary technology and certification processes, and provide companies with adequate preparation time.