What is this evolution, and what is its purpose?
The B Corp standards are at the heart of the B Corp movement and our Theory of Change, defining social, environmental, and governance best practices for businesses. Our standards serve as the foundation for everything our network does — from B Corp Certification to our impact management products to our policy work worldwide. As the B Corp movement grows, B Lab must continually evolve the tools and strategies we use to effectively differentiate leading businesses and help all companies improve their impact.
With this in mind, in December 2020, B Lab announced a review of the performance requirements — or standards — for B Corp Certification. The aim was to understand whether more specific and mandatory performance requirements on key topics could ensure that B Corp Certification continues to differentiate leading companies using business as a force for good. This project has been built on other developments such as B Lab’s Climate Emergency Declaration, which included a commitment to explore the future of the B Corp Certification standards and the Baseline Requirements developed by our Multinational Public Markets Advisory Council. These new standards will evolve what it means to be a B Corp, making certification more relevant than ever before, galvanising business action on the most important social and environmental issues. Throughout this process, our goal is to ensure we are meaningfully listening to stakeholders and incorporating their views, while simultaneously thinking about what is the best and most impactful path forward for the movement and our collective goal of achieving an inclusive, equitable, and regenerative economy.
What is the current model of the standards for B Corp Certification?
There are currently three B Corp Certification Performance Requirements: (1) Positive Performance: Demonstrated by a verified score of 80 or higher on the B Impact Assessment (BIA), (2) Risk Performance: Not having any material issues related to negative impacts that would prohibit the company from certification, and (3) Baseline Performance: For $5B+ Parent companies only, having specific practices in place regarding transparency and management of material issues.
Because Risk and Baseline Requirements Performance only get applied in limited circumstances, the primary focus of the Performance Requirements has been on positive performance. This approach, rooted in the score of the BIA, means that the Performance Requirement takes a “menu approach” in which no specific practices from the BIA are individually required as long as a company is doing enough of them (out of hundreds of options within the questions of the BIA), to achieve 80 points.
Note that there are also other certification requirements in addition to the Performance Requirement, including the legal requirement to amend a company’s corporate governance to require the consideration of stakeholders, and the transparency requirement of having a public profile page.
In the future, what the new model of the standards for B Corp Certification look like?
The draft standards for B Corp Certification have been developed to improve the impactfulness of the standards, improve clarity around what it means to be a leading business, and demonstrate responsiveness to what we’ve heard from various stakeholders over the past few years.
In order to achieve these goals, the draft standards depart from the current model of standards for B Corp Certification, which has previously been developed and iterated upon while the framework has largely remained the same. While the content and components of the new draft standards have been developed with the existing standards in mind, they have also been updated to improve their clarity and focus, while ensuring that specific topics reflect expected performance for companies across different Impact Areas. Within these draft standards, companies will be expected to meet specific applicable requirements for each of the Impact Topics, ensuring positive impact across a range of activities and concerns. These requirements will be contextualized based on key characteristics of companies such as size and sector.
Below is a view of the Impact Topics and overarching expectations of B Corps for each of them, as stated in the draft standards:
Purpose & Stakeholder Governance: B Corps act in accordance with a defined purpose contributing to the creation of an inclusive, equitable, and regenerative economic system for all people and the planet.
Worker Engagement: B Corps workers feel engaged. There is two-way communication and workers’ views are respected.
Fair Wages: B Corps workers can afford a decent standard of living for themselves and their families, and there is wage equality among the workforce.
Justice Equity Diversity & Inclusion: B Corps have inclusive and diverse work environments and contribute meaningfully to just and equitable communities.
Human Rights: B Corps treat people with dignity and respect their human rights.
Climate Action: B Corps take action in accordance with science to combat climate change and its impacts.
Circularity & Environmental Stewardship: B Corps demonstrate environmental stewardship and contribute to the circular economy in their operations and value chain, minimizing any negative impact and pursuing positive impact.
Collective Action: B Corps play a leadership role in fostering shared understanding, solutions, and implementation towards an equitable, inclusive, and regenerative economy.
Complementary Topics: B Corps comprehensively identify and measure a wider set of impacts of their business, in addition to the core Impact Topics, and improve upon them over time.
How can I participate and provide feedback, and when?
Communications regarding the next iteration of the draft standards will begin in late 2023, introducing the high-level approach, changes since the previous consultation, and setting expectations on the second consultation. B Lab will also begin engaging B Corps and other key stakeholders in preparation for the launch.
The second consultation will launch in January 2024 and run until March 2024. This will consist primarily of focus groups, the release of the complete draft of the new standards and an accompanying survey to capture detailed feedback.
If you want to engage in the next consultation, please register your interest here.
Background
What is driving this evolution?
The existing approach of the Performance Requirement has been a tremendous success, but also has its limitations and challenges. They include:
Difficulty in articulating what it means to be a B Corp in a meaningful, impactful, and consistent way;
Not being customized enough to a particular company’s context, be it region, size, country, or industry;
Challenges regarding changes to our score-based standards and how that affects a company’s ongoing certification;
The lack of continuous improvement demonstrated by a company as a requirement of the certification;
The risk and challenge of having the certification rooted in a company engaging in and demonstrating various practices, even if they might not be the most impactful practices.
Addressing any of these points within the current structure of the performance requirement will be challenging, and potentially impossible. And beyond these challenges, it is also recognized that the world is now a very different place than when B Lab and the initial requirements for the certification were developed. There is growing consensus, and awareness, of the climate emergency. There is a global health pandemic threatening our health and well-being. People are taking to the streets to more clearly identify ongoing racial injustice and demand action to address it. And combined with all of these issues, there has been no greater moment of awareness and recognition not only of collective work of the B Corp movement, but the importance of the goals we seek - to reset our economic system to be more inclusive, equitable, and regenerative. As responsible stewards of this movement, it is necessary that we ask these difficult questions and listen to our stakeholders as we look to the future.
How is this different from B Lab’s previous standards development projects?
This project is not focused on incremental changes regarding how the BIA can be improved, but asking how the structure of the Performance Requirement on the whole can be improved.
Since the start of the B Corp movement, the ongoing evolution of our standards has been a core component of how B Lab continues to improve and optimize impact. In addition to innovating new products like the SDG Action Manager, the B Impact Assessment itself has been iterated upon six times, and has included changes such as the creation of new tracks of the assessment for Emerging and Developed-Global Markets, industry specific addenda, evolving structures and scoring, and other significant content changes. At the same time, B Lab has expanded and evolved its development processes (including the launch of Regional Standards Advisory Groups), and began developing specific requirements and position statements on particular controversial industries and topics. All of these changes represent significant improvements to the B Corp standards, but they have also introduced complexity to them, and been met with ongoing feedback about how we can, and need, to continue to improve. Despite these changes, the core aspects of the BIA and how it determines certification performance requirements have remained largely the same, as described above.
What are the potential benefits of this evolution?
These new standards will answer the question: what does responsible, sustainable business look like now and in the future? Collectively, they are intended to:
Improve the impact of the B Corp community, and all those who strive to adopt the B Corp standards by focusing them on core practices addressing the most pressing social and environmental issues;
Improve the clarity of the standards by making it easier for stakeholders to understand what it means to be a B Corp (and for prospective companies to more easily understand and assess what it will take for them to achieve the Certification);
To ensure that these issues are responsive to the needs and expectations of stakeholders, including the B Corp community.
At the same time, it will also be necessary to manage possible risks by ensuring a thorough and thoughtful development process, to ensure that stakeholder voices are heard and incorporated. This will continue to include ample research, opportunities for input, testing, and public comment.
Impacts on the existing community
Is the purpose of this evolution to make the standards more difficult? Easier?
No. The purpose of this process is not necessarily to make the certification more or less challenging, but potentially more focused, meaningful, and impactful. Any change, however, will mean that there would be implications on what companies would need to do to be eligible for the certification in the future. This change will be thoughtfully managed and implemented to avoid disruption, especially for the existing B Corp community.
How would this affect the existing B Corp community?
Whenever there are changes to the standards for B Corp Certification, legacy policies and procedures are developed to avoid disruption to the community. Standards changes are never designed in such a way to automatically remove existing B Corps from the community, and this process will be no different. B Lab wants to ensure our community has time and resources to meet the new standards, so they will be rolled out gradually in a phased manner. We will communicate rollout and transition timelines in advance, so companies don't have to worry about trying to comply with the new standards at once.
10. How will this affect companies that are not B Corps yet but are in queue for certification?
Companies in the queue for certification should continue focused on complying with the current standards. After approval, the new standard will be rolled out in a phased manner over a period of time to ensure our community has time and resources to meet the new standards.
If you want to engage in the development of the new standards, B Lab recommends reading their public drafts. That will familiarize you with the direction we are headed. Then, when the second public consultation opens, you can comment and help inform the new standards.
If there are going to be requirements on the same Impact Topics for all companies, then will all companies need to meet the exact same requirements? How will a company’s key characteristics like size, sector, etc. be featured in this?
Aligned with the objectives of increased impact, clarity and responsiveness of the standards, one of the key aspirations of the evolution of the standards is to have a meaningful degree and quality of contextualization of the standards for B Corp Certification. When contextualizing the standards, there is always a need to balance flexibility with prescriptiveness - as giving companies complete flexibility could help in factoring their unique context more easily, but the lack of prescriptiveness could affect the universality and comparability of our standards and the ability to verify it.
In the draft version of the standards, while the universality of spirit and vision has been maintained within each topic, there is also demonstration of contextualization and how this might look for different companies for example, different requirements depending upon company size and sector, having optionality in terms of ways to meet some requirements, etc. To learn more about how contextualisation shows up within the new standards, please check the Appendix of the draft standards.
What will happen to all the efforts that my company has invested in the past for the certification?
Efforts invested towards having a positive impact on the world and being a leading company are never a waste. The intent of the new performance requirements is not to invalidate your previous efforts, rather to focus future efforts on a set of comprehensive issues ensuring that certification is relevant for the challenges of today and tomorrow and giving organizations clarity to focus on what matters most.
The information that you have shared through your previous certification cycles will remain in the database and will be accessible to you. That said, currently Certified B Corps are likely to be at different stages of achievement within the new structure of the performance requirements. Therefore, some of the efforts that you have taken in the past will align very well with some of the ten topics of the new performance requirements resulting in minimal efforts from your side. However, topics which have not been a priority area for your company will likely require additional effort and investment.
What are the implications of this evolution on verification?
Verification is an important part of the B Corp Certification process, although any possible change of the standard will require changes to what is verified. Such changes could create the opportunity for more focused verification, and as a result, both have the potential to be more efficient and/or create more of a value-add to companies from the verification process itself.
Going into detail
How do the new standards address the idea of continuous improvement?
During the stakeholder engagement process stakeholders shared that they consider continuous improvement as a cornerstone of the B Corp Certification. In the draft version of the standards, continuous improvement is incorporated in the following ways and we will continue developing its details in further iterations:
Most requirements inherently require ongoing action and improvement, which will be verified at recertification (e.g. setting a net zero target and demonstrating progress annually, ongoing action for identifying and managing salient human rights issues). In such cases, the draft of the requirements, specifically outlines expectations for the requirements at a given time interval (e.g. at recertification).
Within the topic of Impact Management, companies set goals on other material topics (as you will see in the draft, either focused on the operational sections or on Impact Business Model sections), against which companies need to demonstrate progress to recertify.
Will there be scoring within the new standards?
The draft of new standards departs from the existing model in which companies achieve B Corp Certification by attaining a minimum aggregate score of 80 points or more across all impact areas. The new requirements identify Impact Topics that are comprehensive of different stakeholder impacts (e.g., fair wages; climate action). With the new standards, the goal is to transition from a points-based certification requirement to a scheme where companies must meet the specific requirements within each topic.
At the same time, scoring incentivizes improvement, provides comparability, and clear roadmaps before, during, and after companies meet the standards. Therefore, new "scoring models" are being explored. The objective is to continue delivering the benefits of scoring and create a system that supports companies to also self-assess their journey toward achieving the requirements and improving their impact.
What is the objective of the Impact Management topic?
The framework for the new standards identifies ten topics with the expectation that companies must meet the specific requirements within each topic. However, the impact of a business is extensive and also includes “other topics”, which may not be directly related to the ten topics.
These other topics that have been historically included in the B Impact Assessment are incorporated into the “Impact Management'' requirement within the draft standards, thus ensuring that they remain an integral part of the B Corp Certification. Within this requirement, companies are required to continue to assess and manage their performance even though specific practices within these other topics are not required. Further, impact management requirements differ for companies with and without Impact Business Models, recognizing that companies with Impact Business Models have already proactively designed their business model to positively impact the planet/society and have a clear focus and scope for the company's impact management strategy.
The draft standards therefore recognize the overall value and comprehensiveness of the B Impact Assessment, including specific coverage of social and environmental issues and best practices that are either indirectly related to or completely independent of the specific requirements on the ten specific topics, and the need for companies to continually manage those topics in addition to the specific core requirements in order to maintain their eligibility for B Corp Certification.
How do the new draft standards take into account the role of Impact Business Models (IBMs)?
Impact Business Models (IBMs) featured in the B Impact Assessment are perceived as one of the key differentiators of B Corp Standards/Certification compared to other standards in the sustainability ecosystem. Stakeholder consultations confirmed the relevance of companies that proactively design their business models to positively impact the planet/society, beyond managing the impacts of their operations.
To continue recognizing and differentiating companies with Impact Business Models, a different set of Impact Management requirements are proposed for companies with an Impact Business Model as a significant part of the business (a minimum points threshold is needed to establish a scale that is significant enough to allow for a different approach within the requirements).
Companies with at least 10 points in one Impact Business Model featured in the B Impact Assessment are required to complete only the Impact Business Model-related questions and set goals on the same. This approach recognizes that the company’s emphasis on generating positive outcomes through the core of the business to a particular stakeholder already defines a clear focus and scope for the company's impact management strategy and action, while the core requirements maintain a degree of comprehensiveness in overall performance.
How do the new standards take into account a company’s negative impacts?
The Risk Standards are an integral part of the performance requirements for B Corp Certification (see response to question 2). To further emphasize the prominence and importance of B Lab’s existing Risk Standards in the overall requirements from the outset, one of the ten topics within the framework of new standards is Risk Standards. Following is a comparison of the existing and new Risk Standards
How do the new standards relate to the existing topics of the B Impact Assessment? How will these relations be reflected?
The way the requirements within the ten specific topics interact with each other and with the content of the B Impact Assessment is important from a conceptual, strategic, and a user experience perspective especially as the B Impact Assessment already contains questions related to the ten specific topics such as Climate Action, Fair Wages, JEDI, etc.
To develop a solution for the interactions between the two, B Lab Global will consider the following principles:
Avoiding duplication of responses and efforts by companies;
Recognizing the interconnections between the specific requirements of the ten topics and the B Impact Assessment within the standards and in the technology platform.
There are different ways that these intersections could be managed. As drafts of the core requirements are further iterated upon, B Lab Global will coordinate with various relevant stakeholders, particularly those internal like Product and Technology & Certification and Verification to find the best possible solution.
Standards development at B Lab
How does B Lab develop standards?
B Lab recognizes that high-quality social and environmental business standards demand continuous improvement in order to meet principles of inclusion, independence, and credibility. Our processes and approach to developing our standards are designed with best practices for standards development in mind, including independent governance and ample opportunities for input and review.
These three governance bodies have played integral roles in the development of the new standards for B Corp Certification:
B Lab’s independent Standards Advisory Council (SAC) is an independent, multi-stakeholder group composed of members from around the world with specific expertise in responsible and sustainable business. The standards are governed by the SAC and the SAC oversees the overall performance requirements for B Corp Certification.
B Lab’s Regional Standards Advisory Groups (RSAGs) in Asia, Australasia, East Africa, Europe, Latin America, and the United Kingdom provide ongoing feedback on the standards. These groups provide continuous input on B Lab’s standards, specifically focusing on context, relevance, and best practices for different markets.
B Lab’s Board of Directors is responsible for appointing members to the SAC and also has ultimate decision-making authority on recommendations coming from the SAC with the ability to overturn decisions made by the SAC with a ⅔’s vote.
What has been the process followed for developing the draft standards and what lies ahead?
Since launching this initiative in December 2020, B Lab has followed an iterative approach to developing the new standards for B Corp Certification. In 2021, the development was focused on the overall framework of the standards that companies should have to meet in order to become Certified B Corps.
To determine this framework, input was gathered on topics including the following: Should there be specific requirements for B Corps? Should there be specific topics for these requirements, if so how many? What are the most pressing topics facing society today? These questions and more were asked of the global B Corp community, all B Lab staff and board members, B Lab’s SAC and RSAGs, focus groups, and the general public.
At the end of 2021, following a year of engagement through focus groups and surveys with more than 1,200 stakeholders from around the world, B Lab’s Standards Advisory Council agreed on a framework for the new standards for B Corp Certification based on a set of specific topics. (Learn more about this process here.)
In 2022, with a draft framework agreed on by the SAC, B Lab has been focused on engaging subject matter experts with expertise in specific social, environmental, and governance topics, and creating the draft of the standards themselves.
The first drafts of the new standards were presented for preliminary consultation and from September to November 2022, 1,051 stakeholders responded to the survey beyond more than 100 B Corps engaging in 48 hours of virtual focus groups.
In May 2023, a Summary Report will be published, showing the findings and insights from 2022 preliminary consultation. This report also explains how B Lab intends to use prevalent survey feedback from the consultation to produce the next iteration of the draft standards, which will undergo a second consultation and a testing period before they are finalized and approved by the Standards Advisory Council and B Lab Global’s Board of Directors. If you want to engage in the next consultation in Q3 2023, please register your interest here.
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