What is a B Corp?
Get an overview of what it means to be a B Corp, how to become one, its origins, benefits, risks and the future.
What is a B Corp?
A B Corporation, also known as a B Corp, is a for-profit company that has been certified by B Lab to meet high standards of social and environmental performance, accountability and transparency. B Corps prioritise ESG and are legally required to consider the impact of their decisions on all stakeholders, including the community and the environment.
Origins of B Corps
The B Corp movement began in 2006 when three friends, Jay Coen Gilbert, Bart Houlahan, and Andrew Kassoy, founded B Lab, a nonprofit organisation dedicated to using business as a force for good.
Coen Gilbert and Houlahan were the co-founders of AND1, a basketball footwear and clothing company that was known for its socially responsible business practices. Kassoy was a private equity investor who was focused on social change.
The three men were inspired by the growing movement of social entrepreneurs and businesses that were using their profits to make a positive impact on the world. They believed that there was a need for a new standard of corporate governance that would hold businesses accountable to all stakeholders, not just shareholders.
In 2007, B Lab launched the B Impact Assessment, a comprehensive tool that businesses could use to measure their social and environmental performance. Businesses that achieve a minimum score of 80 on the B Impact Assessment and meet other requirements are eligible to become Certified B Corporations.
The first B Corps were certified in 2007 and the movement has grown rapidly since then.
Famous B Corp companies
There are now more than 4,000 B Corps in over 70 countries. Some well-known examples include:
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Patagonia
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Ben & Jerry's
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Seventh Generation
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Allbirds
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The Body Shop
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BrewDog
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Coursera
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Moodle
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Gousto
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Intrepid Travel
The 5 pillars of B Corps
Benefits of becoming a B Corp
Some of the benefits of certification are:
Increased customer trust and loyalty
Consumers are increasingly looking to support businesses that are committed to social and environmental responsibility. Certification is a trusted signal that a company is doing the right thing.
Attracting and retaining top talent
Employees are also more likely to want to work for companies that are aligned with their values. Certification is a way to attract and retain the best talent.
Competitive Advantage
B Corps are well-positioned to succeed in the new economy, where consumers and businesses are increasingly demanding sustainable and responsible products and services.
Challenges of B Corps
There are also some associated challenges, including:
Cost and complexity of certification:
The B Impact Assessment and certification process can be expensive and time-consuming, especially for small businesses.
Balancing social and environmental impact with financial performance:
B Corps are required to consider the impact of their decisions on all stakeholders, not just shareholders. This can be challenging, especially when it comes to making financial decisions.
Communicating their value to customers and investors:
B Corps are a relatively new type of business, and many consumers and investors are not familiar with them. B Corps need to educate their target audiences about the value of certification and the benefits of supporting certified businesses.
Competing with traditional businesses
​B Corps often compete with traditional businesses that are not focused on social and environmental impact. This can be challenging, especially in industries where there is a lot of price competition.
The Future of B Corps
Despite these challenges, the future of B Corps is bright. Consumers and investors are increasingly demanding sustainable and responsible products and services. A study by Nielsen found that 66% of global consumers are willing to pay more for sustainable products. B Corps are well-positioned to meet this demand.
Governments and other policymakers are also increasingly supportive of sustainable businesses. The EU’s Corporate Sustainability Reporting Directive (CSRD) and its accompanying standards, for example, state that all listed companies and all large companies operating in the EU will need to disclose a transition plan aligned to 1.5 degrees Celsius warming in their annual reports or explain why they have not.
Traditional businesses that do not invest in sustainability will face a number of challenges in the future. Investors are increasingly focused on ESG factors. A recent study by BlackRock found that 88% of global institutional investors are incorporating ESG factors into their investment decisions. This trend is also likely to continue to grow in the coming years.
Finally, the cost of complying with environmental regulations is likely to increase in the coming years. This will put additional pressure on traditional businesses that do not invest in ESG factors.
60-second takeaways
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A B Corp is a for-profit company that has been certified by B Lab to meet high standards of social and environmental performance, accountability and transparency.
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The B Corp movement began in 2006 with the first B Corps being certified in 2007. There are now more than 4,000 B Corps in over 70 countries.
Aspiring B Corps must achieve a minimum score of 80 points on the B Impact Assessment, which covers five areas: governance, workers, community, environment, and customers.
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As consumers, employees and policy-makers become increasingly supportive of sustainability, there are numerous benefits to becoming a B Corp.
There are also challenges associated with B Corp certification, including the initial cost and communicating its value to stakeholders.
FAQ
What does it mean to become B Corp?
Becoming a B Corp is a voluntary process, but it is a rigorous one. Companies that achieve certification are demonstrating their commitment to social and environmental responsibility, and they are joining a global community of businesses that are working to create a more sustainable and equitable economy.
What does B Corp stand for in business?
B Corp stands for "Benefit Corporation" in business. It is a certification that a company has met high standards of social and environmental performance, accountability and transparency.
What is a B Corp score?
A B Corp score is a measure of a company's social and environmental performance, accountability, and transparency. It is calculated based on the results of the B Impact Assessment, which is a comprehensive questionnaire that covers five areas: governance, workers, community, environment, and customers.
To achieve certification, a company must achieve a minimum score of 80. However, the average score for B Corps is much higher, at around 100.