Described as the business equivalent to the coffee industry’s Fair Trade scheme, B Corp confers a company with certification based on its social and environmental performance standards across the entire company and its products. It requires a company be accountable and transparent to the public according to its assessment score.
B Corp was set upin 2006 by B Lab, a Pennsylvania-based nonprofit organization with offices in the United States, Europe, Canada, Australia and New Zealand. It has partnerships in Latin America with Sistema B. The first 82 B corporations were certified in 2007, and now there are more 3,500 Certified B corporations in more than 70 countries. Most of these companies are small businesses.
Certification assesses a company’s impact on its workers, customers, community and environment. Companies are analysed from top to bottom on aspects from supply chain and input materials to charitable donations and employee benefits, and certified by the non-profit organization B Lab.
Companies are graded on a scale of zero to 200 for an overall B Impact Score. To qualify as a certified B Corp, a company must achieve a minimum score of 80 points. About one in three that submit for certification will certify, and the review process currently takes anywhere from six to 10 months to complete.
B Impact Score measures four areas: governance, community, environment and customers. An assessment asks questions about how the day-to-day operations of a company make a positive impact in those categories. Companies can earn additional points if their business model creates a positive social and environmental impact as well.
The governance category measures a company’s mission, ethics and transparency. The community category covers an array of concepts: diversity, equity and inclusion; economic impact; civic engagement and giving; and supply chain management. The environment category measures environmental management and a company’s impact on air and climate, water, and land and life. The customer category measures a company’s customer stewardship.
Certified B corporations are different from benefit corporations. The benefit corporation is a legal structure for a business, while Certified B corporations are merely certified by the third-party non-profit B Lab.
Annual fees scale based on a company’s annual sales. The lowest fee is $1,000 annually for companies with annual sales below $150,000, all the way up to $50,000 for companies with sales of $750 million to $999 million. The fee for companies with sales of $1 billion or more per year is based on size and complexity of business. These fees help cover the operating expenses of B Lab and fund the verification process