5 Things To Know If Your Business Is Considering Becoming A B Corp – Corporate/Commercial Law

If you’ve ever stayed at a mall, you surely passed or shopped at The Body Shop, which has been selling beauty, skin care, bath and body products from ethical sources for decades. The company has been doing this since 1976 and has a rather admirable vision: that business can be a force for good. With this driving force, The Body Shop has launched a number of advertising campaigns over the years and even became the first international cosmetics brand to be recognized under the Humane Cosmetics Standard.

Patagonia is another socially conscious and popular company. The manufacturer and retailer of clothing and other outdoor products opened its doors in 1973 and is celebrated for its efforts to protect the environment. In fact, in 2019 Patagonia was named the UN Champion of the Earth – the United Nations’ highest environmental award – for its practice of making the best products, avoiding unnecessary harm, and using the economy to inspire and implement solutions to the environmental crisis. Without a doubt, Patagonia’s mission statement best expresses its commitment to the world we share: “We are in business to save our home planet.”

Allbirds was founded in 2016 and is a relatively “new kid on the block” at least compared to The Body Shop and Patagonia, but it is also dedicated to the common good. The eco-friendly brand sells what is often referred to as “the world’s most comfortable shoes,” many of which are made from merino wool that meets strict standards for sustainable agriculture and animal welfare. Allbirds has taken its environmental priorities one step further by promising to cut its carbon footprint in half by 2025, reduce it to near zero by 2030, and remain carbon neutral in the meantime.

What The Body Shop, Patagonia, Allbirds and about 4,000 other companies in 70 countries have in common is that they are certified B Corporations (also known as B Corps) that set the highest standards in terms of verified social and environmental performance, public transparency and legal aspects fulfill accountability to balance purpose and gain.

At their core, B Corps are profit-oriented, mission-oriented companies that want to “do no harm and benefit everyone” through their products and practices. B Corp is a certification – not a legal form like a charity – and in order to become a B Corp, a company must be certified by B Lab, the umbrella organization of B Corps, which is committed to an inclusive, fair and regenerative economic system for all people and the planet.

If you want to follow the lead of The Body Shop, Patagonia, Allbirds, and thousands more companies around the world in pursuing B Corp status, here are five things to keep in mind:

1. Do the B impact assessment

The B Impact Assessment (BIA) is a comprehensive assessment of a company’s interactions with its employees, customers, the community and the environment. More specifically, the BIA measures the impact that a particular company’s operating practices (read: its selected suppliers, manufacturing processes, and governance) and products or services have on the world. It is noteworthy that more than 50,000 companies around the world have used this assessment tool to improve not only their companies but also their commitment to society and the environment.

Depending on the size, age and complexity (number of operating locations) of the company under the microscope, the BIA can take up to several hours. To qualify as a B Corp, a company must score at least 80 out of a possible 200, which is no easy task as most companies earn between 40 and 100.

Participating in the BIA provides your company with a baseline measurement of where it falls on the B Corp scale and highlights potential areas for improvement should you choose to become B Corp certification.

2. Adopt the structure of the Benefit Corporation

In addition to achieving at least 80 points in the BIA, a company wishing to become a B Corp must meet certain legal requirements from B Corp before it can receive certification.

Specifically, a company with 50 or fewer employees must meet the statutory certification requirements before verification. For those who are corporations and incorporated in states that have passed the legislation, it means becoming a charity. The structure of a not-for-profit corporation differs from that of a traditional for-profit corporation in that its purpose is to serve the common good, not just to generate profits for shareholders. To do this, the company must amend its relevant documents (e.g. the articles of association) to include a specific, order-oriented language. Should the company be incorporated in an area where there is no designated legal framework for charities, it must support B Lab’s public policy goal to pass legal designation of charities where it does not already exist, including in the region in which this company is located.

3. Appeal to socially conscious consumers and investors

The advantages of the B Corp designation are many. When your business becomes a B Corp, you are reaching out to like-minded, socially conscious consumers who are concerned about where to put their money. In recent years, many potential customers, including Millennials and Generation Z, have become more conscious of their purchasing decisions, as reported by Nielsen in The Sustainability Imperative. In addition, this section of the population is willing to pay more for sustainable brands. In terms of marketing to them, as a B Corp, you can differentiate your website, products, and services by using the widely recognizable B Corp logo and sharing how your business will benefit more than the bottom line. That way, purposeful buyers know that your business is up to their own values.

Qualifying as a B Corp can open up opportunities for your company to also attract socially minded investors. People who want to invest in companies that make positive change see value in B Corps for a number of reasons. B. Corps, for example, have standardized benchmarks for management best practices; are subject to external audits of their progress and performance indicators; are accountable to the public; and likely to have improved standards of governance.

4. Attract dedicated and committed employees

The B Corp certification could help your company succeed in attracting talent. Nowadays, more and more employees want to work for companies that stand for something other than the pure pursuit of profit. Therefore, B Corp status can give you a head start in hiring and retaining dedicated employees who want to advance your company’s mission and enjoy the fact that their efforts are contributing to the common good on your behalf. There is more. Since B Lab B Corps imposes a certain work culture and corporate governance, existing and prospective employees can be sure that your company will receive a positive and healthy workplace after certification.

5. Join a network of other like-minded companies

When you become a B Corps, you will have access to B Lab’s global online platform called “B Hive,” which would connect you to the B Corps global community. This resource can be used to facilitate working with other like-minded companies and to help you get the most out of your B Corp classification.

Finally

Although the process can take some time, B Corp certification is worthwhile for companies that put purpose and profit on an equal footing. If this describes your business, now is the time to emulate The Body Shop, Patagonia, Allbirds, and all the other social and environmental companies around the world that proudly call themselves B Corps.

Originally published by B The Change.

The content of this article is intended to provide general guidance on the subject. Expert advice should be sought regarding your specific circumstances.

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