B Corp Certification
About B-Corporations
What is a B Corp?
According to Inc. magazine, the B Corp movement started in 2007 and was founded by 81 companies that all looked for alternative ways to make business differently then the traditional for-profit model (Brown, 2011)#. [you may either footnote or use the in-line citation system; you should not use both at the same time.]The Vision of the Certification is to find and certify corporations that use the power of business to solve social and environmental problems
B-Corps are privately certified through the non-profit B-Labs, which certifies B Corporations according to the website if they meet requirements in three areas:
- Meet comprehensive and transparent social and environmental performance standards
- Meet higher legal standards
- Build business constituency for public policies that support sustainable business
As of now, there are about 500 certified B Corporations in 60 different areas of business. The impact of these companies can be seen through their publicly available B Impact Report with data about the social and environmental practices.
Who sets the standard?
B-Labs aims to redefine the purpose of a business by creating business communities and market infrastructure where people can distinguish between businesses that are “good” and businesses that simply have good marketing (greenwashing?).They emphasize empowering entrepreneurs and the stakeholders of their businesses so they can stand for something positive.
According to their website, there are three things they do for companies to systematically bring change and create a new business sector:
- Build a community of Certified B Corporations to distinguish between good companies and good marketing
- Use their GIIRS Ratings & Analytics to accelerate impact investing asset class growth
- Promote legislation that creates a structure for higher business standards
Who is involved in developing or modifying the standard, and by what procedure is the standard developed or modified?
The certification is done partially by the business itself and partially by B-Labs staff members. They continuously improve their assessments with feedback and lessons learned through practice. (source:http://blog.southern-energy.com/index.php/sem-triple-bottom-line/b-corp-assessment-take-2/)
A three step process is needed for a business to get their B-Corp certification and is mentioned on the B-Labs website:
- The business needs to get a minimum of 80 points out of 200 on the B Impact assessment. This assessment will be reviewed by a B-Labs staff member
- The business must adopt the legal framework provided by B-Labs to align its values with other B Corporations.
- The business must sign a term sheet and a declaration of interdependence to make it official
After receiving the certification, B-Labs will do an on-site evaluation on 20% of the certified B-Corps over a two year term.
Who are the evaluators and who accredits them?
Most of the evaluating is done in-house by B-Labs themselves, so the evaluators are B-Labs staff and [are accredited by other B-Labs accreditors] - [no, just say that they are trained by B-Labs. There is no accreditation process in the B-Corp system].
Training of Audit Staff and Consultants
The B Corp website lists a plethora of of consultants who are not trained by B-Labs for consulting but are B corp certified themselves.
[“certified” is the wrong word, because that applies to a corporation. In the text, I said “credentialed” to refer to what a person gets when they are trained to act as an auditor or consultant] Can you say more about the extent of training given to people in order to get a credential from B-Labs? Is there a name to that credential?
(source: http://www.bcorporation.net/index.cfm/fuseaction/serviceArea.detail?id=739f6273-bedf-43da-ad71-990aa02407df) Businesses can also ask for help from B-Labs at any point in the certification process.
Legislative Component
B-Lab, the company behind the B Corps, also works parallel with many states within the United States to lobby for a legal change, to create a legal “Benefit Corporation”.Even though B Corps [? do you mean B-Lab rather than B Corps?] and Benefit Corporations have very much in common, they are essentially independent from each other. Certified B Corps are certified independently by the non profit B-Lab. (source:http://www.bcorporation.net/publicpolicy)
Benefit corporations are not certified but have legal requirements of corporate purpose, accountability, and transparency (B Lab)#. [you already said this]
Benefit Corporations legally meet higher standards of corporate purpose, accountability and transparency. According to the website, there are 3 main factors: [this too is repetitive]
- Purpose: have a corporate purpose to create a material positive impact on society and the environment;
- Accountability: expand fiduciary duty to require consideration of the interests of workers, community and the environment; and
- Transparency: publicly report annually on overall social and environmental performance against a comprehensive, credible, independent, and transparent third party standard.
(source: http://www.bcorporation.net/publicpolicy )
Benefit Corporations are legally established in 7 states (California, Hawaii, New York, Virginia, Maryland, Vermont, and New Jersey) and pending in North Carolina, Pennsylvania, Michigan and Washington. (source: http://www.benefitcorp.net/state-by-state-legislative-status)
B Lab seems to be the driving force behind the legislative changes, and seems to be lobbying in all states in the USA to get Benefit Corporations legislation.
According to the website, the benefits of becoming a benefit corporations are:
- Provide clarity to directors and officers that their fiduciary duty includes creating a material positive impact on society and the environment, even in liquidity/sale scenarios;
- Offer legal protection to directors and officers to consider the non-financial interests of their workforce, community, and the environment when making decisions, even in liquidity/sale scenarios;
- Help maintain mission over time by 1) expanding shareholder rights to enforce this expanded definition of fiduciary duty and standard of consideration; and 2) requiring a 2/3 super-majority vote of shareholders to remove these higher standards; and 3) providing the opportunity to name and enforce pursuit of one or more specific public benefit purposes;
- Create a marketing opportunity to differentiate the business as a new class of corporation required by law to benefit society as well as shareholders.
[this is a very interesting part of your report. Can you say more about this. What does the state legislation say? Does it say that a company must be certified by B-Labs to get this protection, or does it say that a company must meet certain conditions (if so, what are they?) to qualify for the legal protection?
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