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Celebrating Ethical Game-Changers: The Legal Obligations of B Corps

March 21, 2022

March is B Corp month and if you’re anything like us, you likely enjoy hearing the stories of B Corp certified companies all over the web. From household names like Patagonia and Ben & Jerry's to local game-changers like SR2, the B Corp movement has inspired countless companies to approach entrepreneurship ethically. The result? Over 4’000 Certified B Corporations in more than 70 counties and over 150 industries.

In celebration of B Corp month, countless companies are casting a light on the important work carried about by B Corp certified businesses. From Waitrose & Partners and WHSmith platforming game-changing B Corps, to B Corp themselves setting up their own retail pop-up shop, this month the spotlight is firmly on businesses that impact their surroundings for the better.

But what is a “B Corp”?

B Corporation is a global certification in which companies are verified by B Lab as meeting certain standards of social and environmental performance, transparency and accountability. B Lab started in 2006 as a non-profit network aiming to transform the global economy and now has “labs” across the world.

This global movement has now evolved to having over 4,000 companies all striving to do their part socially, ethically, and environmentally. A “B Corp” is a company that has obtained and maintained a certification recognising this.

Consumers and employees are placing increasing importance on the ethical values and sustainability of companies they want to engage with. Being able to identify companies as having B Corp status enables people to make those decisions and support businesses that meet the high standards set by B Lab.

But B Corp goes beyond an ambitious mission. Not only do B Corps have to go through a thorough certification process, but they also have to comply with the requirements of being a B Corp once they have been certified. These include:

Legal Requirement

This is a fundamental element of B Corp certification and requires companies to update their Articles of Association to legally commit in its purpose to the company, amongst other things, “create a material positive impact on society and the environment through your business and operations”.

B Corps, therefore, don’t just claim to be doing “good things” for the community and the planet, they are legally bound to do so.

Impact Report

The B Corp movement is all about continuous improvement and renewal is required every 3 years. B Corps are also required to produce an annual “Impact Report” to review and communicate the impacts a company is achieving every year.

B Lab also encourages companies to share their experiences and learn from each other amongst the community.

How can I get certified?

Who can certify?

Your company must have operated (for profit in a competitive market) for at least 12 months.

How much does it cost?

There is a one-off submission fee payable of £250 plus VAT and then, after certification, annual certification fees. B Lab have put in place different fee levels for the size of companies (based on a company’s total revenue) to ensure accessibility.  

How does the certification process work?

  1. B Impact Assessment (BIA) – completing and submitting the free, confidential online tool enables you to assess your company’s current “positive impact”. To achieve B Corp certification you’ll need to reach a minimum of 80 out of 200 points.
  2. Improving your BIA score – B Lab provides tools and support to help understand what your company can do to improve its score.
  3. Legal Requirement – this is amending your company’s constitution to reflect its commitment to creating a positive impact on society and the environment.
  4. Submit your application for review – this will then be “Evaluated” by B Lab and then, if eligible, this progresses to the “Verification” stage.
  5. Certification – if you obtain certification you are welcomed into a global community and will be a positive impact trailblazer! Huzzah!

How long does it take?

This depends on the capacity of B Lab at that time but once you have taken the time to submit your assessment, this can take a minimum of 14 months (depending on requests for further information and for queries that B Lab may have).

We can help your company

As a firm committed to bettering our surroundings, we’re passionate about supporting hopeful B Corp applicants. Having supported several businesses through the process, we’re experienced in guiding companies through the legal obligations of a B Corp certification. Keen to join the movement? Let us help.

We're the corporate law experts in helping you plan the next route of your journey. Find out more about our corporate law offering here.

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