What is a B Corp?

How did B Corps come to fruition?

In 2005, Jay Coen Gilbert and Bart Houlahan sold their business called AND1 for millions. However, their new owners were completely uninterested in sustainability and focused on profits only. Feeling it was time for a change, they set up B Lab, a non-profit to help businesses grow and also do good. The first businesses were certified as B Corps in 2007.

B Corp was a response to the fact that business-as-usual wasn’t working; prioritising shareholder profits has too often come at the expense of people and the planet. B Corp wants businesses to compete to be not only the best in the world but the best for the world, with businesses alleviating social and environmental problems along the way to this journey and moving away from the idea of shareholder primacy.

What is a B Corp?

A B Corp is a business that successfully manages to balance profit and ethics. A B Corp focuses on its triple bottom line: social, environmental and financial. Also known as the three P’s: people, planet and profit.

B Corp certification scrutinises a company’s entire operations. For example, the Norwegian Consumer Authority concluded that, if a brand markets their product as being less harmful to the environment but provides insufficient detail to back it up, it must be assumed that they are greenwashing.

Why become a B Corp?

B Corp certification is a highly respected global standard in corporate sustainability. With the arrival of the pandemic and the opportunity to “build back better”, as well as a heightened focus on climate change, interest in B Corps has risen significantly in the past year.

Is the effort of the certification process worth it?

• Any business with at least a year of operations can apply, but will have to part with between £500 to £50,000 to do so, depending on its turnover
• Cost aside, the application is a rigorous process that can take many months; Tens of thousands of companies have applied for B Corp status, but only 3,720, in 74 countries, have actually been successful at achieving it
• Whether it boosts a business’s bottom line is tough to prove - research by LSE found no evidence that B Corp certification adds to financial performance

What are the benefits to attaining B corp status?

The community element is a big draw for many businesses; you can connect online via the ‘B Hive’ or meet in person at events, building client and seller relationships and knowing that you’re doing business with organisations you can trust.

Further benefits to companies who go for B Corp status, include the opportunity to build relationships, attract talent, improve their impact and show that they’re leading in their environmental practice.

What are the arguments against B corps?

• Some have argued that it has neither the resources nor the authority to drive change fast enough - instead regulation and law will force boards to make changes
• In the UK, just 450 businesses have been certified since 2015. The UK has 5.7 million businesses. So what of these millions of other businesses? Is this model really a template for radical change?
• There’s the risk that B Corp attracts ‘low-hanging fruit’, companies who are already operating in a socially and environmentally responsible way
• There have also been examples of companies that have achieved B corp certification and have not acted in a way that suggests they are attuned with its core values. For example BrewDog

Can B corps drive significant change?

B Corp is currently campaigning to change the UK Companies Act to ensure all businesses are responsible to people and the planet. By being B Corp certified, businesses are showing that they have chosen people and the planet alongside profit. Further down the line, when governments do introduce legislation, that will be a bare minimum.

Has government regulation been ineffective?

There are a few instances where companies have been held accountable in proportion to the environmental and social damage they have caused. For example, fines paid by oil and gas companies as a result of oil spills run into the billions. But they are still not preventing spills from happening - ExonnMobil has been fined for over 388 incidents.

However, these are public failures. Many companies have failings on par with oil spills but haven't hit the headlines.