What are the New Requirements for B Corp?
B Corp Standards Update
B Corp standards have continuously evolved since their initial introduction in 2006. As B Lab say, these standards need to adapt to address the challenges of our time, just as the world does.
New draft standards have been under development since 2020, and these will present the biggest evolution of the standards to date and signify a new fit-for-purpose model, built for a world where businesses need to increasingly and rapidly shift to more sustainable practices.
In this brief overview, we will delve into the reasons behind these changes, how they are evolving, the implications of the changes, and the benefits the new B Corp Standards will bring.
Why are the B Corp standards changing?
The B Corp movement centres around the B Corp standards, which outline ideal social, environmental, and governance practices for businesses. These standards are the foundation for various aspects of the movement, including B Corp Certification, impact management tools, and global policy efforts.
Recognising the need to adapt and improve, B Lab initiated a wide-scale review of B Corp Certification’s performance requirements in December 2020. The goal was to determine if more specific and obligatory performance criteria in critical areas could enhance B Corp’s ability to distinguish exemplary businesses, committed to positive impact.
This review builds upon prior initiatives like B Lab’s Climate Emergency Declaration and the Baseline Requirements devised by the Multinational Public Markets Advisory Council.
The updated draft standards represent an evolved understanding of what it means to be a B Corp, ensuring certification remains relevant and capable of addressing present and future challenges.
The process has involved much stakeholder input while developing an impactful path forward that aligns with the movement’s overarching objective of fostering an inclusive, equitable, and regenerative economy.
What are the new draft B Corp standards in summary?
The new draft standards for B Corp Certification aim to enhance impact, focus, clarity, and performance expectations across 10 topics (an increase from the current 5 theme areas).
Below is a snippet of the 10 overarching themes and expectations of B Corps for each of them, as stated in the draft standards:
- Purpose & Stakeholder Governance: B Corps act in accordance with a defined purpose contributing to the creation of an inclusive, equitable, and regenerative economic system for all people and the planet.
- Worker Engagement: B Corp workers feel engaged. There is two-way communication and workers’ views are respected.
- Fair Wages: B Corp workers can afford a decent standard of living for themselves and their families, and there is wage equality among the workforce.
- Justice Equity Diversity & Inclusion: B Corps have inclusive and diverse work environments and contribute meaningfully to just and equitable communities.
- Human Rights: B Corps treat people with dignity and respect their human rights.
- Climate Action: B Corps take action in accordance with science to combat climate change and its impacts.
- Circularity and Environmental Stewardship: B Corps demonstrate environmental stewardship and contribute to the circular economy in their operations and value chain, minimising any negative impact and pursuing positive impact.
- Collective Action: B Corps play a leadership role in fostering shared understanding, solutions, and implementation towards an equitable, inclusive, and regenerative economy.
- Impact Management: B Corps comprehensively identify and measure the impacts of their business and improve upon them over time.
- Risk Standards: B Corps avoid, manage, and/or effectively respond to specific potential negative impacts associated with specific industries or practices, as well as existing or emergent concerns from their stakeholders.
Further details about the proposed draft standards can be found here.
What are the impacts of these changes?
The draft standards will have an impact on existing B Corps, however, the objective isn’t necessarily to alter the certification’s level of challenge but rather to enhance its focus, significance, and influence.
The new B Corp Certification standards are being managed to prevent community disruption and existing B Corps won’t be automatically removed due to changes. B Lab plans a gradual, phased rollout of new standards, ensuring companies have ample time and resources to adapt.
It’s important to note, the standards new performance requirements aim to enhance relevance by addressing current and future challenges, with the focus now on a broader and more comprehensive agenda.
While existing Certified B Corps will vary in transitioning to the new structure, past efforts will harmonise with some new performance requirements, necessitating minimal adjustment. The B Impact Assessment (BIA) database retains previous certification data, accessible as before.
However, areas less emphasised previously might demand increased attention and resources. The intention is progress, not to diminish prior work, providing organisations with clarity to concentrate on crucial aspects.
This approach ensures continued alignment with evolving global needs and reinforces the significance of ongoing commitment to making a difference and leading within the business landscape.
A key change is reporting climate action
One of the significant changes is in the new Climate Action Section.
B Corps must actively address climate change and its impacts by tracking greenhouse gas emissions, implementing a climate transition plan to limit global warming, and demonstrating a history of climate action. These requirements apply to their entire value chain and all affected individuals and communities.
It’s suggested companies will need to set a net zero target aligned with science. This will involve setting near-term (5-10 years) emission reduction targets on scope 1, 2, 3 (if >40% of total emissions come from scope 3), that is aligned with latest science, reflecting a fair share of 45% global emissions reduction by 2030 from 2010 levels. The company shall continue to set near-term targets until global net-zero emissions are reached.
This is a significant change from current requirements and we welcome these new standards to drive ambitious and sustained corporate climate action towards net zero.
What benefits will the new B Corp standards have?
The new standards will have many benefits including:
- Enhancing the impact of the B Corp community and all those endeavouring to embrace the B Corp certification by directing their attention and strategic focus to issues that tackle the most pressing social and environmental concerns.
- Improve the clarity of the standards by helping stakeholders grasp the core of B Corp values and making it easier for potential businesses to understand and meet the requirements for B Corp Certification.
- Guarantee these concerns are attuned to the requirements and expectations of stakeholders in the B Corp community.
When will the new B Corp standards come into effect?
There is no confirmed date announced as yet but B Lab has indicated that the standards will come in a phased approach.
In late 2023, B Lab will start communicating about the upcoming draft standards, outlining the approach, recent changes, and expectations for the second consultation. B Lab will also engage with B Corps and key stakeholders ahead of the launch in January 2024. The second consultation, running until March 2024, will involve focus groups, the release of the full draft, and a feedback survey.
As a B Corp certified company since 2017, we are excited to see the evolution of B Corp standards. We will continue to raise our own level of ambition and positive impact and are committed to assisting both current and prospective B Corps in understanding and adapting to the new standards. Together, we aim to empower the entire B Corp community to drive more impactful and essential changes in our corporate structures, contributing to a more sustainable future.
Need help or advice on the upcoming new B Corp standards?
If you are looking for advice on becoming a B Corp or navigating the requirements of the upcoming new (draft) standards we have two certified B Consultants Hannah Meade and Matias Sellanes, who specialise in all things B Corp and help guide businesses through the B Impact Assessment or help them understand and improve their B Impact scores to achieve B Corp certification.
Or if you’d just like to learn more about the process, reach out to us for a chat, we’re a certified B Corp and proud and we’d love you to join the movement and to help you on your B Corp journey email or Call +61 3 7035 1740