B Corporation certification has taken off in the sustainability sector, with more and more companies working on getting B Corp certified to establish themselves as environmentally-focused and socially ethical. Currently, there are a lot of businesses that
have become B Corp certified, such as The Body Shop, Ben & Jerry’s, Aesop, Illy Caffe, Coutts, and more.
But what is B Corp certification, and should we trust it in an era of greenwashing, greenhushing, and false environmental claims? Think of this as a
Dummies Guide to B Corp – with a few case studies focused on financial services in the UK and US.
Putting the B in B Corp
B Corporation is an organisation committed to analysing and screening businesses on the basis of their environmental and sustainable efforts. B Lab was founded in 2006, and the nonprofit network aims to build transparency and accountability to alter the
economic system and enhance businesses’ self-assessments of social and environmental performance.
As of this year, 35% of adults are aware of B Corp, 60% of Gen Z know what B Corp certification is. 8,580 B Corps exist globally, with 2,300 in the US and Canada, 3,820 in Europe, 3,000 in the UK, 10 in China, and more growing. 185,000 people work for B
Corps certified companies.
Benefit Corporation is a legal status that companies need to have to qualify as B Corps. While Benefit Corporation status is only in 42 US states, there are also global forms of the same legislations, such as the UK’s Better Business Act, and Canada’s 21st
Century Business Act.
There are several steps to the B Corp certification process, starting with a survey. The
B Impact Assessment (BIA) is free to use and available online. To complete the BIA, there are respective resources a company can use to review their company structure alongside B Corp standards, and they must use the Legal Requirement Tool to determine
their assessment according to their location, industry, and corporate structure.
The next step is to complete the Risk Review and gather all the data necessary to support claims. Once the assessment is complete, along with the Disclosure Questionnaire, companies will be able to see their baseline score. If it is over 80 out of 200, they
can submit their BIA for review with B Labs.
Once a B Lab representative has been assigned to the company’s case, then the auditing process will commence, which is the Evaluation stage of certification, where the auditor will deep-dive into the company’s claims and assess their validity. The next phase
is Verification, where the B Lab representative will go through all supporting documentation and the company will need to provide proof of their responses in the BIA. Once that has been completed, and the baseline score is still above 80 out of 200, then the
company can sign the B Corp Agreement and receive Certification. Once certified, to remain a B Corp, companies are required to recertify every three years.
Is B-Corp b-lievable?
According to Amy Robinson, corporate projects manager at Triodos Bank: “An audit by an independent organisation such as B Corp helps us to test our sustainable mission against strict international requirements in the field of corporate social responsibility.”
The bank is known as a sustainability-first bank, and last certified in 2022 with a score of 131.3, they are due for recertification next year.
Beneficial State Bank was originally certified as B Corp in 2012, and have applied for recertification this year, which is still being processed. The bank currently holds a baseline score of 158.9.
Terra Nielson, EVP chief impact officer at Beneficial State, states that this year they are working with a certification consultant, Everoot, and have progressed past the initial submission into the Verification stage.
A veteran of Beneficial State, Lauren Dube has since moved to Climate First Bank, where she now works as VP, director of All Good Things. As Climate First was founded only recently, in 2021, Dube states that they were looking at B Corp certification immediately,
and were impatient to submit their BIA as companies need to be operational for a full year before applying. Once submitted, being assigned a B Lab representative and the auditing process took another year, and so Climate First was officially certified in July
2023, with a score of 98.6.
Dube explains that working on B Corp policies from scratch made a difference, as legacy banks need to accumulate data from their years in operation and all of their customers, while a new bank can use B Corp as a foundation on how they can plan to collect
that data and build a reporting framework.
“The BIA was a really great tool for us to use as a framework as we were thinking about starting the bank. So, we use that to see what questions they were asking for products and services and our lending portfolio and was keeping that in mind during that
first year that we were in business as we were building the bank. Then right at that first-year deadline we submitted.”
Wealth management fintech Moneyfarm became a B Corp this year, having started their journey for certification in April 2022. Sustainability officer at Moneyfarm, Michaela Bianchi, describes the evaluation process as rigorous, which focused on five main areas:
governance, community, workers, customers, and environment. Over 200 questions were part of the survey, some requiring more details than others. A lot of data that B Corp looks for is how the bank is serving underserved populations and how many loans are going
towards environmental efforts. In October 2022 Moneyfarm completed their BIA with a baseline score of 84.9.
During the auditing process, they worked on some areas where they could see simple improvements that would improve their score, which Bianchi describes as “quick wins”.
She says that looking at their impact score made them realise where they were scoring higher than others and allowed them to set new goals. “B Corp Certification is the beginning of a process,” she comments, defining it as a “regenerative” experience.
What are the challenges of b-coming a B-Corp?
Bianchi describes the auditing stage as the longest and most stressful part of the process, comparing it to a roller coaster: “During the auditing process there were peaks of intense interaction, requiring the submission of numerous documented details information,
followed by a period of silence, which almost worried me that something was wrong. […] In middle of April, two years from the kickoff, we achieved the B Corp certification with the remarkable 90.5 points. So, during the auditing not only we managed not to
lower the score but even to increase it.”
She says that the greatest obstacle throughout the process was getting people on board from a management perspective, to have support while essentially focusing on a different way of doing business. Bianchi adds that providing detailed historical data was
also a challenge, as by the time the B Labs auditor was appointed it was 2023, meaning that their initial data from 2021 needed to be updated and reverified.
As Triodos Bank became a B Corp quite early on, in 2015, Robinson explains that they were last recertified in 2022 for the third time, and so have become accustomed to the certification process. However, she notes that adapting their responses for the BIA
was difficult as various areas of the BIA have been developed since its inception.
Nielson notes that while the B Corp process helped Beneficial State prioritise documentation of all their claims and data, collecting and verifying all those claims was challenging.
Dube also points to reporting as the most difficult aspect of the process: “For example, your company's loan portfolio, by loan volume - are you applying these certain standards to review for social environmental impact? If we say that we have a process
for that, then it digs deeper - what percentage of your loan portfolio is that process being applied to? I can say that for all our loans, it's part of our underwriting practices, but being able to prove that can be more challenging.”
She explains that thinking about how to demonstrate to someone outside of the bank how they operate on a day-to-day basis is tough. Dube says that locking down a system of policy procedures that cannot be skipped and ensuring that there is a reporting methodology
in place to ensure that data is accounted for, and their efforts can be demonstrated in every step is essential.
What can a B Corp certified marketplace look like?
B Labs is engaging in productive conversations on business models leading to solutions on climate and equity. They are focused on addressing issues of inequity by mobilising communities to embrace and inform on the way they operate and their impact. The
aim of the organisation is to refocus priorities of business and economics on what matter: people and planet.
B Corp certification is used to validate better business impact, to prove that purpose and profit can in fact coexist. By making companies more accountable and standardising reporting metrics to ensure transparency, B Corp is working towards autonomising
independence when it comes to financials, food supplies, and economic systems – this is how we evolve the flawed economic system.
By reallocating capital and rewarding companies that support their employees, communities, and the environment, money can be moved towards the underserved and the financial systems in place can become more equitable. A large part of B Corp’s work is educating
and influencing companies to do better, even those that do not qualify and have a long way to go before becoming certified can use B Corp values as guidelines on how to build better business practices.
Dube says: “I would say with B Corp certification, that logo is becoming more recognised as a vehicle for trust. Being able to pick up a physical product and see ‘B Corp certified’ is to say: ‘I know that someone's actually investigated how they're treating
their workers, how they're treating their customers, the impacts they're having on their community, their environmental impact’. I think for banks, which are not always perceived in the best light, having that shows that we were looked at through a microscope
and were still able to receive that certification.”
Bianchi concludes by highlighting Moneyfarm’s commitment to improving their score for their re-certification, especially as parameters become more stringent, to demonstrate to their customers and stakeholders their commitment to sustainability ethics.
She states: “It builds trust and credibility and attracts talent, and if our score is lower now that is public, I think that will reflect badly on us.” The public availability of companies’ scores allows consumers to assess their sustainable commitments
and demonstrates a further commitment to transparency.
Nielson details the cycle of improvement that B Labs encourages: “When we next recertify, B Lab will be using a new set of standards that raise the bar for all B Corps. Our priority over the next two years will be to familiarise ourselves with those new
standards and ensure we have all the required elements in place to successfully recertify. As part of the B Corp movement, we believe in continuously raising the bar for ourselves. B Corp certification is not the finish line; it’s the starting point that we
continue to grow and improve from.”
Dube also takes pleasure in the community of B Corps that bring business to one another and support each other through the certification and recertification processes – seeing each other collaborators more so than competitors and helping each other grow.
There is no Planet B, but there is B Corp
Dube states that there has been some disillusionment due to anti-ESG policies in Florida, where Climate First is headquartered, and that has generated increased government scrutiny. Anti-ESG legislation is definitely a dimmer on the efforts being made and
make other businesses less likely to improve on their sustainable standards.
“This is how we chartered the bank. We were in business for a good chunk of time before that policy got passed. We had to remove some policies from the bank to comply. I do think that there's been pushback with these policies, and I'm really hoping that
those pushback initiatives are successful, to where banks see that we fought back. We just hit $850 million in assets for being in a little over three years as a bank. That really demonstrates that you can be in this space and be successful; you don’t have
to comply to the status quo to grow a bank.”
Nielson comments on ESG progress in the US: “Regulators are increasingly sounding the alarm about the major risks that climate change
poses to the overall financial system, as well as damage to infrastructure, housing, crops, and communities. Given the impact of these risks, we believe we will start to see more companies prioritising ESG factors and enhancing their environmental, social,
and governance performance. While we may be on track to improving ESG standards, we have a long way to go to see the outcomes of these investments and need to move faster to meet the need.”
Robinson states that she does see that there are more efforts being made in the financial sector in the UK to become more transparent with claims relating to sustainability, and regulations such as the FCA’s UK sustainability disclosure are taking important
steps, however she says “it is not yet clear if it will increase the requirements for overall transparency that would enable informed choices between products with positive and negative environmental impacts.”
Robinson highlights that other organisations that UK financial institutions should look to are the Partnership for Carbon Accounting Financials and campaigns such as the Fossil Fiel Non-Proliferation Treaty.
Dube says that the BIA is a great tool to identify goals and set up best practices, even if a company is not at the point where they can undergo the certification process. She emphasises that it is a great resource, and there are other resources and communities
like the Global Alliance for Banking on Values which financial institutions can look to for guidance.