Originally published at: https://bcorporation.com.au/blog/10-things-you-need-to-know-about-b-labs-evolving-standards/
The B Corp standards are at the heart of everything we do — from certifying businesses worldwide to our broader policy and advocacy work. And just like the world around us, they must evolve as we do, and as business does.
The intensifying climate crisis and widening social chasms demand an urgent recalibration of what it means to do good business in an ever-changing world. These changes are not just about maintaining a certification; they’re about transforming an economy that is no longer working — for people, for communities and for the planet.
Right now, we have reached a vital juncture in the evolution of B Corp Certification standards — and your role in shaping them is not just ‘nice to have’, it’s mission-critical.
In this, the third piece in our B Lab Australia & Aotearoa New Zealand’s (B Lab AANZ) series on the evolution of standards for B Corp Certification, we delve into the practical nuances of how the standards are evolving, and how it will impact existing and aspiring B Corps alike. Q&A-style, we wade through the ‘how-tos’ and the ‘what-nexts’ with our experienced Certification team. Let’s dive in.
1. What is driving the evolution of B Corp Certification standards?
There are four main reasons why B Lab and our Global Network have embarked on this multi-year, multi-stakeholder project to review our standards since December 2020.
Primarily, it is to better address intensifying global crises — and we don’t need to tell you what they are; you’re seeing them writ large every day.
The second is to galvanise impactful action. By focusing on the most pressing social and environmental issues facing people and the planet, we can help clarify which actions and business models can create the most impact.
Thirdly, it is about leading the way. While B Corps come from every corner of the globe, across more than 160 industries — they are all committed to forging a new path and being brave on the path of better business. This evolution is to ensure that B Corps can continue to lead a more sustainable, equitable and regenerative economy for all.
And lastly, it is driven by the movement itself. Being a B Corp means committing to driving continuous improvement, and finding ways to go above and beyond to drive positive impact. The standards are not immune to this, and it’s about walking the walk on continuous improvement.
2. What are some of the key changes we can expect in the new standards?
Up until this point (and until the new standards come into effect, no earlier than 2025), businesses seeking B Corp Certification have had to meet a stringent purpose and stakeholder governance requirement to incorporate the interests of all stakeholders in decision-making.
Businesses have also had to complete a scored B Impact Assessment of their practices against five impact areas: governance, workers, community, the environment, and customers. This assessment is then reviewed by us, verifying all supporting documentation, to arrive at an overall ‘B Impact Score,’ which must be at least 80 points to achieve certification.
LEARN MORE: Unpacking the B Impact Score ↗
In response to community and stakeholder feedback, one major evolution in the new standards is that companies will need to meet specific requirements across a number of Impact Topics in order to certify as a B Corp, and this means a change to the ‘scoring’ process.
As we move away from an 80 point threshold in the current standards, B Corps will need to meet specific performance requirements across a wider range of social, environmental, and governance impact topics.
3. What is included in the wider range of social, environmental, and governance impact topics?
Under the proposed new standards, there will now be specific requirements and criteria, contextualised by company size, location, and industry, as well as more advanced approaches to impact business models, risk management, and differentiation based on company performance.
Here is a summary of the latest draft B Corp Performance Requirement Impact Topics and overarching expectations under each of them:
- Purpose & Stakeholder Governance (PSG): B Corps act in accordance with a defined purpose, contributing to an inclusive, equitable, and regenerative economic system for all people and the planet.
- Workplace Culture (WC): B Corps have positive workplace cultures with meaningful worker dialogue.
- Fair Wages (FW): 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 (JEDI): B Corps have inclusive and diverse work environments and contribute meaningfully to just and equitable communities.
- Human Rights (HR): B Corps treat people with dignity and respect their human rights.
- Climate Action (CA): B Corps take action in accordance with science to combat climate change and its impacts.
- Environmental Stewardship & Circularity (ESC): 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.
- Government Affairs & Collective Action (GACA): B Corps play a leadership role in fostering shared understanding, solutions, and implementation towards an equitable, inclusive, and regenerative economy, including contribution to the public infrastructure they utilise and rely upon for their success.
- Complementary Impact Topics (CIT): B Corps comprehensively identify and measure a wider set of impacts of their business, in addition to the core Impact Topics, and improve upon them over time.
Did you know?
The evolution of standards is baked into our DNA and B Lab has revised its standards six times in the 17 years since B Corp Certification began, however, its core components have remained consistent.
The current evolution of standards is the first full-scale shake up of what it means to be a B Corp since 2006, and represents a multi-year, multi-stakeholder project to evolve what it means to be business as a force for good.
4. How has stakeholder feedback shaped these new standards and topics?
At every stage, feedback from the B Corp community has directly influenced the new draft standards. In fact, the preliminary consultation period saw participation from more than 1,000 individuals globally, representing a diverse cross-section of demographics, company profiles, and stakeholder groups.
Following the extensive preliminary consultation period, B Lab Global released a full Preliminary Consultation Summary Report, which represents an ambitious yet attainable goal for business leaders looking to be a force for good. The Summary Report collates and summarises the rich and valuable feedback we received. It’s well worth a read, if you’re keen to prepare for the second consultation period.
5. What stage in the process are we at now and why is it taking so long?
It’s a fair question to ask why they are taking so long — but we believe this is what meaningful stakeholder engagement looks like. It is not rushed; it has time and space to emerge and evolve.
When you have big ambitions to transform the economic system, that transformation takes time and standards development is a thorough, multi-year process, and intentionally so. We’re doing the work; listening, learning, iterating, adapting.
Right now, we are about to commence the second consultation phase of the process. This phase is about refining bold, future-facing standards, and it is the culmination of over three years of work. This opens from 16 January to 26 March 2024, and we want everyone with a stake in the movement to get involved.
This iteration of the draft standards is much more comprehensive than the last, sharing compliance criteria and contextualising the standards for different companies by size and sector. This addresses important stakeholder feedback from the previous consultation. And so we will be seeking feedback on whether these new standards are clear enough, ambitious yet attainable, and truly capable of raising the bar for businesses worldwide.
6. How are these changes likely to affect existing B Corps?
The answer you really want to know is that: no company will be required to certify or recertify on the new standards for B Corp Certification before 2025.
But in terms of what happens next for existing B Corps — as we mentioned, the draft version of the new standards will be released for a second public consultation in early 2024. We expect the new standards to be finalised by the end of the year — subject to the feedback received in the consultation. Although the standards will be finalised, they won’t be ready for certifying companies by this time. Finalising the standards is only the first step in the journey of evolving the standards. We must also build new tools and products to house the new standards and develop new processes for verification. This work continues to be emergent and we won’t rush it, but we understand the need for clarity and certainty on when any new changes will take effect.
B Lab absolutely wants to ensure that our community has the time, information and support required to understand and adapt to the new standards. As such, there will be a phased transition period for all existing B Corps. The timing of this will be confirmed after the feedback from this second consultation phase is reviewed, and we understand its impact.
Please rest assured that we will communicate all rollout and transition timelines well in advance. These details are still being finalised with the rollout likely taking a phased approach.
It’s important to note that the intent of the new performance requirements is not to invalidate a company’s previous efforts. We know how hard companies work to achieve certification. In fact, much of the work companies are doing in line with the current impact areas (Workers, Customers, Community, Environment, Governance) will align closely with the proposed performance requirements under the new Impact Topics.
That said, topics that may not have been a priority area until now will likely require additional effort and investment, and B Corps are likely to be at many different stages of this process.
What we will also say is that — the way we see it — efforts invested towards having a positive impact on the world is never a waste.
As such, the evolution of standards is a way to focus future efforts on a more comprehensive range of issues, and to measure impact and action accordingly. This is to ensure that B Corp Certification is relevant for the challenges of today and tomorrow, and to honour those who are proactively leading business as a force for good.
Until the phased transition period occurs, B Corps are encouraged to continue to work on improving their impact according to the current standards, which is probably as ‘business as usual’ as this movement gets.
7. What about aspiring B Corps? Are there going to be new requirements for B Corp Certification?
Alongside the standards development, B Lab is also improving the B Impact Assessment tool and Analytics tech platform. This may change the types of organisations that are looking to certify in the future because it raises the bar for business impact across a range of topics, such as human rights and collective action.
For aspiring B Corps, essentially this means — get prepared to go deep on the details, both internally and externally.
Before meeting performance requirements, companies will be evaluated on foundational criteria, including legal compliance, stakeholder governance models, and a commitment to the B Corp mission. This is to ensure a company is able to fulfil the eligibility requirements for pursuing B Corp Certification, before getting too far into the process.
We also acknowledge that some businesses may find the new requirements for certification challenging. But please rest assured that we are working to provide more context and flexibility to address these challenges, especially for under-represented and marginalised groups.
If you are already part-way through your BIA or are close to hitting ‘submit’, know that there will be plenty of notice before the switch to the new standards, as well as a likely phased transition process. This means — for aspiring Bs — keep improving your impact according to the current standards and submit when you’re ready, then look out for future updates on the implementation timeline. No work to improve your impact will go to waste.
LEARN MORE: Impact Topic: Human Rights ↗
8. Will Impact Business Models (IBMs) still be recognised in the new standards?
Absolutely. IBMs are integral to the B Corp movement and the new standards will continue to emphasise and recognise businesses designed to deliver positive social and environmental impact on purpose.
However, one key change proposed in the latest draft of the standards is that the ‘Mission Lock’ IBM will be discontinued. This is because the purpose and stakeholder governance (a.k.a legal) requirement, which formed the basis of this IBM, is now mandatory for companies wishing to certify as a B Corp.
In the latest draft, companies with one or more IBMs will be acknowledged in the following ways:
- Increased flexibility in approaching the performance requirements (i.e. exemptions or more time to meet them)
- The option to demonstrate equivalency in compliance with requirements in some specific Impact Topics
- Receive public recognition in the B Corp Public Profile and potentially other B Lab Programs
These changes reflect feedback from the preliminary consultation that the proposed new standards focused disproportionately on operational impacts, and overlooked one of the ‘secret sauces’ of B Corp Certification: IBMs and their potential. In this next round, you can expect more recognition and focus on IBMs.
9. What about the way that risk is assessed? Are there going to be companies that are simply ineligible for certification?
To date, as part of the B Corp Certification process, a company’s potentially negative impacts are assessed through the B Impact Assessment’s Disclosure Questionnaire, in combination with background checks and B Lab’s public complaints process.
In addition, if a company falls under industries or includes practices with potential negative impacts addressed under B Lab’s Controversial Issues standards, it must be evaluated to meet the standard requirements before being eligible for B Corp Certification. These risk standards are currently under review.
We are using this moment, and the feedback from stakeholders, to also optimise and improve our certification processes. As such, we are working to incorporate upfront evaluation and eligibility to understand risk from the outset, making it clear to companies early on in the process, under the Foundational Requirements, if they are eligible to pursue B Corp Certification, or not.
We are inviting feedback during this second phase of consultation to evaluate the potential for the risk standards to be embedded into the new standards to the highest degree possible, or whether they should be included in a separate list of industries and/or practices ineligible for B Corp Certification. Once the review is completed, stakeholders will be updated and consulted, as appropriate, on outcomes and next steps.
10. Does stakeholder input really make that much of a difference?
As the B Corp standards evolve to meet the urgent demands of our time, we cannot stress enough that your role is pivotal. Because evolving these standards is not just about redefining business norms; it’s about scripting a new narrative for the future of our planet and society.
While we believe these standards are bold and future-facing and we’re confident they’ll raise the bar for businesses — we want to know: are they clear and ambitious, yet still attainable? And only businesses themselves can answer that question.
In many ways, the best approach to understanding the range of changes and how they may affect your business is to participate in the consultation process itself.
Believe us when we say that your input has been invaluable in informing the standards so far. Now’s your chance to see the changes we’ve made and have your say on their clarity, attainability, and impact.
The next round of consultation will begin in early 2024, offering another crucial opportunity for input, and we want to hear from B Corps, aspiring B Corps and other stakeholders throughout this next phase — 16 January through to 26 March 2024.
There will be regional focus groups, focus groups for aspiring B Corps, and B Lab is also specifically looking to engage with stakeholders that are commonly underrepresented in the B Corp, and global business, community. Accordingly, B Lab Global will be hosting dedicated focus groups to hear directly from business owners or leaders who identify as:
- a Person of Colour
- a Person with a disability
- First Nations or Indigenous
Participating in the focus groups will involve an estimated effort of almost 5 hours, and you may be eligible to receive an honorarium of USD 175 for your time and expertise.
Now it’s our turn to ask you a few questions…
Do you want to be part of shaping a future that aligns with our collective vision for a more inclusive, equitable, and regenerative economy?
What is your unique perspective on what it takes to be a better business in this ever-changing world?
And will you join the (r)evolution?
Now is not the time to stand back and forever hold your peace. It is, however, the time to get involved and register to take part in our upcoming interactive survey and series of virtual focus groups with our global team.
Ready to play a vital role in evolving the standards for B Corp Certification?
The second round of consultation is due to begin in early 2024. Find out more and register your interest to be part of our focus groups and register to complete the survey in 2024 below.