What is a B Corp?

mariam-abu-hussein
Mariam Abu HusseinLegal Assessment Specialist @ Lawhive
Updated on 30th November 2023

Are you an entrepreneur or business owner curious about what a B Corp is? Or maybe you're interested in exploring ways to align business with social responsibility and environmental goals or sustainability? If so, read on, as a B corp might be just what you were looking for!

what-is-a-b-corp

This guide explores what a B Corp is, who can get certified and how.

We’ll explore:

  • How B Corps are certified

  • How to get your business B Corp status

  • Pros and cons of the B Corp structure

  • Real B Corps you might have heard of

  • If you can turn a startup into a B Corp

What is a B Corp?

A B Corp is any business that has committed to social and environmental performance, transparency, accountability and has been verified.

We know what corporation means, but what about the ‘B’ in B Corp. Well, it is originally drawn from the US business structure ‘benefit’ organisations.

Different businesses will have their own interpretation of what exactly this means for them, whether you’re a small business or a corporate, however in essence, it’s about doing good for your customers and the planet! That sounds good to us!

Who certifies B Corps?

B Corps are verified by B labs - they are a social not-for-profit that holds businesses to a high level of accountability in order to market themselves as socially and environmentally responsible

In their own words:

“Our most challenging problems cannot be solved by governments and nonprofits alone. By harnessing the power of business, B Corps commit to positively impact all stakeholders – workers, communities, customers, and our planet”.

It’s part of a movement to change the business landscape. In business school, business and marketing students learn about the 4 Ps: product, price, promotion and place.

B Corps subscribe to two additional ‘P’ words: people and planet.

How to certify as a B Corp?

There is a formal process required to achieve B Corp status set by B Labs:

  • Complete the B Impact Assessment with a total score of 80+ points

  • Meet the legal requirement – all stakeholders need to be committed through Articles of Association 

  • Sign the B Corp agreement and Declaration of Interdependence 

  • Publicly list your B Corp score on the B Lab Directory and recertify every 3 years

The Declaration of Interdependence begins:

“We envision a global economy that uses business as a force for good”

and ends with:

“To do so requires that we act with the understanding that we are each dependent upon another and thus responsible for each other and future generations”.

A B Corp is not a legal structure. This means a B Corp is not a legal business entity to itself such as a corporation, partnership or limited liability company.

Businesses that become B Corps are already registered companies, however, and there is no size restrictions on a company becoming one. Sole traders, mutuals and cooperatives are also allowed to become B Corps.

Additional requirements are asked of the following legal structures:

  • Companies under a year old

  • Companies with related entities

  • Large multinationals

  • Public companies 

As increasing numbers of multinationals are attempting to become B Corps recently, if you’re one of these businesses, you will need to work with B Labs to identify the relevant certification for your business.

Take a look at the B Labs Large Enterprise Approach on their website to learn more.

Advantages of being a B Corp

We’ve hinted at some benefits your business can enjoy from B Corp certification, so let's now explore the range of advantages associated with this accreditation.

  • Encourages socially responsible behaviour from your staff, stakeholders, clients and suppliers, as well as your business network and community 

  • Builds trust with public and attracts like-minded partners and product and service users

  • Attracts staff with the same values and beliefs, and helps retain them as long-term employees and brand advocates

  • Supports social change and moves the conversation about societal progress forward – which isn’t a bad legacy to strive for

  • Streamlines operations and reduces waste, B Corps are virtually allergic to waste and seeking this accreditation will help you clean up your processes

  • Show you mean what you say, you’ll have to walk the walk as a B Corp, your actions will matter as much as your words, and this might be the motivation you need to stick to your values

  • Saves you money when reaching for your ESG goals, through B Corp certification you’ll access B Corp community data and resources which will guide you on your path and send green shoots of growth through your business

  • Lessens potential of legal action from action taken against your company, although probably not your primary motivation, by acting ethically at a time when climate change protests are rising in pitch your business will be in tune with the zeitgeist

Disadvantages of being a B Corp

Everything so far seems pretty clear-cut, but are there any drawbacks to being a B Corp - surely it can’t be for all businesses?

Some disadvantages we can see include:

  • The cost and complexity of becoming a B Corp can be restrictive and counter-intuitive for smaller businesses, especially for early years start-ups who need to keep cash flowing and concentrate on survival for now

  • Greenwashing can be a concern, especially as B Corps aren’t regulated by the Government. This might mean you make misleading claims and some companies might deliberately greenwash, despite putting a B Corp certification smokescreen in place

  • B Corp is not a widely known term - the public awareness of the benefits of B Corps is growing relatively slowly

How many B Corps are there in the UK?

According to the UK B Corporation Movement, there are currently “over 1,500 B Corps in the UK, across 58 industries with over 80,000 employees”.

While still a relatively small number, this figure has surely grown since then, especially with the buzz phrase ‘build back better’ that was in vogue in the direct aftermath of the worst of the COVID-19 pandemic. 

Outside the UK, there are over 6,800 B Corps globally, so a decent proportion of B Corps are UK based, which means you’ll be able to collaborate and learn from many UK-based B Corps.

Examples of B Corps in the UK

It’s always helpful to see something in practice. So, let’s take a look at some prominent UK B Corps.

The Independent has outlined some of the key UK B Corps to keep an eye, including:

  • Emma Bridgewater – if you don’t immediately associate Emma Bridgewater with pottery, you will likely have seen their designs adorning the shelves of high street British department stores. Their designs are handmade, and hand painted in their UK factory. Their pottery is colourful, modern and bold with a hint to 20th century cottage interior

  • Lily’s kitchen – leading the healthy and ethical pet food subcategory, Lily’s kitchen creates nutritious and planet-friendly food for your pets. They use organic ingredients to take the strain off the planet, boast eco-friendly packaging and choose to represent their values with actions, not just words

  • Who Gives a Crap – known for their bold name and marketing as much as their honourable mission, this ecommerce toilet roll, tissue and kitchen towel company donates half of its profits to charity and community projects, such as Sanergy – they build toilets in less privileged countries. Their paper products are made from bamboo, uses bold and colourful branding and the packaging includes no plastic. Also, orders come in bulk, usually lasting for the year, so delivery costs (financial and environmental) are limited 

B Corp vs Non profits

B Corps and non-profits are different legal structures and have different aims.

A non-profit is an organisation that works for the public benefit and doesn’t make any profit, investing any revenue back into itself, funding community projects or donating proceeds of business to charity.

A B Corp is a normal profit earning business that has the aim of being socially and environmentally conscious. 

Can startups become B Corps?

Yes, a startup can become a B Corp as long as they have been in business for more than one year.

As a start up with less than 12 months in business, you have the opportunity to become a Pending B Corp. This will allow you to communicate your values to customers and investors, participate in the community and erect a framework for future B Corp status.

If you would like more information about becoming a B Corp, particularly relating to the legal requirements involved, get a free case assessment and no-obligation quote from the Lawhive legal assessment team.

Our corporate law solicitors are on hand to provide the very best advice relating to your company, structure and requirements, at affordable fixed-fee prices.

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