What is B Corp and How Does it Help Small Businesses?
At a time when stakeholders are increasingly becoming environmentally conscious, from a small business perspective it makes sense to capitalise on that by demonstrating your commitment to solid social responsibilities that will result in measurable social and environmental impact.
Such an idea was already introduced a decade ago by B Lab Inc., a non-profit organisation founded in 2006 in Berwyn, Pennsylvania.It developed the benefit corporation, or B Corp, certificate programme, to provide companies with a certified measurement of social and environmental progress that could be openly marketed using the name.
Over 3000 companies have so far become B Corp certified, and many more large and small businesses alike are planning to move in this direction. This sends out a message, particularly to small and medium-sized enterprises (SMEs), about how significant B corp is relevant in today's era of conscious consumerism.
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What is a B Corp?
The B Corp certificate is awarded to for-profit organisations by B Lab and certifies that they create value for non-shareholding stakeholders, such as their employees, and the environment. The certificate is recognised by the majority of U.S. states to drive mission and profit concurrently.
Who can apply for a B Corp certificate?
If you are planning to apply for a B Corp certification for your business, you do not need to label your products or services as ‘sustainable’ or ‘eco-friendly’, which appears more like a marketing approach—nobody comes forward to regulate or certify such an attempt. Instead, the certificate is given to an organisation based on how it runs its day-to-day business and whether it values its employees and environment. It is more purpose-driven.
A B Corp can be applied for by any for-profit organisation, such as a limited liability company (LLC), a partnership, etc. The certificate is conferred on companies that have been in business for at least 12 months. However, you can apply for a certification-pending seal in the meantime, until you complete the stipulated time and receive the certification.
The certification process is an impact assessment, which involves many questions to which your business has to respond. These are often related to your company’s impact on the community, environment, employees, and so forth. To qualify for the test, one has to score at least 80 out of 300 points.
Duration of the certificate
Since companies have to enhance their performance from a social and environmental perspective, the certification process requires them to assess their impact on these aspects every two years. For recertification, you must again attain 80 points on the impact assessment test. If your business changes hands and you want to keep the status, you must recertify within 90 days of the change.
Benefits of having a B corp
Attracts top talent to your business organically
Increases market value of your business
Enhances the loyalty of stakeholders when businesses display real commitment to their social and environmental aspirations
Impacts environment positively
Provides job opportunities to youth from the local community your company serves If one of its primary social objectives is to maximise the potential of unemployed, educated youth
Improves company brand
Is B Corp actually needed for your business?
Before applying for the certification, you must reflect on whether your company really needs B Corp or not, since it doesn’t automatically confer any specific tax relief. B Corp is more about having a purpose and making commitments to society and the environment, than for a defined commercial or financial benefit.
You can definitely apply for this certification if you want to build up your organisation to do public good, regardless of your size.However, startups cannot apply for the certification unless they have been in business for the last 12 months.
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SMEs and B corp
Studies have shown that B Corp has positively impacted the growth, operation, efficiency, and profits of SMEs. It is a smart move in terms of small businesses and is growing in importance on a global level. The certification helps make social and environmental commitments from the inception of your business and allows you to assess progress every two years, which is good for your organisation to achieve resilience and further growth.
Although the certificate evolved in the US, its impact has now spread across the world, with businesses from Brazil, Chile, Afghanistan, Italy, Mexico, and Turkey being recently certified. B Lab continues to collaborate with organisations to further increase the movement internationally.
ESG Ratings also provide a benchmark of how companies are voluntarily working to measure their sustainability transitions. Bookmark our growing listing to keep track of company and sector progress.
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