Becoming a B Corp UK – What does it mean?

27th October 2022

Standing up for your principles

We are being increasingly approached by clients who are focused on social impact and are wanting to promote more widely the values they celebrate within their businesses.  As a firm with a strong history of civil liberties and human rights, this resonates with us.

Many of these businesses are already engaged in developing diversity and inclusion within their organisations and are actively trying to develop these ways of working both with their teams and with their suppliers and clients.

These for-profit businesses are looking at ways to distinguish themselves and identify to others that they support policies that are intended to reflect their core values.

One of the ways that companies are now doing this is to become B Corps.

There are now more than 800 UK B Corp companies certified and this number is likely to grow significantly.

But what is B Corp, how do you and why should you become one?

A business with B Corp Certification is committed to responsible and sustainable business practices. It is intended to set businesses apart for the work they do, the actions they take and how they operate their businesses.

A company that successfully applies for and receives B Corp approval receives a distinctive B Corp logo which is becoming increasingly recognised as another marker to identify a business that wants to promote and celebrate its values.

While the primary objective for those companies becoming B Corps should be to demonstrate their commitment to good principles of working, the B Corp accreditation also has the benefit of helping businesses to reinforce their relationships with their clients and customers, to attract and retain talent who share their views and where applicable, to attract the right types of investors.

Who regulates B Corps?

B Corp certification is administered by B Lab UK, a charity founded in 2015.

Not only can companies apply, but other forms of businesses can also become B Corps, including sole traders, LLPs, partnerships and co-operatives.

Charities and not-for-profit organisations are not eligible to apply and are regulated separately.

How does a business get B Corps accreditation?

To be awarded a B Corp accreditation, a business must:

  • demonstrate high environmental and social accountability;
  • change their corporate governance structure to be accountable to all stakeholders, not just the shareholders; and
  • be transparent by allowing B Lab to record their performance review on their website.

So, how do I become one?

Most businesses find that the journey to certification is a rigorous but rewarding process.

To certify, you must operate a for profit business in a competitive market for at least 12 months.

If you have less than a year of operations, you can apply for a B Corp pending status in the interim, as a stepping-stone to full certification.

The process

The process is as follows:

  1. B Impact Assessment

You will need to complete and submit the free B Impact Assessment on the B Lab UK website which will measure, improve, and verify your business’ social and environmental performance. There are around 200 questions which are tailored to your business’ size, location and sector.

It also includes a disclosure questionnaire which highlights any sensitivities, fines or sanctions linked to your business (all kept confidential).

A score of 80 or more points is required to achieve the certification in the following 5 areas (as defined by the B Lab Assessment):

  • Governance: code of ethics; financial information disclosure; whistle-blower policy; mission and engagement
  • Workers: career development; health, wellness and safety; tracking satisfaction and engagement
  • Environment: environmental management system; recycling materials; water, waste and energy usage
  • Community: civic engagement and giving; diversity, equity and inclusion; supply chain management
  • Customers: customer feedback or complaint mechanisms; regularly monitoring customer outcomes and wellbeing

It is relatively unusual to achieve this on the first try and so you might (as many businesses do) need to reflect and spend time improving your score.

  1. Meet the B Corp legal requirement

You will be required to adopt specific wording proposed by B Lab into your Articles of Association. These reflect a commitment to creating a material positive impact on society and to consider the impact of key decisions on all your stakeholders.

These amendments will need to be approved by your directors as inserting them into the company’s constitutional documents oblige them (and the company) to ensure that these principles and values are followed while still effectively running the company’s business.  They can be relatively easily amended and adapted by your legal advisers, and we can guide you through this process.

It is also sensible to check other constitutional documents, such as any shareholders’ agreements, to make sure there are no further obstacles and consent required to approve the amendment.

In terms of timing, if your company has less than 50 employees, the changes to the Articles are required before certification but if you are a larger company of 50+ employees, additional time is granted – for example, a limited company has a year, whereas an LLP has 90 days post-submission to ensure that this has been completed.

  1. Declaration of Interdependence and B Corp Agreement

You must then sign the mission statement (the declaration of interdependence) which further contracts your commitment to B Corps’ values. The statement states that you believe that:

  • we must be the change we seek in the world;
  • all business ought to be conducted as if people and place matter;
  • through their products, practices, and profits, businesses should aspire to do no harm and benefit all; and
  • 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.

You will also need to sign the B Corp agreement, a legally binding agreement committing your company to the legal requirements if you have not done this before the certification process has been finalised.

Once all is signed, you must pay a one-off submission fee of £250 + VAT and then a mandatory annual certification fee before you can be officially certified. The certification fee depends on your company’s total revenue on the last set of audited accounts – it can range from £1,000 – £50,000 (see table of ranges here).

Your impact score will be displayed on the B Lab directory annually and you will need to recertify every 3 years to ensure a continued commitment to the cause. If within 3 years your company changes control or legal form, you must inform B Lab and additional verification might be required.

Pursuing such certification might not be the right decision for every business and so consideration should be taken before committing your business to apply for a B Corp certification.

Why wait?

If you are interested in learning more about B corps or setting up one for your business, or to discuss any aspect of this article, please contact David Martin or Peter Weiss.