November 24, 2021

B Corps: what’s in the name?

B Corp

At the time of writing, there are now over 3,500 B Corps in more than 70 countries. The UK has seen a steep rise in the number of certified B Corps, due to both the certification of many high-profile brands, such as Innocent Smoothies, Patagonia and the Body Shop, and the increased importance consumers are placing on the environmental and social impact of the brands they support.

How does a business certify as a B Corp?

B Corp certification is voluntary and aims to demonstrate a business’s longstanding commitment to consideration of the impact of their company decisions, whilst retaining transparency and legal accountability. Certification requires businesses to weigh up the impact of their decision-making on customers, employees, suppliers, community and the environment.

Certification is provided by B Lab, a not-for profit organisation who devised the B Corp framework. As part of the process, all businesses looking to certify must complete a B Impact Assessment (BIA), which assesses the day-to-day operations and the business model of the company. All businesses must achieve a minimum score of 80/200 on the BIA and must also complete a disclosure questionnaire which includes background checks and a public complaint process.

Legal obligations

B Corps are required to consider the impact of their decisions on all their stakeholders as part of the terms of their certification, not just the company’s shareholders. This is largely where a B Corp differs from a traditional company, as shareholder value is not the forefront consideration for a B Corp but one factor amongst several others.

As such, it is a requirement in the UK for B Corps to amend their articles of association to reflect their commitment to a “triple bottom line” approach to business. This means that articles of association will need to state that the company exists to promote the success of the business for the benefit of its shareholders, but also to have a material positive impact on society and the environment.

It is not a prerequisite that a company amends their articles of association prior to certifying. If a company doesn’t elect to do so before certifying there is a grace period to do so afterwards. However, doing so before or during the certification process will increase the company’s BIA score, so it is often a desirable step for businesses looking to certify and gain valuable points for the BIA assessment.

For this reason, many businesses seek to amend their articles prior to certifying. To do so, as with any amendment to a company’s constitution, certain formalities must be met including board and shareholder approval.

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If you would like to discuss B Corps and the legal requirements to achieve B Corp status, please get in touch.

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