The rise of B Corps
6 January 2023
These days customers want more than a business that supplies what they are looking for. They are seeking businesses that have social purposes and good ethical values. One way for businesses to demonstrate this is by being certified as a B Corporation (B Corp).
What is a B Corp?
A B Corp is an organisation that has been certified by B Lab (a non-profit network) to confirm that it meets high standards of social and environmental performance, accountability and transparency when running its business.
The aim of B Corps is to transform the global economy to benefit all stakeholders (including workers, communities, suppliers and the environment), rather than just aiming to maximise profits for shareholders regardless of the impact on others.
To become a certified B Corp a company needs to pass a ‘B Impact Assessment’. Once certified, companies are reviewed every three years and must rectify anything that falls below the necessary standards.
In order to be certified companies must also demonstrate that they generate the majority of their revenue from trading, compete in a competitive marketplace and they must not be a charity or a public body or otherwise majority owned by the state.
How prevalent are B Corps?
There are now over 6,000 B Corp Companies worldwide, and in 2022 the number of B Corps in the UK increased from 564 to over 1,000. The fastest-growing industries are transportation and logistics companies and employee benefit companies.
Objectives of B Corps
B Corps aim to have the following outcomes:
- Businesses and the economic system contribute to the regeneration instead of the degeneration of natural eco-systems;
- Businesses and markets contribute to an equitable and inclusive society and economy;
- Individual health, wellbeing and community binds are improved by the economic system and the role of business; and
- Rebalancing of power between shareholders and stakeholders increasing diversity and resilience of the ecosystem.
Legal requirements to become a B Corp
Certified B Corps are legally required to consider the impact of their decisions on all of their stakeholders and not just their shareholders. As a result they are required to make changes to their articles of association to include provisions that show the objects of the Company are to promote the success of the Company for the benefit of its members as a whole AND through its business and operations, to have a material positive impact on society and the environment.
If you are interested in becoming a certified B Corporation more information can be found at www.bcorporation.uk. Birketts can also assist with the legal requirements of certification.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at January 2023.