Is B Corp still worth it? Considerations for Chief Sustainability Officers

The recent case of a PR agency being stripped of its B Corp status for doing business with oil and gas companies has revived the debate over potential double standards at the certification body. Here’s what Chief Sustainability Officers should know about the entity’s evolving standards and what the label really means.

A few weeks ago, B Lab (the organisation that delivers B Corp certification) made a decision that sent shockwaves in the corporate world: stripping four agencies within the Havas public relations group of their B Corp status.

The decision was the result of an investigation kicked off by a public complaint, which criticised Havas’ lucrative advertising contract with oil company Shell, signed in September 2023. 

“The investigation found that Havas’ actions constitute a breach of the B Corp community’s core values as expressed in our Declaration of Interdependence,” a B Lab spokesperson explains. The declaration states that B Corps should ​​be the change they seek in the world, conduct business “as if people and place mattered”, and aspire to do no harm and benefit all through their products, practices, and profits, and understand “that we are each dependent upon another and thus responsible for each other and future generations”.

Perceived inconsistencies in B Corp policy

The decision was welcomed by climate activists, but led some in the corporate sustainability sector to question what they see as a double standard. In Havas’ case, the certified B Corps were not directly involved in the Shell contract, yet they were stripped of their status due to “Havas’ structure and use of a common brand name across some of its agencies”, which means that the entire group is ultimately required to earn certification, according to the B Lab spokesperson. 

But brands within the Nestlé group (specifically Nespresso and Nestlé Health Sciences) have maintained their B Corp certification despite numerous concerns over their parent company’s human rights and environmental record – from child labour allegations to illegal treatments of bottled water.

Nespresso’s certification itself has made B Lab the target of criticism from others in the B Corp movement, who point to the company’s “abysmal track record” around human rights and lack of supply chain transparency.

This is not the first time observers point to inconsistencies in B Lab’s certification policies: in 2022, Scottish beer brand BrewDog lost its B Corp status after its own employees denounced a toxic workplace culture.

The B Corp movement was born in 2007 with a first wave of members that were businesses primarily driven by sustainable and ethical practices. As such, it was perceived through the 2010s as a type of gold standard for responsible business – a perception that has faded in recent years. 

Eliminating the root of the problem

Partly in response to criticism, B Lab has developed new draft standards – with one major update set to eliminate the possibility of double standards among B Corps.

“Today, we give companies flexibility in where they gain their impact management points: they have to obtain an 80-point score to be qualified as B Corp across governance, community, customers, environment and worker impact areas,” Judy Rodrigues, B Lab’s Director of Standards, tells CSO Futures.

This helps explain how a company can obtain the certification despite performing poorly in their treatment of workers, human rights in supply chains or environmental management. 

“Now we're moving towards a standard where we would expect all B Corps to meet minimum requirements across our impact topics: we want them to perform across all environmental, social and governance impact topics. It will bring more clarity and consistency on what it means to be B Corp,” she adds. 

For critics of the B Corp movement, this change brings a ray of hope. “I hope the new sets of standards will lead to more continuous accountability and more transparency around what it actually means to have that,” says Mike Penrose, founder of sustainability platform FuturePlus.

He adds that without the change, B Corp “could fall foul in the way that some of the other stamps of validity of the past have lost a little bit of their sheen, because nobody actually knew what they meant”. 

Understanding B Corp’s upcoming standards   

The new standards, whose latest draft is available here, are the result of a consultation with B Corp stakeholders (mainly certified and aspiring B Corps), which ran from January to March 2024 and gathered over 16,000 data points, from 1,000 organisations in 50 countries.

Based on this feedback, B Lab presented revision proposals to its regional advisory groups and then to its main Standards Advisory Council, which is responsible for approving them and recommending approval to the B Lab Board.

“We're still in that process, but part of that is also reviewing our approach to evaluating company negative impacts, as well as including requirements on how companies are going to identify, mitigate and remediate them,” says Rodrigues. 

The new standard will likely include “a discrete number of ineligible industries”, but also other eligibility criteria around due diligence and assessing risk. 

The new standards will also support interoperability with other standards and regulations, including the EU’s Corporate Sustainability Reporting Directive (CSRD) and its own reporting standards (ESRS).

A high-level stakeholder feedback summary is set to be published in September 2024, with the new standards coming into force early next year. For Chief Sustainability Officers interested in getting a B Corp certification in the near future, it might be best to wait for the new standards to be finalised, since all B Corps will be required to apply them.

Rodrigues recommends using this waiting time to “get acquainted with the new standards” and start preparing. “Do a gap analysis, identify where your actions are meeting the requirements today, identify where there's gaps, and then develop a plan on how you're going to close those gaps,” she advises.

Becoming a B Corp: Process and benefits

The process of becoming a B Corp varies depending on revenue and company size, but generally takes between 16 and 18 months, according to Rodrigues. It starts with ensuring that the company is willing to commit to B Lab’s primary eligibility requirement: a stakeholder governance model formalised by legally becoming a ‘benefit corporation’ if this structure is available in the country where the firm operates (such as Italy, France and several US states).

“The B Corp movement is really trying to transform the economy to be more inclusive, equitable and regenerative, and to demonstrate that you can have purposeful businesses that are profitable, so that's a key eligibility requirement,” she explains. Where there is no legal structure for benefit corporations, companies must commit to work with B Lab to lobby for this opportunity to happen in the future. 

Then, it’s time for the B Impact Assessment: a digital tool that helps firms assess their positive impact performance for the environment, communities, customers, suppliers, employees, and shareholders. Receiving a minimum score of 80 points is the first step towards B Corp Certification under the current standard, though the scoring system will change next year.

Once their score is ascertained, the company will go through a verification process involving virtual meetings and may require onsite visits, which may take anywhere between six months and two years. The cost of this verification ranges from €2,500 to €10,000 in Europe, depending on revenue. Certification then comes with an annual fee, which goes from €2,000 to €50,000.

Becoming a B Corp is, therefore, a significant commitment, but B Lab’s own research suggests that certified companies perform better financially and are more resilient to crisis than their non-certified counterparts.

‘A good marketing tool’

Speaking to CSO Futures last November, George Roffey, Chief Sustainability Officer at recently B Corp-certified Centrus, also said the process helped increase engagement and buy-in from all teams – a significant pro for CSOs.

But for Penrose, “the reason nearly everybody gets B Corp is not because it actually improves their business processes: it is because it's a good marketing tool.”

He believes even the new standards won’t fix B Corp’s lingering problem: the lack of constant monitoring. Certified companies have to provide new evidence of their performance every three years to maintain their status, which, according to Penrose, gives them a lot of time to rest on their laurels while enjoying the B Corp “halo effect”.

“My biggest issue isn't necessarily with B Corp per se, it is with anything that purports to tell people a black and white message: if you have this stamp, you're a good company. The truth is, we're not good. Nobody's good,” he says, adding that companies should be striving for continuous improvement, and the B Corp stamp doesn’t encourage them to do so.

As such, Chief Sustainability Officers should not approach B Corp certification as a sustainability management system, but as a marketing effort that’s part of a broader, constantly evolving sustainability strategy, Penrose suggests.

When seen through this lens, B Corp can be a useful tool for sustainability engagement – both internally and externally.