By Dave Carter
What you need to know as an SME
For a lot of businesses, sustainability comes to life in the form of measuring, managing and reducing their environmental impact – through carbon footprints or regulatory reporting requirements like ESOS, SECR and CBAM.
B Corp on the other hand puts more emphasis on behaviours, ethics, values and tying sustainability and impact more closely to the working fabric of an organisation.
Interested? Read on….
What is a B Corp?
Launched in the United States in 2007, B Corporation is a certification of social and environmental performance and public transparency, developed and assessed by the non-for-profit B Lab and is granted to for-profit organisations that achieve a minimum score against a set of social and environmental standards.
One of the most important differentiating factors of B Corp is the ‘legal standard’ which requires applying organisations to enshrine their commitment to B Corp in its articles of incorporation. By imposing the legal standard, B Corp certification ensures that companies are committed to meet the highest standards of verified social and environmental performance, public transparency and legal accountability for the long term. It acts as a clear marker of a company’s commitment to corporate social responsibility, ensuring that its intention to become a purpose-led business is engrained into its constitution. Companies in over 90 countries, across 150+ industries and covering more than 600,000 employees have already achieved B Corp status and the movement is growing – at pace.
After success in the United States, the B Corp initiative launched in the UK in 2015. To date, there are around 2,300 B Corps in the UK, which is the largest single market, outside of the US. These include a number of household names Butternut Box, Gousto, Freddie’s Flowers, Hello Fresh, Tony’s Chocoloney, Charlie Bigham’s, Rituals and Lily’s Kitchen.
Why should a company become a B Corp?
Whether you ascribe to the sustainability agenda as a whole or not, individuals, consumers, businesses, wider society and governments globally are as environmentally aware as we have ever been in human history – and the trend is only increasing.
We’re more aware of the purchases we make, the waste we create, the services we use, the food we consume and both consumers and clients want to associate with companies that are properly considering their social, environmental and community impact.
A survey conducted by B Lab in 2020 found that 72% of UK adults believe that businesses should have a legal responsibility to the planet and people, in addition to the maximisation of profits. This is already being born out in the existing UK legal commitments to Net Zero and the growing level of regulation increasingly impacting SME organisations across the country.
The commercial rationale
There is strong evidence that achieving B Corp certification can drive significant levels of commercial performance.
From B Corps initial launch in the UK in 2015, B Lab has been tracking the performance of members. To date, UK B Corps have reported an average revenue growth of 14% year-on-year. Taking compound growth into consideration, this suggests that businesses who achieved certification in 2015 would have grown by over 300%. Certified in 2020? That’d be almost double the revenue from the starting point. The numbers don’t lie.
A Better Managed Business = A More Valuable Business
Aside from bottom line performance, there is increasing focus on ethical businesses at an investor level for a number of reasons.
As a result of B Corp’s detailed and thorough certification process and focus on continual, evidence-based improvement, achieving certification ticks a number of boxes for investors.
When Private Equity, Venture Capital, Angels or any other investors look at valuing a business, there are a number of core characteristics that come into play. Clearly, revenue and financial metrics are front and centre but often, sidelined aspects can significantly drive investor interest and confidence including brand / company reputation, differentiation from competitors, risk mitigation and importantly, the existence of strong, clear and articulate policies, processes and governance structures that drive operational consistency, effectiveness and efficiency.
All core traits embedded in a business through B Corp. There are no shortage of examples of businesses who have raised significant levels of funding whereby B Corp was a central aspect of the company’s manifesto to current and prospective investors.
This is equally true in relation to the M&A market where B Corps are an equally appealing asset. Examples include Nestle acquiring a majority stake in B Corp Mindful Chef and Unilever acquiring Pukka Herbs.
Attracting and retaining talent
With ever increasing costs of doing business, the ease of attracting (and arguably more importantly) retaining key staff is no longer just a nice to have, but can be a huge driver of cost efficiency.
It is now very widely recognised that businesses are finding it increasingly hard to find staff. A report from hiring platform Adzuna in 2024 showed that on average, it takes a business 40-50 days to hire. What this doesn’t necessarily show however is the impact to the business whilst someone is not in-post, nor the time and cost it takes to interview, advertise and (potentially) engage recruiters.
In a world where Gen Z and Millennials are increasingly dominating the workforce and with strong ties and beliefs relating to social impact, the environment etc – doesn’t it just make sense to be a business, people are looking to work for?
Who can become a B Corp?
Any UK business is eligible for B Corp certification if they can demonstrate:
It generates most of its revenue from trading;
It competes in a competitive marketplace;
It is not a charity;
It is not a public body or otherwise majority owned by the state; and
At least 12-months of trading history.
Companies limited by shares or guarantee, community interest companies, co-operatives and limited liability partnerships are all able to apply.
As a rule of thumb, almost all sectors, verticals and industries are open for B Corp certification, although, high impact or controversial businesses and sectors (such as tobacco, oil and gas, arms etc) will require an eligibility review to be undertaken.
Early-stage companies like Startups may also pursue ‘Pending B Corp’ status, designed to set a start-up on the path to full Certification.
How does a company become a B Corp?
Step 1: Validate
Determine whether the business meets the requirements to become a B Corp.
Step 2: Complete the B Impact Assessment (Free)
If a score of under 80 is achieved, work to deliver changes to surpass the 80 point threshold.
Step 3: The Legal Requirement
Engage board members and investors.
Revise articles of incorporation to align to B Corp clauses.
Step 4: Achieve Certification
Sign the B Corp Declaration of Interdependence.
Join the club!
Step 5: Continual Improvement & Recertification
Using the BIA, create a roadmap to improve the business impact.
Recertify in 3 years time.
The B-Impact Assessment (BIA)
The BIA is the online evaluation tool that enables a business to measure its impact. It comprises approximately 200 questions, which are tailored to your business given its size and industry vertical etc.
The BIA considers five areas of impact (can we make a nice table or make this visual) and within each, considers the existing level of quality / depth of impact in terms of the existence of policy etc, but also the evidenced impact this is delivering.
These pillars are evaluated and scored against the answers provided to approximately 200 questions, which are in themselves tailored to the nature of your business, its industry and the scale of the organisation.
The five pillars are:
Governance
Job descriptions, financial controls, anti-corruption, code of conduct etc.
Community
Social impact reporting, charitable partnerships, apprenticeships, volunteering opportunities etc.
Workers
Performance reviews, fair wages, flexible working, mental health support, gender pay gap etc.
Environment
Net Zero commitment, carbon reduction plan, energy efficiency, waste, minimisation etc
Customers
Feedback & complaints, customer data security, ethical marketing, customer surveys etc.
Once a business has completed / submitted the BIA, they receive a score out of 200. The line in the sand a business needs to surpass to qualify / achieve B Corp status is 80 points.
Navigating the review process
This process is divided into two main stages: evaluation and verification. The duration of this process can vary based on your company’s size, scale, complexity and the amount of focus you can put towards completing the BIA – and improving your score if necessary.
Due to the growing levels of interest in B Corp and the depth of audit B Lab conducts, there is typically an existing pipeline of other applicants in the queue waiting for evaluation. It is important to consider when signing up.
Whilst not gospel, typical turnaround times are along the following lines:
Evaluation Queue: ~3-6 months
Evaluation: ~3-6 weeks
Verification Queue: ~3-6 weeks
Verification: ~2-3 months
The evaluation and verification process involves an independent Evaluation Analyst from B Lab reviewing your submission and assessing your company’s ‘maturity’.
The analyst will validate your BIA responses and run an audit process to ensure that the answers provided align with the realities of the business operations accurately. They will dive into aspects such as the business structure, clients on the books, the nature of the work being delivered and any number of other focus areas. In the evaluation process, it is crucial to form an effective working relationships with the analyst. The analyst will always have questions to ask, requests for more information or require tasks to be completed so it is imperative to respond quickly, clearly and effectively.
Verification
The verification is a second level audit run by a separate Business Analyst to ensure impartiality, consistency and alignment to the standard and fairness of the system. This will include review calls with the analyst whereby they will verify and award a final score to your submission, considering your answers in the BIA and on any calls, as well as all provided data, documentation and evidence.
Your score may decrease during this phase. If so, you will be granted additional time to address any areas of weakness however in order to mitigate for this eventuality, we always recommend for businesses to push to achieve a self-scored ~88 points (the 80 point threshold, plus/minus 10%) before submitting for evaluation & verification. If the business drops below the 80 point threshold, there is a 3 month window for improvement.
The BIA is notoriously challenging– but why?
The BIA has this reputation for two core reasons:
Whilst the BIA isn’t ‘complex’, it is very thorough –
For businesses, especially SMEs going through the BIA for the first time, this is not only daunting but can be a significant capacity challenge. It isn’t unheard of for the process to take upwards of 18 months for a business where there is 1 person responsible who can only focus on the BIA for a couple of hours in a week.
Understanding the task –
Many first timers do not meet the 80 point bar on the first time-of-asking as they misunderstand, are unable to evidence or cannot effectively answer the questions in the way that B Lab require. As a result, many businesses go through the application process multiple times.
When we take clients through the BIA, some of the core value we deliver is in:
• Simplifying the process and creating a path forward
• Already having cheat-sheets, surveys and materials to use
• Understanding what data is needed
• Knowing how to share it with B Lab
• Minimising the likelihood of not meeting the 80 point threshold
• Minimising the capacity demand and streamlining the process
In doing so, we look to give businesses the best chance of meeting the bar on the first try, using our knowledge and experience to streamline and accelerate the application process.
Legal requirements & the getting the seal of approval
Core to the integrity of B Corp is the legal standard – but what is this?
To certify, aspiring B Corps must demonstrate its legal accountability by amending its constitutional documents in a way which requires its board of directors to consider both the company’s shareholders and its stakeholders when making decisions. This is achieved by including a pre-defined clauses in the company’s articles of association.
This is a major consideration when addressing the question of just how serious a business is about achieving B Corp status – but should not necessarily be a bone of contention or worry.
The amendments required include:
A clause confirming the company’s commitment to; (i) stakeholder interests; and (ii) a material positive impact on society and the environment;
A reiteration of the duties of the company’s directors under section 172 of the Companies Act 2006 and further wording that explains no particular stakeholder interest takes precedence over any of the others; and
An obligation on the directors to prepare an annual impact report, comprising of a balanced and comprehensive analysis of the impact of the business on society, the environment and the local community.
As you can see, unless a business is approaching this from a stance of not wanting to effectively ‘live’ the B Corp ethos, the legal obligation isn’t excessively burdensome, idealistic or impractical.
If this is a significant issue, a business can sign a term sheet instead of amending its articles. However, this will score lower in the B-Impact Assessment, compared to companies who have explicitly included the objects clause in the company’s articles of association.
Finally, the company will need to sign a declaration of interdependence: a statement encompassing the B Corp value system and shared vision for the future.
Continual improvement & recertification
To drive impact, B Lab ensures that companies continue to meet standards, by requiring B Corps to recertify every three years – and by ensuring the ‘standard’ is updated regularly – reflecting changes in best practice.
Businesses are expected to be able to evidence an improvement in their impact score over time. In the intervening 3 years, it is important that businesses develop an action plan based on their initial BIA score – identifying areas of relative weakness, stakeholders who will deliver (and track) improvements and a roadmap.
The recertification process is a ‘retake’ of the B Impact Assessment, but the process should be significantly easier to complete than when first applying given prior experience / competency and the continual improvement efforts that will have been in place.
In addition to the recertification process, B Lab has the authority to audit businesses that are believed to be operating in conflict with the B Corp standard. Companies found to be acting incorrectly can have their B Corp status revoked – as was seen in 2024 when global marketing & PR business Havas lost its B Corp status as a result of taking on Big Oil firm Shell as a key client.
Starting your journey? Let us help.
Expertise
As one of the UK’s leading sustainability, carbon and cost consultancies and with over 120 specialists, we understand the challenges facing UK SMEs when it comes to sustainability topics.
Tailored Support
Our ‘Streamline B Corp Support’ package will provide you with personalised guidance and hand-held support from initial assessment through to final certification and beyond – and can include any number of bolt-ons like leadership workshops or sustainability 101 education days.
Proven Track Record
With over 1000 clients and with experience of working with the likes of PANGAIA & Graze, you’re in safe hands.
Contact us today to schedule a consultation and take the first step toward becoming a B Corp.
B Corp certification is far more than a badge—it’s a commitment to building a better, more sustainable future. For UK SMEs, it’s also a strategic opportunity to differentiate, grow and thrive in an increasingly purpose-driven economy.
With Auditel as your partner, you’ll have the knowledge, tools and support to navigate the certification process with confidence. Let’s work together to make your business a force for good.
For a free exploratory call, or to learn more, contact our B Corp leader Dave today at:
dave.carter@auditel.co.uk
