As a business owner, you’ll appreciate the importance of understanding what makes investors tick when they are seeking investment opportunities. Increasingly, investors are looking into more aspects of the companies they invest in than just the level of return or financial profitability. While these things are still key drivers for attracting investors, companies are also being required to demonstrate a balance between their financial gain and their environmental impact on the world around them.
What is B-Corp status?
Companies can achieve Certified B-Corporation (B-Corp) status by demonstrating their commitment to social and environmental responsibility alongside financial performance. B Lab certification verifies that a business meets high standards of accountability and transparency. For many applicants who come to us for assistance, earning B-Corp status isn’t just about a label; it’s public recognition of your company’s dedication to these values.
Are you eligible for B-Corp?
You can apply for a B-Corp certification if you are a for-profit business with at least one year of operations, there is no minimum size that your company has to be to join the B-Corp community. If your company has less than one year of operations, you can apply for pending B-Corp status which is a step on the road to full certification. Charities, public bodies or majority state-owned entities are not eligible to become B-Corps.
How do you become a B-Corp?
Earning B-Corp certification typically takes companies between six and ten months. Here’s a breakdown of the key steps, which your B Corp liaison would be able to guide you through:
Application and fees: Submit your application with a £250 (+VAT) fee.
B-Corp Impact Assessment (BIA): Complete this assessment, aiming for a score of at least 80 out of 200 across five key areas: governance, community, workers, environment, and customers. You’ll also need to confidentially disclose any relevant issues in a separate questionnaire. B Lab will then verify your score and conduct interviews/request documents to ensure you meet their standards. Background checks and potential site visits may also occur during this stage.
B-Corp legal requirement: Ensure your company currently meets or is actively working towards meeting, the legal requirements for B-Corp.
Declarations and agreements: Sign the B-Corp Declaration of Interdependence (a mission statement) and the B-Corp Agreement (a legal commitment to the B-Corp legal requirement).
B Impact Report: This report details your BIA results and is published in the B-Corp directory before certification.
Annual fees and reports: Pay an annual fee based on your company’s revenue (ranging from £1,000 to £50,000) and produce an annual impact report alongside your regular financial statements.
Maintaining certification: Renew your certification every three years by undergoing a re-verification process, including an updated BIA score and document verification. Ongoing compliance with the B-Corp legal requirement is also essential.
B-Corp’s introduction of tougher standards and the new certification process
The B-Corp landscape is set to evolve in the coming year, with stricter requirements for companies seeking certification. Large businesses will face increased scrutiny, including demonstrating responsible lobbying practices and a commitment to renewable energy.
The B-Corp certification process is also undergoing a significant shift. We understand that B Lab UK plans to replace the current B Impact Assessment, which awards points based on five areas, with a new system focused on meeting minimum requirements across nine core topics.
Previously, companies could achieve certification with a total score of 80 points, even if those points came from excelling in just a few areas. B Lab UK described this as a “flexible scoring mechanism.”
I want to become B-Corp certified. What are the recommended next steps?
If you are considering applying for B-Corp certification for your business, we would strongly recommend seeking legal advice at the very early stages to ensure you have considered all aspects of applying for B-Corp status and are prepared for all the steps in the certification process.
Harper James’ team of corporate solicitors have extensive experience in helping businesses become B-Corp certified and they can guide you through the legal aspects of the application procedure.
Article by Callum Giliker, Senior Corporate Solicitor at Harper James.
