The future of business: What is a certified B corporation?
Sustainability, environmental changes, equality and fairness are all issues that have become more widely spoken of in recent times. The pandemic seems to have further focussed people’s minds on these subjects.
The traditional concept of “a good businesses” is changing. Being profitable is a requirement, of course, but for many it is no longer enough. Owners want the effect their business has on the environment and the community, to be a positive one. Business leaders are considering both their environmental and social impact and are incorporating appropriate standards into their business models. This is how a modern type of corporation has emerged: the certified B corporation (“B Corp”).
What is a certified B corporation?
There is an increasing presence of B Corps in the UK. Big names such as Waitrose, Boots and Ocado are B Corps. There are though smaller, owner managed companies who are also seeking this certification.
B Lab, (a not-for-profit organisation), carries out the verification process. Application is very comprehensive, and it takes a considerable amount of time. However, if a business is successful, becoming a B Corp not only makes them stand out from their competition, but it can also attract employees and investors and potentially makes the business far more appealing when it comes to finding a purchaser.
In a nutshell B Lab evaluates how a business creates value for stakeholders, such as their employees, the environment, and the local community. A B Corp certificate is a badge of pride for the business, and it is a way for the business to publicly establish their identity as an organisation which is interested not only in shareholders but also in the success of the stakeholders.
There are rigorous standards for social and environmental performance as well as accountability and transparency for the business.
A company’s constitution is its articles of association (the “Articles”). The Articles define the responsibility of the directors, manage shareholders’ conduct, and can also define the kind of business the company is to undertake.
What are the requirements for becoming a B corporation?
One of the legal requirements for becoming a B Corp is that the Articles must adopt appropriate language to show a clear commitment to a “triple bottom line” approach to business.
A B Corp must also produce an impact report which is publicly available and gives reassurance of the positive impact the B Corp is having on society and the environment.
The world is changing, priorities are shifting, and businesses are adapting. If you would like to become a B Corp and would like advice in relation to the adoption of appropriate Articles, please contact a member of our Business Team for a discussion on how we can help.