Written by
Ilyas Omari
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Businesses are increasingly prioritising more than just profit. Environment, Social, and Corporate Governance (ESG) and Corporate Social Responsibility (CSR) have become essential considerations for companies.
Over 50% of ASX200 companies now provide detailed information on ESG factors to investors.
A B-Corp certification provides a way for organisations to demonstrate their commitment to these principles. B-corp certifications in Australia also grew by 58% in 2020.
In this article, we take you through Australia’s B Corp certification process, including its definition, assessment, benefits, and steps to certification.
What is a B Corp?
B Corp, short for Certified B Corporation, is a certification given by B Lab, a global non-profit organisation, to organisations that make profit and are constitutionally to consider the impact of its decisions on all stakeholders, including employees, customers, communities, and the environment.
B Corps in Australia are working to create a more sustainable and equitable world by:
- Providing good jobs and fair wages
- Protecting the environment
- Supporting local communities
- Innovating for social good
These businesses meet specific standards set by B Lab and undergo a rigorous assessment process of their social and environmental impact. They must renew their certification every 3 years.
There are over 560 B Corps in Australian and New Zealand, representing a wide range of industries, including food and beverage, fashion, finance, and technology.
Recommended read: B Corp network in Australia
What is a B Corp assessment?
Organisations must go through the B Impact Assessment, a detailed questionnaire conducted by B Lab to become a B Corp. This assessment evaluates various aspects of the business, including internal policies, contributions to the community, and environmental impact. The organisation’s performance is measured, and an impact score is assigned. The B Corp assessment covers five areas:
- Governance: How the company is structured and managed
- Workers: How the company treats its employees
- Community: How the company interacts with its local community
- Environment: How the company impacts the environment
- Customers: How the company treats its customers
The assessment is scored on a scale of 0 to 200, with a score of 80 or more required for certification.
What does it mean to be B Corp certified?
B Corp certification signifies that an organisation has met B Lab’s social and environmental performance standards, accountability, and transparency.
B Corps are dedicated to using their business as a force for good, considering the interests of employees, communities, and the environment alongside profitability. This certification demonstrates a commitment to a triple-bottom-line approach: people, planet, and profit.
A B Corp certification can have an impact on your company’s reputation. Employees and investors might view B Corp companies as more ethical and socially conscious.
What are the advantages and disadvantages of becoming a BCorp?
There are many benefits to becoming a B Corp as they are part of a growing global movement of businesses committed to using their power to impact the world positively. B Corps also have access to a network of other B Corps and to resources and support from B Lab.
Advantages of becoming a BCorp
Becoming a B Corp-certified company has its advantages.
Here are some key benefits:
- Increased credibility and customer loyalty: B Corps are held to a higher social and environmental performance standard than traditional for-profit businesses. This can make them more attractive to customers and investors who are looking to support businesses that are doing good in the world.
- Attracting and retaining talent: B Corps often attract employees who are passionate about making a difference and working for companies with a strong social mission. Certification can help you attract top talent and improve employee engagement and retention.
- Networking and collaboration: B Corps is a global community of businesses with similar values and goals and gives you access to networking opportunities, collaboration with other certified businesses, and shared knowledge and resources.
- Investor attraction: B Corp certification can appeal to impact investors and socially responsible investment funds that prioritise companies with a demonstrated commitment to sustainability and social responsibility. Simply put, it opens doors to new investment opportunities.
- Reduced risk of legal liability: B Corps have the legal protection that allows them to consider the interests of all stakeholders, not just shareholders. This can help to reduce their litigation risk.
Disadvantages of becoming a BCorp
B Corp certification might also come with some drawbacks.
- Certification process: Becoming a B Corp can be time-consuming and require significant effort and resources. It involves meeting rigorous standards and completing the assessment, which may pose challenges for some businesses.
- Increased cost: The cost of becoming a B Corp can be significant, as it requires a significant amount of time and resources to complete the certification process.
- Increased scrutiny: B Corps are held to a higher social and environmental performance standard than traditional for-profit businesses. This means that they are more likely to be scrutinised by the media, investors, and the public.
- Potential for conflict: B Corps are required to consider the interests of all stakeholders, not just shareholders. This can sometimes lead to conflict between the different stakeholders, as they may have different priorities.
Are B Corps and Social Enterprises the same?
Often times B Corps can be confused with social enterprises, however, they are different.
While B Corps can have a social purpose, they can also be traditional profit-focused businesses. B Corps aim to make positive social and environmental impacts while generating profit, thus combining business goals with broader stakeholder considerations.
Social enterprises, on the other hand, are organisations that are driven by a social or environmental mission and seek to generate a positive impact alongside financial sustainability. These enterprises operate in various sectors, including education, healthcare, renewable energy, fair trade, and more. Their primary goal is to address social or environmental issues rather than maximise profits for shareholders.
Social enterprises often employ innovative business models and strategies to achieve their mission. They may reinvest a significant portion of their profits back into their social or environmental goals or use them to support marginalised communities or causes. Social enterprises’ specific structure and legal status can vary across countries and regions.
While social enterprises encompass a broader range of organisations prioritising social or environmental missions, B Corps are a specific certification indicating a company’s commitment to these values. B Corps must meet rigorous standards and undergo regular assessments to maintain their certification.
The B Corp status provides a recognised framework for measuring and verifying a company’s commitment to social and environmental responsibility, distinguishing them from traditional for-profit businesses.
How to get B Corp certified
The process of becoming a B Corp is rigorous, but it can be a valuable way for businesses to demonstrate their commitment to sustainability and social responsibility. This section explains all the steps you need to become B Corp certified.
Step 1: Get a better understanding of B Corp certification using a free course.
Enrol in a B Corp complimentary brief course to grasp the fundamentals of B Corp certification.
During the course, you will gain insights into the values driving the movement, the step-by-step process of achieving certification, and discover why more than 4,500 businesses have embraced it. Upon completing this course, you will have the knowledge to incorporate B Corp thinking into your role and business effectively.
Step 2: Check if your business is considered complex
The certification process is different for complex businesses. If any of the following criteria apply to your business, you will need to reach out to B Corp Australia for more information:
- The company has subsidiaries or is a subsidiary itself.
- It operates under a franchise model.
- Its revenue amounts to US$100 million or more.
- It operates in two or more industries.
- It operates in five or more countries.
- It shares operations with a non-certifying parent or sister entity.
Step 3: Meet legal requirements
Use the Legal Requirement Tool to determine how your company can integrate stakeholder consideration into your governance structure based on your location and corporate structure.
Step 4: Risk review
Complete the Risk Review and baseline requirements for multinational corporations if applicable.
Step 5: Necessary documents
Gather the necessary supporting documentation and data to prepare for the assessment.
Step 6: Take B Impact Assessment
Complete the B Impact Assessment (BIA), a comprehensive questionnaire that assesses a business’s impact across five areas:
- Workers
- Community
- Environment
- Customers
- Governance
To become certified, businesses must score at least 80 points on the BIA. Once a business has completed the BIA, it must submit an application to B Lab, the nonprofit organisation that administers the B Corp certification program.
A submission fee of $250-900 AUD is required to join the queue. This fee is based on the company’s revenue. B Lab will then review the application and independently verify the business’s impact.
Step 7: Provide Additional Information
Verification includes a review call with an analyst, a thorough examination of your verification report, and providing supporting documentation for your assessment answers. You will be asked to provide information about your employees and suppliers.
If you meet the verified 80-point threshold, proceed to the Post-Verification stage and sign the B Corp Agreement. You are not a B Corp-certified business. Prepare for recertification every three years, using the B Impact Assessment and the certification process as a continuous improvement tool.
What is the cost of becoming a B-Corp organisation?
The cost of becoming B Corp certified in Australia varies depending on the size of the business. Check the B Corp website
for the fees that will apply to your business.
In addition to the initial certification fee, B Corps must also pay an annual licensing fee.
It is crucial for you to assess your company’s financials before making the decision to pursue a B Corp certification.
Conclusion
A B Corp certification can provide you with an edge in the market and attract talent and investors. The process of getting a certification can be time-consuming and expensive but worth the investment.
If you are unsure if your company could benefit from a B Corp certification, you can talk to one of our qualified lawyers to walk you through this process.
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