A significant number of businesses could potentially lose their esteemed B Corp ethical designation following a recent enhancement of the qualifying standards by the organization responsible for the certification system.
B Lab, the entity that administers B Corp certification, introduced the most substantial changes in its nearly two-decade history earlier this month, eliminating the previous point-based model that allowed companies to offset deficiencies in one area with strengths in another.
Under the former system, firms that struggled in specific categories, such as environmental impact, could compensate by excelling in other domains, like corporate governance or employee treatment.
The criteria for obtaining B Corp status faced scrutiny in 2022 after BrewDog, a Scottish brewery, lost its certification amid serious allegations regarding a “toxic” workplace environment.
B Lab has also been criticized for awarding certification to Nespresso, following an open letter from the Oregon-based nonprofit Fair World Project that year. Additionally, Danone, a major global player with B Corp certification, has had to address environmental criticisms related to packaging waste.
The revised B Corp certification framework is notably more stringent, particularly for larger corporations. It mandates that companies adhere to “non-negotiable” standards across all seven categories, with compliance confirmed through third-party audits.
This reform was partly propelled by new European Union regulations requiring that any ethical claims, including B Corp status, be validated by external organizations.
Insiders indicate that a portion of the 10,000 certified companies will need to enhance their ethical practices to achieve recertification, which occurs every three years.
According to an analysis by the Guardian of the publicly accessible B Corp database, hundreds of companies are already at or near the 80-point minimum required, even under the previous, less demanding framework.
Among the more than 2,000 B Corps in the UK, over 60 have exactly 80 points, including Kent-based digital marketing firm Sleeping Giant Media and VoucherCodes, a platform showcasing discounts from major brands.
Additionally, around 600 other companies currently hold scores of 81 or lower.
Under the new regulations, larger companies will encounter more extensive requirements, such as publicly disclosing their tax strategies and establishing science-based emissions reduction goals across their entire operations.
One insider noted that even companies with high scores, like Coutts, a private bank scoring 107.6, could be impacted. Although Coutts does not need to recertify until 2028, its investments in fossil fuels may pose a risk, despite its commitment to cut carbon investments by 50% by 2030.
A representative from Coutts stated, “Coutts is dedicated to assisting clients in achieving their sustainability goals and demonstrating robust environmental, social, and governance practices. Our B Corp certification is valid until 2028, and we will assess the updated criteria accordingly.”
Conversely, some B Corps appear to be less vulnerable to losing their certification. The highest-scoring UK company, ACS Clothing, is based in Scotland and has exceeded 200 points by focusing on recycling and the repair of worn or damaged garments.
B Lab UK commented, “As the B Corp community has expanded, so have consumer expectations; businesses need to adapt to these changing demands to remain competitive and innovative. This growth naturally creates a tension between scaling and upholding high standards. By opting to elevate the latter, we believe B Lab is safeguarding the movement’s future and emphasizing long-term relevance, even if it results in slower short-term growth. The new standards provide a more rigorous definition of what it means to be a B Corp.”
They further added, “Our aim is not for every business to become a B Corp, but rather for every business to operate with similar principles.”
VoucherCodes declined to comment, and Sleeping Giant Media did not respond to requests for information.
