What is a B Corporation?
B Corp Certification is granted to companies that are committed to meeting high social and environmental performance, accountability, and transparency standards. B Corp certified companies consider the impact of their decisions on various stakeholders, including employees, customers, communities, and the environment, rather than just trying to make the most profit.
In order to gain certification, companies must undertake a rigorous assessment process, as well as amending their legal documents to include the targets of being a B Corporation.
In the UK, the application involves completing an online questionnaire, making sure you score more than 80%, changing your company articles of association and then coughing up a bit of cash.
Pros of B Corporations
Firstly, a B Corp’s emphasis on social and environmental impact helps them contribute positively to communities, reduce their environmental footprint, and make a real difference rather than just profits.
Secondly, the emphasis on trust and transparency throughout the rigorous certification process holds companies that gain the certification accountable for their claims, creating trust within the company, but also in investors and consumers. This ensures that the company commits to ethical practices.
On top of this, being a B Corp can significantly impact on the type of customer, and employee, that uses a company. In today’s competitive market, consumers increasingly seek companies that align with their ethical values. Similarly, employees are drawn to companies that demonstrate a genuine commitment to social responsibility. B Corp certification, therefore, serves as a beacon, attracting like-minded individuals to work for and use services.
Finally, B Corps benefit from the idea of an alterered company constitution, which encourages their directors and officers to consider social and environmental factors while making business decisions. This legal framework offers flexibility to directors, meaning they don’t just have an obligation to focus on profit, but instead can work to improve their community. An example of this is one of our companies, TP Transcription Limited, providing transcription and translation services to academic and business clients. This company is currently going through B Corp accreditation, and we have had to alter our UK articles of association to reflect the B Corp commitment.
Cons of B Corporations
One of the main issues with B Corp certification is the complex certification process. While the assessment is required to maintain the credibility of B Corp certification, it can be time-consuming and financially difficult, particularly for smaller businesses, causing many to decide not to bother.
Additionally, not everyone understands what it means to be a B Corp. Some consumers might not know the level of commitment involved or the significance of the certification, leading to misconceptions about the company’s objectives and practices.
Another issue is the potential for greenwashing. In order to appeal to socially conscious consumers, some companies might exaggerate or misrepresent their social or environmental efforts without a genuine commitment to impactful change.
Criticisms of B Corps
Although B Corps advocate for ethical practices, their impact might be limited. Focusing primarily on certification could divert attention from addressing deeper systemic issues within industries, potentially limiting their impact.
There’s also scepticism about the perceived sacrifice of profit. Emphasising social and environmental impact might compromise financial success, especially in highly competitive markets where profit margins are paramount. This could be a reason why some small companies don’t bother going for the certification, as profit may be the only reason they exist.
Additionally, the standardisation of B Corp assessments can be an issue. As these assessments are the same for all businesses, they may not focus on the specific environmental and social challenges of some industries, making the certification less worthwhile.
In conclusion, B Corporations represent a significant shift in the business landscape, aiming to redefine success by incorporating social and environmental considerations into corporate strategies. While they face challenges and criticisms, their commitment to a more inclusive, sustainable, and responsible approach to business marks a promising step towards a more conscious and ethical future for commerce.
Jonathan Fagan is MD of Ten-Percent.co.uk Limited and TP Recruitment Limited, a set of websites involved in a range of recruitment work. Jonathan has been running small businesses for over 20 years and has a number of interests and investments in companies as diverse as transcription, legal recruitment and a bit of marketing. He is an author of a number of guides and books, together with a children’s novel. In his spare time he enjoys playing golf, cricket, coaching girls’ football, operating a parent taxi, lots of running and paddleboarding on Bala Lake and the River Dee. He is a strong believer in a good work-life balance and regular blogs on making money vs enjoying life. Jonathan’s website is https://www.jonathanfagan.co.uk