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What is a B-Corporation?

B Corp (standing for "Benefit Corporation")

Certification means that the business is meeting high standards of verified performance, accountability, and transparency. The B Corp label seeks to provide proof that a company is pursuing the so-called triple-bottom-line: a positive profit, and a positive impact on people, and the planet. Companies have to make changes to their charter to incorporate the interests of all stakeholders into the fiduciary duties of directors and officers.

Examples of B-Corps businesses

examples of B-Corp businesses

 

How do companies get certified?

  • Certified B Corporations are self-assessed and then the data is verified by a 3rd party non-profit, called B Lab, and must reach a minimum score.
  • The assessment covers four main areas where a business must have a positive impact: 1) employees, 2) communities, 3) customers, and the 4) environment.
  • Each company’s B Impact Report can be viewed online so that consumers can see where the companies they buy from sit on the scale.

Does it mean all B Corps are sustainable companies?

It makes life easier to trust a label, yet the truth is often more complicated. Is B Corp certification an absolute certainty of sustainable operation? Unfortunately, the answer probably depends on the B Corp. Where does B Corp fall short?

 1. Lack of Transparency

When you go to the B Corporation’s website, you can explore all the companies that are certified and look at several statistics. Even though it's nice that these statistics are provided, the information is quite difficult to assess in terms of actual results. What does a score of 6.5 in the Environment section mean? The scores don't show clear reasoning and are not clear to the average person.

Also, B Corporation does not seem to require an annual report detailing companies’ performance and results, which shows a lack of accuracy and transparency.

Example: Sézane

example Sézane

Fashion brand Sézane, for example, is B-corp certified while only rated Not Good Enough on the Good on you rating system.

The company has eliminated some hazardous chemicals but has not set a time-bound target to eliminate all hazardous chemicals. There is no evidence it has set a greenhouse gas emissions reduction target and that it has the policy to prevent deforestation in the supply chain.

2. Difficult to assess their impact

It's also disappointing to learn that B Corps do not publish the actual data from the impact assessments. These scores are kind of like a 10K financial statement.

If you are unfamiliar with it, a 10K is an annual report which provides a comprehensive overview of a company’s business and financial condition for investors. It is required by law and enforced by the Security and Exchange Commission.

It would be given a major boost if B Corps published that data for researchers, journalists, and engaged citizens to legitimize their effort.

Other governance models

There are other ways to change your business model that doesn’t depend on a 3rd party certification, and the associated fees, such as a multi-stakeholder cooperative.

A co-op serves its members, not shareholders. This is an alternative strategy for diversifying the stakeholders in a company. Co-ops can reduce the more negative side effects of a purely profit-driven company, and redefine what success means.

Conclusion

Although certified B Corporations are a significant and valuable improvement and we are hopeful that the B Corporation standards will make an impact to help drive the transformation we need. Allowing companies to assess themselves, receive a stamp of approval and entice eco-minded consumers is a process we must consider with a critical eye. We will be watching the B Corp movement as it grows and hopefully becomes more traceable, impactful & transparent.

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