5. THEORETICAL FRAMEWORK
5.8. B Lab and the B Corps Certification
5.8.1. The procedure to become a certified B Corp [24]
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5.8.1. The procedure to become a certified B Corp [24]
Figure 2: The procedure to become a certified B Corp
Step 0:
Those companies that wish to obtain the certification must have at least one year operating, therefore, to qualify for the certification, it must be constituted as a company and have been working for at least 12 months. If the company is new, it can apply for a temporary ‘Certification Pending’ designation. This option allows start-ups with less than 12 months operating to communicate to the broader community that they are on the path to become a certified B Corp.
Step 1:
The corporation has to complete the B Impact Assessment (BIA): a questionnaire that allows the measurement of a company’s performance.
The BIA is free and online. It is available on the B Lab website and can be entered as many
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times as needed. There are approximately 100 questions that cover 5 areas of the company:
Governance, Workers, Community, Environment, and Business Model. It can take about 3 hours to complete the entire evaluation.
Once the BIA is completed and the results can be sent to the B Lab. This evaluation serves as a roadmap to understand how the company operates in terms of its practices and policies.
Simultaneously, the B Lab online platform has certain tools so that companies can compare with other companies and find examples of best practices in each of the areas evaluated. Once the evaluation is completed and saved, the company can see their obtained score (out of 200) in the B Impact Report. (Refer to Appendix B in Page 92)
Step 2:
After Submitting the BIA to B Lab, each of the areas of impact gives certain points. If the composite score is satisfactory with standards, then the company might be eligible for the next step.
B Lab performs what is called an ‘Assessment Review’, which aims to clarify possible doubts about the questions and answers in the BIA and ensure that there are no errors of interpretation.
A sample of questions are selected for detailed screening by B Lab. In addition, B Lab seeks to understand in depth the practices and unique circumstances of each company.
To appraise the score obtained during the Assessment Review, a person from B Lab contacts the company to answer questions and deliver the final score. Once this is finished, the B Lab delivers the final score. A company may opt for the B Certification if it manages to obtain more than 80 points out of a total of 200.
B Lab also starts to perform a background check of the company to make sure the certification
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is awarded accordingly to the mission and vision of the movement.
Step 3:
If the final score is satisfactory, B Lab requests supporting documentation necessary to demonstrate the veracity of the information answered during the BIA. B Lab randomly selects some questions from the Evaluation to corroborate whether those policies and practices are actually carried out within the company.
Additionally, a Disclosure Questionnaire must be completed, in which B Lab is informed in a confidential manner about unethical practices, sanctions and fines related to the company and its partners. Although this component does not affect the overall score of the company, if the answers to these questions raise significant issues, then the Board of Directors (who have the final decision power) together with the Standards Advisory Council (committee of 20-22 international and independent members that are experts in the area and industry, who advise the Board of Directors on what decision to take) of B Lab will consider whether the company in question should become a certified B Corp.
Step 4:
If all the above performance requirements are met, the B Corp’s Declaration of Interdependence and the Term-sheet are signed, where the duties and rights as certified B Corp are listed and the entry into the community of Certified B Corps becomes official.
The ‘Term Sheet’ contains the contractual conditions between B Lab and B Corps, with the detail of the annual fee that B Corps must pay to B Lab.
The ‘Declaration of Interdependence’: which states the company’s commitment to adhere to the B Corp Community values;
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Step 5
Changes must be made to the company's bylaws and governing documents in order to consider the workers, the community and the environment in a binding manner for decision-making purposes. The changes would be executed differently depending on the country where the company is located.
Although this step is NOT mandatory to obtain the B Certification, it is in fact required to get recertified 2 years later. About one year is granted to make the relevant changes after obtaining the B Corp’s Certification.
Before getting the certification, what is necessary in this step is for the company to determine whether they need to amend the governing documents or adopt benefit corporation status (where available) to meet the legal requirement for certification and corporate structure.
To do this effectively, companies must engage key board members, legal counsel, and investors about the usefulness and implications of adopting these legal changes for raising money, selling your business and directors' liability.
Step 6
Pay the certification annually. Its cost varies according to the company’s annual amount of sales as shown in the table below:
Table 8: B Lab Certification fees
B Lab Certification fees per year as of January, 2018
Annual Sales Annual Fee
USD $0 - USD$ 149,999 USD $500
USD $150,000 – USD $1,999,999 USD $1,000
USD $2 MM - USD $4,999,999 USD $1,500
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USD $5 MM - USD $9,999,999 USD $2,500
USD $10 MM - USD $19,999,999 USD $5,000
USD $20 MM - USD $49,999,999 USD $10,000 USD $50 MM - USD $74,999,999 USD $15,000 USD $75 MM - USD $99,999,999 USD $20,000 USD $100 MM - USD $249,999,999 USD $25,000 USD $250 MM - USD $499,999,999 USD $30,000 USD $500 MM - USD $749,999,999 USD $37,500 USD $750 MM - USD $999,999,999 USD $45,000
USD $1 B+ USD $50,000+