What is B Corp status?
B Corp status is a certification that recognises businesses that meet high standards of social and environmental performance, accountability, and transparency. B Corps are part of a global movement of companies that use their profits and power to create positive impact for their stakeholders, communities, and the planet. B Corp status does not lead to a change in the legal status of a company but does require changes to be made to its constitutional documents. Despite the name potentially leading you to believe that only companies can achieve B Corp status, it can be obtained by most types of businesses, including companies, sole traders, partnerships and co-operatives.
Below, we will explain what B Corp status entails, why you might want to pursue it, and how to update your governing documents accordingly.
What are the benefits of B Corp status?
B Corp status can help you differentiate your business from the competition, attract and retain talent, access capital, and build trust with customers and investors. Some of the benefits of B Corp status include:
- Joining a community of over 3,800 B Corps in more than 70 countries, who share your vision and values, and can offer support, resources, and opportunities for collaboration;
- Getting access to the B Impact Assessment, a tool that helps you measure and improve your social and environmental performance and benchmark your performance against other B Corps and industry peers;
- Displaying the B Corp logo on your website, products, and marketing materials signals your commitment to the highest standards of business conduct and impact;
- Enhancing your credibility and reputation, as B Corp certification is verified by a third-party organisation, B Lab, and requires you to meet legal accountability standards and publish your impact report; and
- Aligning your business with your purpose and ensuring that your mission and values are embedded in your corporate DNA and protected over time, regardless of changes in ownership or management.
What are the legal requirements of B Corp status?
To become a certified B Corp, generally, a business must have been in operation for at least 12 months and complete the following three steps:
- Complete the B Impact Assessment, which evaluates your business’ impact on its employees, customers, community, environment, and governance. Your business will need to score at least 80 points out of 200 and verify its score with B Lab through a review process.
- Incorporate the B Lab UK legal requirements into your business’ constitutional documents. A limited company, for example, must amend its articles of association to incorporate wording prescribed by B Lab UK which essentially modifies the duties of directors such that stakeholder interests are elevated to be as important as shareholder interests.
- Sign the B Corp agreement and the declaration of interdependence.
This is the case in the majority of instances but there are exemptions and/or other requirements for large and more complex businesses.
Updating your constitutional documents
If you are looking to amend your business’ constitutional documents to meet the legal requirement for B Corp certification, you will need to follow these steps:
- Review the B Lab UK guidance and model language for your type of business. You can find these on the B Lab UK website, under the legal requirement section.
- Obtain the necessary approvals from your board of directors and shareholders.
- File the amended constitutional documents with the relevant authorities, such as the Registrar of Companies.
- Submit the amended governing documents to B Lab, along with your B Impact Assessment score and verification documents, to complete your B Corp certification process.
Updating your governing documents for B Corp status may seem like a daunting task, but it can be a rewarding and worthwhile investment for your business. By doing so, you will join a growing community of businesses that are redefining success and using business as a force for good.
How can we help?
Ryan Belcher is an Associate at Nelsons, specialising in corporate law services, including acquisitions, disposals and mergers, corporate and group reorganisations and company formations.
For further advice relating to B Corp status or any related subjects, please get in touch with Ryan or another member of the team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online form.
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