When the B Impact Assessment was created in 2006, one of the goals was to create a framework that enabled stakeholders to compare apples to apples, measuring a company’s positive social and environmental impact across different industries and geographic borders, considering companies of all sizes. 

Over the years, significant improvements have been made to the B Impact Assessment, which is currently in its 6th iteration. In this latest version, some adjustments have been made to tailor questions to small and large companies, while strengthening questions around the governance and management of social and environmental impacts for multinationals and large companies. A summary of all the changes in Version 6 can be found here. 

The B Corp Certification process assesses a company’s potentially negative impacts separately from its positive impacts. In aiming to shift away from an extractive economy to a regenerative one, beyond simply evaluating compliance, it’s important for the assessment to look at what companies are proactively doing differently to go above and beyond and create a positive impact for people and the planet. While most of the B Impact Assessment captures a company’s positive impact, a company’s negative impacts are identified through the Disclosure Questionnaire, background checks, and the public complaints process. A company may be required to transparently disclose practices on their public B Corp profile, implement management practices to mitigate the risk, or in some cases, be ineligible for certification. 

B Lab also recognizes that for companies in certain industries or of a certain size, additional analysis may be required to assess a company’s performance and confirm that it is accurately mitigating any potential negative impact to stakeholders. In 2021, B Lab introduced additional baseline requirements for large companies (required for parent companies generating $5B+ in annual revenue). 

Over the years B Lab’s independent Standards Advisory Council has also continually evolved B Lab’s risk standards to introduce additional minimum standards for companies in certain industries or who have certain practices and policies with potential for negative impact. 

While some industries and practices may prohibit a company from certification, in some circumstances, we also recognize that it may be possible for companies to meaningfully manage potentially negative impacts or practices. In these circumstances, we must distinguish between good and bad actors by using rigorous standards of verified social and environmental performance, legal accountability, and public transparency. 

For example, our risk standards may require structural change regarding risky or potentially harmful behaviors often prevalent in large companies and controversial industries: 

• Pharmaceutical companies are only eligible for B Corp Certification if they have not, in the past five years, engaged in lobbying or policy that endangers consumer safety; influenced unjustified delay in the introduction of an authorized generic product to the market; or engaged in price gouging of their products. They must also demonstrate outlined best practices.
• Companies involved in the production and sale of fossil fuels, including those that generate or sell energy derived from fossil fuels, would only be eligible for B Corp Certification if they are not engaged in specific prohibited practices regarding extraction, lobbying, and financial incentives; have successfully transitioned their energy portfolio to be at least 50% carbon-free; and have committed to making progress towards transitioning to a fully carbon-free portfolio within specified timeframes.
• In the water utilities sector, companies involved in lobbying or policy advocacy for cheaper water prices for the company or weaker regulations, and companies with unresolved stakeholder concerns over their access to water sources or over their interactions with the public sector are ineligible for B Corp Certification.

There is a natural tension between the inclination to exclude companies in controversial industries and the need to transform culture, behavior, and impact of these industries. We constantly grapple with this at B Lab in order to maintain credibility, manage risk while also achieving the impact the B Corp movement seeks in the world. 

There are now Certified B Corps in over 160 industries across the globe with varying levels of complexity within their structures. There are currently 20 different industry risk standards ranging from fossil fuel companies to pharmaceuticals – however, the absence of a B Lab position and standard on an industry or practice with potential negative impacts does not mean that B Lab does not consider the issue controversial.

With the speed of technological advancements and globalization, new industries and practices are rapidly emerging, and our standards need to evolve accordingly. As part of B Lab’s ongoing process to evolve B Corp standards since 2020, B Lab is considering and gathering stakeholder input on how to continue to improve how we evaluate and support companies in mitigating risk within the certification process.