Certified B Corporations (B Corp) – Become a Better Business
What is a B Corp?
A B Corp is a business that has committed to high standards of environmental and social performance, transparency and legal accountability to balance profit for shareholders and the general business purposes. Despite the name denoting a focus on corporations, sole traders, partnerships, Mutuals and Cooperatives may also be eligible for certification.
B Corp certification is operated and maintained by B Lab UK – a UK registered charity with a primary aim of equipping business entities to be a force for good. Therefore, a business with B Corp certification will benefit from the brand association with the B Corp model and its aims. Customers or suppliers who are conscious of their impact on the environment and society will easily be able to identify your legal commitments to act as a force for good given your B Corp status. Requirements for becoming a B Corp Each company that would like to apply for B Corp certification must go through B Lab UK’s application processes which consists of a series of assessments designed to help the company to improve its policies, procedures and practices.
The company must also amend its articles of association to include wording specified by B Lab UK from time to time. The wording elevates the importance of the interests of stakeholders in line with the interests of shareholders in the company.
What are stakeholders?
A Stakeholder denotes the wider groups of interested parties that are impacted by a company’s actions. Such parties may include employees, the environment and the wider society. Considering the impact on stakeholders is already a legal requirement for directors under the Companies Act. Despite this, shareholders are still the primary concern for directors to consider.
The important distinction for a certified B-Corp is that consideration of the impact on stakeholders is elevated so that they are considered in the same manner as shareholder interests.
As a result, the directors’ duty to “promote the success of the company” is effectively amended. This is because the definition of ‘success’ is redefined to consider stakeholder interests equally rather than being primarily about shareholder profit. This means that the directors must give much more weight to wider stakeholder factors when making decisions.
As part of the transparency and accountability of the scheme, the directors must prepare an impact report each year detailing the impact that the company has had and the ways that it has sought to promote the success of the business for stakeholders and shareholders equally.
If you would like assistance with amending your company’s articles of association or any other corporate commercial matters please get in touch with Jack Ross (one of our specialist company commercial solicitors) by calling 01752 203500 or emailing directly via firstname.lastname@example.org