With the array of frameworks, standards and rating systems available for selection by companies that want to demonstrate their commitment to environmental, social and governmental issues (ESG), B Corp certification stands out for its process of wide-ranging mandatory evaluation, verification and legal requirements.
Along with this is the driving element of its members, those companies that want to be “part of the movement.” Through its strengths of collective voice and action as a community, member companies have signed on to build an inclusive economy and commit to net zero by 2030. Recently, B Lab, the non-profit that runs B Corp certification, launched the SDG Action Manager, a tool that helps companies track their progress on the Sustainable Development Goals.
But is certification enough to prove a company’s commitment to best practices with governance, workers, community, the environment and customers? B Corp certification alone should not convince a company that they have met a threshold for transparency, disclosure and commitment. The B Corp community’s members should elect to go beyond the reporting requirements of B Corp certification in order to establish credibility and build trust among stakeholders.
Dealing with complexity & transparency
The recent acceptance of Arbonne, a multi-level marketing company (MLM), into the B Corp world was announced the same week as the launch of the SDG Action Manager. This decision may leave some people scratching their heads given the controversy around MLMs and that the company assessment will only take into consideration Arbonne’s internal staff, not their thousands of so-called consultants.
B Lab recognizes tensions like this with its public responses to complaints on “Controversial Issues” like orphanage-based volunteer programs (it’s fine with them if there are certain policies in place; however, I’d disagree) and bottled water industry (it’s okay, as long as they can prove they’re mitigating negative impacts) and through their work on creating a pathway to certification for large multinational companies. They have yet to issue one on MLMs. The difficulty in this certification, noted in the bottled water response, is that the B Impact Assessment focuses on “positive impact and pro-active impact management”, so it is “insufficient in assessing the potential negative impact.”
While material negative impacts are considered through a Disclosure Questionnaire, answers are analyzed, not scored. On top of this, it’s hard to compare companies and get a view to what they’re doing (better or worse) without looking through their assessment answers. However, certified B Corps are only required to share publicly overall scores. Only for public companies, multinationals and subsidiaries with a parent company (like Arbonne and Ben & Jerry’s) the entire assessment must be public.
B Corp multinationals have additional requirements to provide an annual report using another third party standard (like GRI, Integrated Reporting, etc.), to undertake a materiality assessment with a management strategy and goals attached, as well as offer tax and government affairs disclosures and a human rights policy.
In the Impact Assessment questionnaire, the existence of some programs or targets are deemed more important than outcomes. Although it can be said that the assessment covers the issues of many stakeholders (workers, suppliers, etc.), actual stakeholder engagement has little weight. B Lab is implying here that their internal assessment isn’t sufficient enough to evaluate the full complexity of a company’s impacts. In any case, there are no transparent benchmarks (other than against other companies who have taken the assessment), goals or metrics behind the calculations and weightings of scores.
Expanding & sharing reporting
This is where B Lab and its B Corp certified community can do more: by encouraging reporting transparency and the uptake of additional standards and reporting among its members.
- Shared B Impact Assessments could support more granular comparison and benchmarking for the community.
- If private companies want to get in line with bigger public players in the market, they need to feed the desire for transparent ESG data.
- Stakeholders want more insights into how companies manage opportunities and risks, particularly as ESG performance now frequently factors into investment decisions.
Comparability, alignment and mainstreaming are key issues frequently debated around ESG reporting. While work continues on framework alignment, B Corp companies can support comparability and mainstreaming by the use of additional, more comprehensive and standardized frameworks and making public their B Impact Reports, Disclosure Questionnaire and additional framework reports.
The Global Reporting Initiative (GRI), for example, provides a set of standards for sustainability reporting that measure impact (positive and negative) on the economy, the environment and/or society. GRI is the most popular guidance for ESG reporting in Canada and worldwide, B Lab recommends its use in its guide on calculating greenhouse gas emissions, and the B Impact Assessment was built on GRI, among other work.
One step forward for additional standards is B Lab’s SDG Action Manager, which is now offered within the B Impact Assessment tool. It brings together B Lab’s Impact Assessment, the Ten Principles of the UN Global Compact and the Sustainable Development Goals, and it was created with input from an impressive group of institutions, civil society, academia and experts, including GRI. Within B Lab’s technical guide, it notes its use for B Corps is voluntary, with no oversight or verification, but is meant for educational purposes and can complement frameworks and tools, like GRI’s.
Along with providing targets, there are two key improvements for B Corp companies interested in using the SDG Action Manager: the inclusion of risk, ie. how a company’s performance may be negatively contributing or hindering its achievement; and the recognition and embedding of human rights principles, which are not explicitly mentioned in the B Impact Assessment. However, a helpful reporting and benchmarking tool like the SDG Action Manager will not adequately provide stakeholders the information they desire without additional company transparency and reporting on their work toward SDG targets.
There are currently 270 B Corp companies in Canada. B Lab is the benefit corporation movement’s biggest proponent and its most comprehensive accreditor, so it has influence over companies who are currently or interested in balancing purpose and profit. B Lab and the B Corp community are well placed to do more and do better in their social responsibility reporting.