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B Corps Are Trending: Find Out Why!

Posted on February 7, 2023 by

Teresa Gordon

Teresa Gordon

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B Corp Certification for You Global Business 

B Corp Certification

With a growing international focus on sustainability, more B Corps are emerging around the world, and for good reason. B Corp certification can bring advantages to for-profit organizations of virtually all sizes, from smaller local businesses to large multinational corporations. As a global company, it is important to understand how becoming a B Corp can positively impact your Foreign Direct Investment (FDI) strategy. Before we get into specifics, here are a few of the top benefits that B Corp businesses enjoy compared with conventional competitors.  

What are the Benefits of Becoming a B Corp? 

  1. B Corp standards can help manage risk because they focus on strong governance 
  2. Certified B Corps are increasingly attractive to many so-called “impact” investors  
  3. B Corps may see a market boost from younger consumers who value sustainability 
  4. The networked community in which B Corps operate can lead to stronger supply chains 
  5. Top employees who seek meaning in their work may be drawn to B Corp businesses 
  6. Even small B Corps can have a positive ripple effect on global quality of life 
  7. Certification may lead to lower long-term costs through access to best practice knowledge and process improvement resources in the worldwide B Corp community 

What is a B Corp? 

According to B Lab, the non-profit body that certifies B Corp businesses, 5,000 organizations hold B Corp certifications in a global network that spans 79 countries and 154 industries. To earn the certification, B Lab requires companies to meet high transparency and accountability standards in five key performance areas. 

  1. Governance 
  2. Workers 
  3. Community 
  4. Environment 
  5. Customers 

Four Main Steps are Required to Achieve B Corp Certification  

  1. First applicants must take and pass the B Impact Ratings System. Companies must score 80 or above on this 200+ point assessment of their employee and environmental practices. 
  2. Second, they must complete a remote interview with a B Lab staff member to review B Impact Ratings System finding.  
  3. Third, their company must adopt the B Corporation Legal Framework 
  4. Finally, they must complete and sign a B Corp Term Sheet to make certification official. 

Earning the certification is challenging enough, but B Corp businesses are expected to recertify after two years to keep up with changing assessment standards and demonstrate adherence to rigorous ethical standards. During this time, B Corp companies are subject to third-party audits. 

How Can B Corp Certification Support Global Business Strategy? 

B Corp certifications apply to single entities and do not cover parent companies or subsidiaries without additional steps prescribed by B Lab. That said, certification can be advantageous to multinationals that want to stand out as viable and trustworthy partners – either to strengthen existing worldwide relationships or to expand their geographical presence. 

Although many companies recognize the boost that B Corp certification can bring to public awareness of their sustainable practices, the process is still maturing internationally. Industry observers point out that more worldwide standardization and consistency would help to elevate and solidify the B Corp movement. Some worry that companies may use “impact washing” as a marketing trick rather than as an authentic internal improvement regimen. They encourage B Corp aspirants to think more deeply about future strategy – particularly when it comes to addressing local problems in ways that help them become a global force for good. 

Experts across the industrial spectrum are exploring the implications of better governance for the whole international business community. Business journalist Allyson Hewitt, writing in the Stanford Social Innovation Review says, “To build a truly better future, industry leaders must invest in impact – and hold themselves accountable for achieving it.” Hewitt has four recommendations for multinationals considering B Corp certification. 1) Find a clearly defined initiative that fits your organization’s purpose while supporting global good for workers, customers, and the environment. 2) Make an honest assessment of the differentiators your organization brings to the movement. 3) Find and build partnerships with like-minded businesses and government entities. 4) Make sure that you are authentically living your company values internally.  

How Does B Corp Certification Connect to Foreign Direct Investment (FDI)? 

Although B Corp certification and FDI are separate models with distinct goals, B Corp standards introduce a way of thinking that can add deep value to a broader FDI play. Recall that Foreign Direct Investment is a mechanism for companies to expand their footprint across borders, usually by gaining majority interest and management control in a foreign company. They may accomplish this by simply extending their existing business model to the new country, augmenting it through an adjacent international business in their value chain, or by conglomerating into completely new lines of business. 

At the time of this writing, B Corp businesses operate in nearly 80 countries. It is worth considering that the shared transparency, accountability and resources across the international B Corp network can facilitate an FDI strategy with like-minded partners. Having B Corp standards in place internally can not only help expedite due diligence activities but can also ensure that all parties have a mutual understanding of what it means to promote public good for partners, workers, customers, their local communities and the environment. These kinds of shared values can help promote the kind of resiliency it takes to not only succeed, but also to thrive in a post-pandemic international business environment. 

Continue the Conversation 

Clayton & McKervey’s international practice group advises clients on global best practices and success strategies. If you are considering a B Corp certification for your business, we are available to talk with you about how this concept can fit in with your overall business planning objectives. Contact us today to learn more. 

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Teresa Gordon

Shareholder, International

Teresa leads the firm's international group and supports global businesses through all phases of growth as they expand to and from the U.S.

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