You might not have the term Sustainability Management System (SMS) at your fingertips yet, but you’re about to see a lot more of it. An SMS is a key plank of the new B Corp standards, and all companies certifying against V2.1 will need one in place. The good news? You almost certainly already have the pieces – you just might not have pulled them together under one clear, structured framework. Think of an SMS as simply a formalised lens to show how your organisation governs, manages and improves its environmental and social impact. It’s about documenting the systems you already rely on, strengthening what’s there and proving that sustainability is genuinely embedded in how you operate. Let’s dig into what that really means.
What is a Sustainability Management System?
In short, a Sustainability Management System means ‘a framework of policies, processes and practices integrated into an organisation’s operations to manage their environmental, social and governance (ESG) responsibilities effectively.’ We quite like this metaphor from B Lab for explaining it: ‘The SMS functions much like the central nervous system of the company’s impact work: it collects vital data (identifying impacts), establishes priorities (setting goals), sends instructions (policies and procedures) to all parts of the organization (all sites and entities), and continuously monitors performance to ensure the entire body remains healthy and aligned with its core mission.’
The key elements of an SMS are:
- Governance: clearly defined roles, responsibilities and decision-making authority over sustainability policies, procedures, goals, objectives and budgets.
- Objectives and action plan: clearly defined sustainability goals supported by a structured action plan outlining steps, timelines and key performance indicators (KPIs).
- Policies and procedures: documented sustainability-related policies and operational procedures applicable across relevant areas.
If a company is meeting all of the requirements to submit for B Corp certification, then it will almost certainly already be doing all of the above. Therefore, it is not about building a new separate system; it is simply about bringing together all governance mechanisms, objectives, policies and processes to show how social and environmental impact are managed holistically throughout the business. Read more about how B Corp defines SMS.
Who will need a Sustainability Management System (SMS)?
All companies doing anything sustainability or impact-related technically have a ‘sustainability management system’. The question is, how good is it? How is it governed? Are there clear policies in place? For B Corp purposes, all companies should be prepared to talk about their SMS throughout the new requirements. However, if the company has a complex organisational structure, B Lab will request it to share a formalised version via a handy Excel sheet. This is so the company can explain how the SMS works and who has authority over it – i.e. proving that the company has a holistic system in place to manage sustainability across the company applying for B Corp certification.
Where and when is it included in the new B Corp Standards?
For large and complex companies, the SMS will be requested during the scoping process, which determines the scope of the company’s B Corp certification if you have multiple entities or a parent company. One of the elements B Lab will be looking for to show this, is that the company (or group of companies) wishing to gain or maintain certification operates under a unified SMS. The company must have an independent executive team who has authority to develop and implement policies, processes and procedures to meet the B Lab Standards – i.e. they can make decisions regarding the SMS.
This means that if your company is part of a group or has a parent company, you must show that your own highest governing body – not the parent company – has real authority and operational control over your Sustainability Management System (SMS). In other words, the entity being certified must be the one steering the ship and you must be able to demonstrate that the accountability, decision-making power and day-to-day responsibility for the SMS sit firmly within the certifying entity itself.
The earlier the better
If you are planning on certifying (or recertifying) as a Large company under the new standards, reviewing your SMS will be key to your B Corp scoping. However, it can be valuable regardless of your size or whether you’re on the B Corp journey. The idea is to review how all things impact and sustainability-related are managed within your business. This will be different for every business. For example, sometimes it will be managed through a dedicated sustainability function or it could be a lot more embedded in roles and teams across the organisation.
There isn’t a one-size-fits-all approach, but conducting this exercise may highlight gaps in governance, policies or action plans. Course correcting this will be helpful for any of your sustainability endeavours, whether it is the implementation of your strategy, your B Corp certification or your next impact report.
Final thoughts
Sustainability Management System is a term we are going to be hearing a lot more about in the B Corp world and it is essential for companies on a certification journey. The strongest impact strategies are built on solid systems – and a well-defined SMS provides exactly that. It clarifies who makes decisions, how policies are applied, how progress is tracked and how sustainability is truly integrated across the organisation.
Whether you’re preparing for scoping, gearing up for recertification or simply want tighter, clearer sustainability governance, reviewing your SMS early will save you time, confusion and last-minute scrambles.
If you’re not sure where to start, or you want support reviewing or formalising your SMS, we can help you map, strengthen and document your system with confidence. Just book a no-obligation call here for an initial chat.
