Executive Summary
- B Corp governance: The legal requirement remains a key part of the stakeholder governance structure of B Corps.
- Mission statement: The mission statement becomes a public positive impact purpose statement.
- Stakeholder governance: Stakeholder governance requirements are ramped up for governing bodies of large companies (250+ employees).
- New requirements: A responsible marketing policy, a new grievance mechanism, and additional considerations for large companies (increased rigour of impact reporting) are required.
- Key enablers for B Corp certification: Good governance, strong purpose statement and considering stakeholders in decision making are key enablers for achieving all aspects of the new standards and achieving B Corp certification.
This summer we are sharing our thoughts on the themes of the new draft B Corp standards in a blog series. After the first article on environmental impact, this second instalment focuses on where Purpose and Governance sits in the future landscape of B Corp.
Purpose & Stakeholder Governance are cornerstones of the B Corp movement as good governance enables impactful activities and practices throughout all aspects of the business model and operations. The importance of this topic is reflected in the new standards through a dedicated Purpose & Stakeholder Governance Impact Topic as well as governance aspects featuring heavily in the foundation requirements which determine eligibility for B Corp Certification. Stakeholder governance is core to the B Corp movement as it unlocks a business’ ability to contribute to an inclusive, equitable, and regenerative economic system that ultimately benefits people and the planet.
In the words of our own Chief Ecosystem Officer, Tom: “The world has moved beyond corporate purpose as a brand exercise. Leadership teams now see stakeholder perception as key to business resilience, yet corporate ownership and reporting structures still favour short-term, high-return decision making, so stakeholders can be hard to prioritise. The B Corp framework has always been good at providing the prompts for better decision making so it’s right that the new standards continue to help us redefine corporate success.”
Purpose and Stakeholder Governance in Detail
What is stakeholder governance?
Adopting stakeholder governance mechanisms allows a company to consider the interests of all stakeholders equally to shareholders. Whereas in a traditional business governance framework, the interests of shareholders are put first, even if people or the planet suffer as a result. Beyond profit and shareholders, the stakeholders impacted by a business include the environment, employees, local communities and their customers among many more.
What purpose and stakeholder governance elements of the new draft standards are similar to the current B Corp standards?
The “legal requirement” aspect of the B Corp journey is key to centering purpose at the heart of the company and remains so in the next evolution of the B Corp standards. In the UK the legal requirement involves: a change to the articles of association to align a company’s corporate purpose with positive social and environmental goals; encouraging decision making which considers all stakeholders; and implementing a process for transparent updates on progress such as through the annual publication of an impact report. If you’re based outside of the UK, use this tool from B Lab to identify your path for meeting the legal requirement.
In the Purpose & Stakeholder Governance Impact Topic:
- Formulating a company mission statement: showing up in the new standards as a purpose statement and leveled up as it will need to be shared publicly (e.g. on company website) and outline how the company will contribute positively to people and planet
- Considering impacts on stakeholders was previously part of the governance section, now evidence of how companies are considering impacts on stakeholders governance was already measured previously, in the new draft standards stakeholders must be consulted will now be a requirement to have this all formalised
- Large companies (250+ employees) must keep stakeholders informed by being transparent on social and environmental performance through the release of an annual impact report approved by the highest governing body. The largest companies (10,000+ employees) must tie this reporting to a third party standard e.g. GRI
- Material issues will need to be identified, monitored and improved upon and are assessed throughout the new B Corp requirements, a solid foundation of stakeholder governance smooths the way for effective materiality assessments that underpin a company’s broader sustainability strategy
What governance elements of the new draft standards are new?
The company’s approach to lobbying is an aspect of governance that is emphasised more in the new draft standards, showing up in both the foundation requirements and the Government Affairs and Collective Action Impact Topic sections of the new B Corp requirements. These requirements check that the company’s lobbying activities on public policy are not contrary to their purpose of having a positive impact on society or the environment. These explicit requirements on lobbying will be helpful in assessing the risk associated with companies operating in or adjacent to controversial industries.
More new elements in the draft standards to consider:
- Publicly accessible grievance policy
- Publishing a responsible marketing and comms policy (was a little action under Customers but this new requirement shows that it’s not a ‘second thought’ topic)
- Increased expectations on larger companies to tie the executive team’s objectives and remuneration to social and environmental performance.
- Board members or highest governing body must actively monitor the company’s social and environmental impact and stakeholder considerations – this is a more explicit role than was previously required
- Companies will be assessed on how they are having a broader positive impact on society and the economy by paying appropriate taxes and taking action at policy, industry, and/or business community levels.
In conclusion, the legal requirement will remain a key part of the stakeholder governance structure of B Corps. Some familiar aspects of the old standards are taken further in the new draft including the mission statement becoming a public positively impactful purpose statement and stakeholder governance requirements ramped up for governing bodies of large companies. Some new aspects will be required including a responsible marketing policy, new grievance mechanism, and additional considerations for large companies including increased rigour of impact reporting. Overall, good governance, strong purpose statement and considering stakeholders in decision making are the key enablers of achieving all aspects of the new standards and achieving B Corp certification.
More information on the blog series
The B Corp Certification standards are evolving and the development process is still underway. Here at Greenheart we’re keeping our fingers on the pulse as B Lab shares information on what the new standards will mean for certified and aspiring B Corps. As discussed in our recent blog on The Future of B Corp Certification we shared that the changes will affect companies certifying from 2026 onwards, introducing a set of mandatory performance requirements.
Check out our first blog in this series which focused on the Environmental aspects of the new standards. Still to come in the series are blogs on the new B Corp Standards with a focus on People and Culture and finally, impacts in your Value Chain. This series will uncover how to assess gaps in your company’s performance to prepare for the new B Corp standards.
Speak with about how the updates to B Corp standards will affect your business by emailing contact@greenheartbusiness.com.
