The B Corp.
Companies are responsible for a significant proportion of global emissions. Therefore, companies must do as much as possible in the field of corporate social responsibility to counteract climate change. A starting point could be to set (or review) the company’s social goals. Here, the question can be asked: what contribution do you, as a company, want to make to society (i.e. in addition to generating profit)? In some countries, this social role of companies is already enshrined in law. Take, for example, the Loi PACTE introduced in France in 2019. Part of this legislation is that companies can include a raison d’être in their articles of association, which allows them to distinguish themselves with the legal seal société à mission. Although the introduction of a special legal form with a similar objective has been suggested several times in the Netherlands, namely the so-called B.V.m., this has not yet been introduced in our legal system. Therefore the question can be asked: is there nevertheless a possibility for a Dutch company to distinguish itself in the field of sustainability? The American private initiative called the Benefit Corporation (B Corp for short) may offer a possibility. This article discusses what a B Corp is and how a company can obtain and retain this certification.
B Corp certificate
A B Corp is a private certification for for-profit companies. This certification is granted by B Lab, an international non-profit organisation founded by entrepreneurs. It is therefore not a specific legal form like the almost identical American Benefit Corporation, nor a non-governmental organisation. It is in fact the private version of the public French société à mission. The B Corp does not have to pursue a pure social interest or be dependent on the government. In short: a B Corp is allowed to (want to) make profits (and even be listed on the stock exchange), as long as it voluntarily commits to standards of transparency, social responsibility and sustainability. A company binds itself to these standards in its articles of association, policy and operations, accountability to the public and reporting. The interests of all stakeholders are central to this. They must be able to benefit in the long term from the profits made.
The process of certification is described in detail on the B Lab website. This is a brief summary of the necessary steps:
- Step 1: B Impact Assessment (BIA) – The company must complete the Impact Assessment developed by B Lab. This assesses the company on five different components that relate to stakeholders: governance, employees, customers, environment and the (local, national and global) communities in which the company operates. The company must explain its answers with as many concrete examples and documentation as possible. Based on the answers, points are awarded on a scale of 0-200, of which a minimum of 80 must be achieved to qualify for certification. This is followed by a written and oral verification round.
- Step 2 – B Agreement – If a company has successfully passed the BIA, some practical matters concerning the certification are laid down in an agreement (Agreement for B Corporation Certification) with B Lab. The company also signs the B Corp Declaration of Interdependence to demonstrate its commitment to the values and aspirations of B Corps.
- Step 3 – Publication: as transparency is sought in a B Corp, a B Corp must agree to the publication of:
- General information about the company on the B-Corp website;
- A summary of the BIA score on the five different components;
- The name of the majority shareholder (if any).
- Step 4 – Amendments to the Articles of Association: the objectives of the B-Corp must also be anchored in the Articles of Association of the company. This comes down to two amendments to be found on the B-Corp website:
- Change to Company objective: “One of the Company’s objectives is to have a significant positive impact on society and the environment in general through its business operations and activities.”
- Change of duties of directors: “In making their decisions, the directors shall also consider the social, economic, legal or other consequences of the conduct of the Company’s business with respect to (i) the employees, subsidiaries and suppliers (ii) the interests of the customers of the Company and its subsidiaries, (iii) the communities and society in which the Company, its subsidiaries and suppliers conduct their business, (iv) the local and global environment and (v) the short and long-term interests of the Company.”
If all these steps are successfully completed, a company can obtain the B Corp certificate. To retain this certificate, the company must pay an annual fee to B Lab and successfully complete the BIA every three years.
In the Netherlands, the consequences of certification are mainly related to the company’s reputation. Over the years, the certificate has gained a lot of recognition in our country through the participation of well-known Dutch companies (for example: Tony Chocolonely, Dopper, Triodos Bank and SnappCar). Legally, this certification is unlikely to have many consequences. This is because in the Netherlands (unlike in the United States) a stakeholder model is already used. Nevertheless, it may be that the certified company, with its public affirmation of stakeholder orientation, is more likely to be called to account by third parties, such as the media or consumers.
However, whether this can have consequences for the liability of companies is uncertain. The certification and the related transparency, statutory embedding, communication and reporting can, for example, specify the standards of care of a company. Therefore, certification could entail a higher liability risk. To date, however, no such liability has been assumed. This could change with the current rise in climate case law, such as the ongoing Milieudefensie/Shell case.
Do you have plans to turn your company into a B Corp and would like support in doing so? Then contact Law & More. Our lawyers specialise in corporate law and sustainability and are happy to think along with you about making your company more sustainable. With our characteristic personal approach, we would like to look together with you at what suits your company and how this can be (legally) achieved.