How is performance recognized?

During the preliminary consultation, while there was continued support for the standards being rooted in a universal set of requirements, feedback was also received about how valuable companies find it to measure their performance. Common reasons cited included:

• Ability to differentiate companies’ performance

• The potential to drive continuous improvement and the ability to learn and prioritize efforts

• The ability for companies to institute recognition measures at the company

• Making the standards motivating and more engaging

All through the development of the new standards, the intent has always been to develop a framework that would help provide the benefits of performance measurement while also mitigating the challenges of the current B Impact Assessment scoring system (such as overemphasis of reaching the score resulting in score exaggeration in B Impact Assessment submissions, challenges in comparing company scores across versions of the standards, etc.) and aligning effectively with the structure and vision of the new standards. Achieving the same level of granularity and differentiation as the numeric point scoring system of the B Impact Assessment was not the goal - the structure and vision of the new standards are different.

The development process for the new approach for performance recognition involved research on other standards’ evaluation models and an exploration of different options (including keeping the existing B Impact Assessment points system entirely or partially) with input from various stakeholders.

To respond to the desire for differentiation and to create a path for continuous improvement, the standards propose two approaches to performance recognition:

• Recognition in the Performance Requirements

• Recognition in performance on the Impact Business Models

Recognition in the Performance Requirements

In the approach for evaluating company performance against the new standards, a company will be evaluated as "Does not meet", "Meets" or "Exceeds" each Impact Topic’s sub-requirements. Such evaluation will be based on the compliance criteria underlying each sub-requirement. The minimum expectation from companies will be to “Meet” all applicable sub-requirements in order to certify as a B Corp. An indicative example of what this could look like for the topic of Human Rights is shared below:

Evaluation of Company Performance Against the Proposed Requirements

To enable such evaluation, specific compliance criteria will be defined for what it means to "Meet" and "Exceed" performance against each sub-requirement. Examples of such differentiated compliance criteria are shared below. In the latest draft standards, where applicable, specific guidance has also been shared for what would not be acceptable for demonstrating compliance against a given sub-requirement. The full list of compliance criteria for “Does not meet”, and “Exceeds” are not currently included in this draft of the standards as the goal is to first seek input from stakeholders on this overall approach before developing it further. These will be developed comprehensively after the second consultation. 

Examples of Compliance Criteria for Meeting and Exceeding Sub-requirements

As the company completes topics, their progress towards qualifying  for certification could be visualized (for internal purposes) as illustrated below in the first image. Once the company gets verified and certified, their levels of verified performance at sub-requirement and impact topic levels across topics would be disclosed on their B Corp Public Profile, as illustrated below in the second image. This would enable the company to communicate their performance to their stakeholders/public and differentiate from and compare with peers. 

A Potential Snapshot of Company Overall Performance

Note: The above visuals are only illustrative examples. The way to present the company’s performance visually and the specific language to be used will be determined and tested with users in due course.

To strengthen transparency, users would be able to click on each of the Impact Topics and see a detailed view of which requirements and sub-requirements a company is meeting and exceeding (for example, as shown in the first table).

Beyond the qualitative public view, the ways in which a company could speak about its performance will be further explored in alignment with the overall updated claims for B Corp Certification. For example, a company could potentially refer to the % of sub-requirements it is meeting or exceeding performance.

Recognition of the Impact Business Models

Impact Business Models (IBMs) are the ways that a business is designed to create a specific positive benefit/outcome for one of its stakeholders (e.g. a company that provides services that preserve or restores natural environments, a company that periodically recruits and trains individuals from underemployed populations). During the preliminary consultation, feedback from stakeholders indicated that the proposed new standards focus heavily on operational impacts, diminishing one of the 'secret sauces' of B Corp Certification - the recognition of Impact Business Models and their potential. Feedback also indicated that the proposed new standards do not award the same degree of recognition for Impact Business Models as the current standards, consequently burdening companies with IBMs to demonstrate 'more' operational impact compared to the current approach.

For certain types of companies in the building/real estate, finance, and education industries, the B Impact Assessment includes specific Industry Addenda that measure the unique positive impacts for companies in those industries. These addenda allow the B Impact Assessment to provide more catered insights, aspirational best practices, and accurate benchmarking that would otherwise not be included in the assessment with this level of specificity and detail. For this reason, the addenda replace the Impact Business Model (IBM) sections that assess a company’s products and services, as they provide a more nuanced assessment of the positive impact that companies in these industries can have through their products and services. Addenda can be seen as a more detailed version of an Impact Business Model, therefore it is being considered within the same approach (i.e., when IBMs are referred to, it includes the existing Industry Addenda part of the B Impact Assessment). 

Data from companies’ performance on the B Impact Assessment also indicates the importance of performance on IBMs/Industry Addenda in the B Corp community’s overall achievement of B Corp Certification:

• 86% of B Corps perform on Impact Business Model/Industry Addenda.

• Two-thirds of all certified companies needed IBM points in order to become a B Corp. 

  • On average, IBM points make up 22% of a company's score.

How are IBMs recognized in the new standards?

All companies applying for B Corp Certification would be expected to undergo an Impact Business Model Assessment as part of the Foundation Requirements (for more details, see section ‘What are the requirements for B Corp Certification?’). Those companies that have an IBM* at a certain scale would be recognized in the following multi-pronged way:

1. Have more flexibility in approaching the performance requirements through exemptions or more time to meet them. 

2. Possess the option to demonstrate equivalency in compliance with requirements in some specific Impact Topics. 

3. Receive public recognition in the B Corp Public Profile and potentially other B Lab Programs.

*Note: In this case, IBMs exclude the Mission Lock IBM (to be discontinued), as this IBM refers to the legal requirement which would continue to be a mandatory requirement for companies wishing to certify as a B Corp. 

Flexibility Mechanism

Companies’ performance against each IBM/Addenda would be classified into tiers for each IBM (see table below) informed by a percentile score methodology rooted in B Corps’ historical performance data. The performance thresholds would be initially based on the existing scoring system of the B Impact Assessment, would be determined at a specific point in time, and would be available to all companies. 

While three tiers of performance will be emphasized and have more benefits tied to it, companies that earn any amount of points on IBMs would be acknowledged to drive their adoption and improvements. 

Impact Business Models’ Performance Tiers

Note: Following the proposed methodology, each IBM will have specific point thresholds for each of the tiers (based on the historical performance data of B Corps that earned that particular IBM). The specific numeric thresholds of points for each IBM/Addenda are not shared at present to avoid biased feedback from stakeholders at this stage of development.

In the latest draft standards, each sub-requirement is accompanied with a section called “Eligible for equity and flexibility mechanisms?” which identifies whether the sub-requirement is or is not eligible for such mechanisms. Depending on their size, companies in Tier 1, 2, 3 of IBM performance would have the option to be exempt from a certain number of those sub-requirements that are eligible for equity and flexibility mechanisms (up to a certain percent) or have more time to meet those sub-requirements.  

Provisions of the Flexibility Mechanism for Companies in Tier 1, 2, 3

The % flexibility of 15%, 10%, and 5% were informed by analyses of B Corps’ performance on IBMs in the B Impact Assessment. Further, these percentages consider that companies might perform on multiple IBMs, which requires balancing the total percent of flexibility that a company might earn. 

Note: Companies with multiple IBMs would be able to accumulate flexibility up to a maximum of 30% (including the provisions related to the equity mechanism for countries/territories).

Equivalency with requirements

Companies with a certain level of performance on certain IBMs will also be considered as already meeting certain sub-requirements. Some examples of such equivalencies between IBMs and sub-requirements are:

• Companies possessing the Workforce Development IBM would already be meeting the optional sub-requirement JEDI2.l The company implements the Workforce Development IBM. 

• Companies possessing the Basic Services for the Underserved IBM would already be meeting the optional sub-requirement JEDI2.t The company implements the Basic Services for the Underserved IBM.

• Companies possessing the Environmental Innovative Process (Manufacturing or Wholesale or Agriculture) IBM would already be meeting the sub-requirement ESC 4.1 The company prevents and mitigates its actual and potential negative environmental impacts.

Note: The exact “IBM tier to qualify for each equivalency” is yet to be determined.

Public Recognition

Companies possessing IBMs would also be recognized for their performance on IBMs on their B Corp Public Profile. Such recognition would identify the specific company's IBMs and their level of performance on each of these. Two early routes for what such recognition could look like are listed below, where IBMs could be represented through visual badges/medals

Route 1: The company’s tier of performance on the IBMs (see table above) is acknowledged in badges through the wording of “Developing”, “Advanced”, “Outstanding”, and “Leader” accompanied by visuals of a seed, sapling, tree, and forest respectively to demonstrate the scale of their impact. The name of the IBM is mentioned alongside the badge. Tier 4 companies i.e. companies with very few points on the IBMs get the “Developing” badge.

Route 2: The company’s tier of performance on the IBMs (see table above) is acknowledged through medals of different colors along with the wording of “Developing”, “Advanced”, “Outstanding”, and “Leader”. The name of the IBM is mentioned alongside the badge. Tier 4 companies i.e. companies with very few points on the IBMs get the “Developing” medal.

Example Routes for Publicly Recognizing Companies with IBMs

Benefits of the proposed approach to IBMs

The proposed multi-pronged approach to recognizing companies with IBMs delivers the following advantages:

• The approach uses flexibility as a mechanism to tailor the standards for companies with certain levels of performance on IBMs, with the level of flexibility directly linked to the level of performance achievement within each IBM including a minimum threshold for receiving such flexibility.

• The type of flexibility that companies with IBMs receive is tailored by the size of the company with smaller companies receiving a certain degree of exemptions on certain sub-requirements and large companies receiving more time to meet certain sub-requirements. This acknowledges that smaller purpose-driven companies might not have conditions to focus on meeting some sub-requirements given their focus on their mission and IBMs, while for larger companies, given their complexity, more time may be helpful. 

• The approach helps recognize not only the IBMs that a company possesses but also their level of performance on these IBMs relative to that of other companies, based on a data-driven methodology. 

• Recognition is delivered through simple visual badges/medals, which enable a company to differentiate themselves, communicate more easily about their IBM performance, and could incentivize them to continue improving on their IBM performance. Companies with low IBM points also receive a badge/medal that is visually distinct. 

• Through provision of flexibility, the proposed approach helps maintain continuity with the approach to IBMs in the current standards where companies that do not have an IBM need to perform better on operational impact areas to achieve the minimum performance requirement (i.e. 80 points).

While in the latest draft of the standards, the point system is proposed to be maintained in the backend for evaluating performance on the IBMs, revision and updates to the IBMs are planned in the near future. Such revision will factor what leadership on these IBM and Addenda areas looks like in today’s world and will explore the potential for a restructuring that is more clear and coherent with the structure of the rest of the standards. In cases where the standards for IBMs change, transition timelines will be communicated in advance, and legacy policies will be developed to allow time for companies to adapt and avoid any disruption to the community.