What are the main changes between the first and second drafts of the standards?
The below sections provide more detail on the changes made to the Impact Topic requirements and other cross-cutting changes in the latest draft standards, in response to feedback received during the preliminary consultation, additional research and expert interviews, and inputs from B Lab's standards governing bodies.
Impact Topics Expanded Content
The content per Impact Topic sub-requirement was expanded to include:
Terms and definitions: a list of requirement-specific terms and their meanings; which are essential to understanding the Impact Topic requirements’ content.
Compliance criteria: the specific criteria that companies need to meet to demonstrate compliance with the sub-requirement for the purposes of B Corp Certification.
Implementation guidance: additional information to facilitate a company’s implementation of the sub-requirement and was split into compliance and advisory guidance. The compliance guidance provides qualitative information on how to interpret the sub-requirement and its compliance criteria, including binding clarifications of what is and is not accepted to meet the sub-requirement. If the guidance is quantitative, it includes calculation methodologies and estimation methods. This section also contains an interpretation note to clarify the sub-requirement application to parent, group certifications, and independently certifying subsidiaries. The advisory guidance provides additional recommendations on implementing the sub-requirement (for example, methodologies, stakeholders that could be engaged, other helpful considerations etc.). Described practices are not required to demonstrate compliance with the sub-requirement.
Implementation resources: include links to references, data sources, external frameworks, and methodologies, in available languages, which could help companies implement the requirements.
Initial interoperability assessment with other standards: i.e., the European Sustainability Reporting Standards (ESRS), IFRS Sustainability Disclosure Standards and Global Reporting Initiative (which will be expanded to include other standards when the new standards are finalized).
Evidence: identifies what specific evidence must be presented by the company to verify compliance with the sub-requirement (e.g., documentation requirements, interview/review call requirements)
Changes to Impact Topics
Impact Topic Title and Other Changes
The Worker Engagement topic was renamed to Workplace Culture (WC) as it is a more accessible term and more easily captures workplace dialogue and the purpose of the topic. Also added a sub-requirement on worker representation for the largest companies.
The Collective Action topic was renamed to Government Affairs and Collective Action (GACA) to reflect its new sub-requirements, i.e. disclosing the company’s approach to responsible lobbying and practicing responsible tax management (as a result of the integration of the Baseline Requirements for Multinational Companies.
The former Impact Management topic was renamed to Complementary Impact Topics (CIT) which focuses on companies comprehensively identifying and measuring the impacts of their business, in addition to the other core Impact Topics, and improving upon them over time.
There will no longer be a Risk Impact Topic as part of the Performance Requirements. This is because several of the former Risk Topic sub-requirements were integrated into the GACA (as cited above) and the sub-requirements on responsible marketing and communication practices and having a grievance procedure were added under PSG. We are also using this moment of standards evolution to optimize and improve our certification processes. As such, we are working to incorporate upfront evaluation and eligibility to understand risk from the outset, under the Foundation Requirements, making it clear to companies as quickly as possible if they are eligible to pursue B Corp Certification. Finally, a broader approach linked to B Lab risk standards is currently under review, and additional former Risk topics sub-requirements related to risk standards are on hold until this review is completed. This review is assessing the potential for B Lab’s risk standards (and those in the queue) to be embedded into the new standards to the highest degree possible or determine if they should be included in a separate list of industries and/or practices ineligible for B Corp Certification under the Foundation Requirements. Once the review is completed, stakeholders will be updated and consulted as appropriate on its outcomes and next steps.
Changes to the Governance Topic
Purpose and Stakeholder Governance (PSG):
A new sub-requirement was introduced that requires larger companies to consider their stakeholders’ interest when making decisions on stock buybacks and dividends. This is in response to feedback from the first public consultation that impact management actions related to financial management, a highly impactful area, should also be reflected within PSG.
The stakeholder governance requirements have been further defined and contextualized. Smaller companies are required to demonstrate examples of how they consider their stakeholders in strategic decisions. While for larger companies revised sub-requirements were introduced that require 1) regular stakeholder engagement to define relevant impact topics (integrating the Baseline Requirements), 2) an annual impact report that includes a summary of stakeholder engagement, 3) mechanism in place to involve stakeholders in decision making.
Changes to Social Impact Topics
Fair Wages (FW): included pay transparency and more flexibility to living wage for a company’s own workers, with two new options: paying a collectively-bargained wage and paying 75% of family living wage whilst meeting one additional criterion (e.g. implementing the Worker Owned IBM).This ‘alternative’ living wage option is intended to acknowledge that prevailing wage calculations often do not adequately capture the complexity of wage and benefits around the world.
Human rights (HR): added requirements on legally-responsible purchasing practices and ‘beyond compliance’ supplier monitoring and engagement.
Justice, Equity, Diversity & Inclusion (JEDI): added a ‘menu’ of 23 optional JEDI actions that companies can choose from, which is intended to provide flexibility whilst also being concrete in demonstrating pathways to compliance.
Changes to Environmental Impact Topics
Climate Action (CA): new sub-requirements were added for larger companies. These include: 1) conducting a scenario analysis to understand the cascading impacts of climate change on the company’s business, its stakeholders, and society; 2) engaging in climate advocacy as this is critical to support and accelerate the implementation of climate transition plans and to ensure that climate targets can be achieved. At the same time a set of retroactive sub-requirements were removed, as the standards focus on continuous improvement activities and progress on the climate transition plan.
Environmental Stewardship & Circularity (ESC):
The circularity-related sub-requirements were separated and added under a distinct main requirement linked to circularity.
A specific commitment to 100% renewable electricity and zero waste to landfill has been added to the environmental strategy sub-requirement under ESC (in addition to addressing other negative impacts in the operations and value chain). The intention is to drive meaningful action and avoid only incremental improvements.
New sub-requirements were introduced for larger companies that require a specific water stewardship strategy and a biodiversity transition plan. While there is a general environmental strategy requirement, by separating water stewardship and biodiversity, more specific expectations (reflecting ecological thresholds where possible) could be set on critical impact areas to respond to the intensifying biodiversity, water and climate crises.
For the service sector with minor footprint the sub-requirements under ESC and HR have been revisited to ensure the requirements are meaningful and consider their context. This means that fewer operations-related sub-requirements apply to this category and a new sub-requirement was added that requires these companies to consider the environmental and human rights impacts of new clients and projects.
Cross-cutting changes to the latest draft of the standards
Other cross-cutting changes to the latest draft of the standards include the further tailoring and adding additional requirements across all Performance Requirements to incorporate contextualization factors such as company size, sector, and industry.
The incorporation of equity and flexibility mechanisms to be applied for companies operating in locations with a challenging operating context and/or companies with Impact Business Models (IBMs) were also incorporated.
Additionally, as we move away from a framework where companies have flexibility in how to achieve a verified 80 point score to a framework where companies have to be verified to meet specific requirements across the standards’ Impact Topics, a new proposal was developed for how B Corp Certification performance will be recognized and differentiated.
A new section on Foundation Requirements
A new section on Foundation Requirements was added to the latest draft to ensure companies are clear on the eligibility requirements to pursue B Corp Certification and to help them prepare for certification by learning how their business models can be designed to create specific positive social and/or environmental impacts and to recognize those companies that have an Impact Business Model.