“There is definitely a benefit to be had for a fashion brand to become certified as a B Corporation as it provides them with tangible evidence to market their products as environmentally friendly.”
make out. One example of this is that B Lab’s corporate governance board sets the standards that companies are assessed against but they do not show all of the results and performance of each company against these standards. There is also no requirement to file an annual report detailing a company’s performance, except for those that are publicly listed.
The grass is greener
Despite this criticism, there are thousands of B Corporations that became certified in order to make a difference in the industry and ensure that they are running a sustainable operation. For example, Patagonia became certified as a B Corporation as they aimed to reduce their carbon footprint and change the way businesses operated in the fashion industry. The criteria to become a B Corporation is also very rigorous and companies that voluntarily undertake this process do not do so lightly as it can involve an overhaul of their group structure and allow access to a B Lab’s analyst to undertake a review of the entire day to day operations. A step that anyone attempting to greenwash would be unlikely to take, particularly if there are environmental or ethical issues within their supply chains. As such, a company would need to restructure to remove any unethical or questionable environmental practices to even be considered for B Corporation certification, and in turn become a ‘greener’ and more sustainable company in any case.
As the world continues to combat climate change and consumers become more conscious of the environmental impact of corporations, the B Corporation may continue to be a popular method of proving to consumers that fashion brands are moving towards more sustainable practices and environmentally products.
To B or not to B?
Deciding on whether to become certified as a B Corporation is a big step to take due to the scrutiny that a company is placed under by B Lab and the overhaul in the structure of a company that is required to meet the B Lab criteria.
What is a B Corporation?
A B Corporation is a business that meets the criteria set by B Lab, an international organisation that sets standards and policies for businesses. In order to become certified as a B Corporation, a company must meet B Lab’s standards of “social and environmental performance, public transparency and legal accountability”. The certification process by B Labs is rigorous and continuing and as such, a company should follow through on their commitment to improving their social and environmental performance and be prepared to restructure how their business is run. But becoming a B Corporation, does not necessary mean a dip in the top or bottom lines in favour of focus on a company’s environmental and social impact. Many household names have restructured into a B Corporation and become more profitable and outperformed their competition. Ben and Jerry’s is a prime example of this. They achieved B Corporation certification in September 2012 and their profitability continues to outshine the majority of their competition in the food and beverage industry.
How do I become a B Corporation?
To become certified as a B Corporation, you must fulfil the criteria set out by B Lab, who carry out an assessment (called a B Impact Assessment) of the business’ impact on its workers, customers, community and the environment. Businesses must score a minimum of 80 points (out of 200) to become certified. B Lab will first meet with the business to review the completed assessment and responses provided. Publicly listed companies are treated differently to private companies in relation to their B impact assessments, with the assessments of public companies being made available online. However, you will also need to demonstrate a legal commitment to becoming a B Corporation and certain language surrounding the commitment to having a material positive impact on society and the environment and requiring directors to prepare an annual impact report amongst other things, to be inserted into the articles of association of a UK company. If you decide that, after becoming certified, you no longer wish to remain a B Corporation, the certification can be surrendered, as Etsy did in 2017. At the time, Etsy reported that to maintain its certification, it would be required to change its corporate structure, which it would not do “because converting is a complicated, and untested process for existing public companies.” However this announcement came the same day the New York Times ran an in-depth piece about the transformation Etsy has been undergoing to a more profit-driven company under its new CEO.
Take home points
To summarise, the key advantages of becoming certified as a B Corporation are: ¡ You can take the first step to becoming more socially and environmentally conscious about the impact of your business; ¡ Your company is able to market a social and environmentally friendly image with real substance to support it’s claim; ¡ B Corporations can still remain profitable and in fact are some of the most profitable companies in their respective markets; ¡ It may help to rehabilitate any prior unethical practices by demonstrating real steps that the company is taking. But: ¡ The process to becoming certified is robust and can be time consuming and require significant resources; ¡ The entire structure of the company will require an overhaul which will require significant time and cost; ¡ There is no guarantee that the company, even restructured, will pass the B Impact Assessment to achieve certification; ¡ Some may be concerned that becoming a B Corporation can deter the focus of a company from profitability.
Fox Williams has advised companies on becoming B Corporations (
www.fashionlaw.co.uk;
www.foxwilliams.com)
Paul Taylor, Fawad Rashid, and Stephen Sidkin DOWNLOAD THE FOOTWEAR TODAY APP NOW SPONSORED BY JULY/AUGUST 2022 • FOOTWEAR TODAY • 49
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