Dozens of firms risk losing B Corp status after standards overhaul

Dozens of companies may be at risk of losing their coveted B Corp ethical status after the organisation behind the corporate kite-marking system raised the standards required to qualify.B Lab, which oversees B Corp certification, launched the biggest overhaul in its 19-year history earlier this month, scrapping a system under which companies must gather enough points across multiple categories to qualify.Previously, businesses that performed poorly in one of five areas, such as their environmental record, could make up for it by scoring highly in another category, such as corporate governance or their treatment of staff.The criteria required for B Corp status came under the spotlight in 2022, when the Scottish brewer BrewDog lost its certification after high-profile allegations about a “toxic” workplace culture.The organisation has also faced criticism for certifying the coffee company Nespresso, in an open letter from the Oregon-based non-profit Fair World Project, sent the same year. The international foods group Danone, one of the largest companies with B Corp status, has also been forced to respond to environmental concerns over packaging waste.The updated B Corp certification process is more rigorous than its predecessor, particularly for larger businesses.It requires companies to meet “non-negotiable” standards in every one out of seven categories, with attainment verified by a third-party audit.The overhaul has been partly motivated by changes to EU law that require companies boasting of any ethical standard, including B Corp status, to be rubber-stamped by an external organisation.Sources familiar with the process said that some of the 10,000 companies that have the status will need to improve ethical standards to recertify, which they must do every three years.BrewDog lost its B Corp certification in 2022 after allegations about a ‘toxic’ workplace culture. Photograph: Islandstock/AlamyAnalysis by the Guardian of the publicly available B Corp database suggests hundreds are already at, or close to, the 80-point threshold required, even under the old, less onerous system.Of more than 2,000 UK B Corps, more than 60 score exactly 80 points.They include the Kent-based digital marketing agency Sleeping Giant Media and VoucherCodes, a website that provides details of discount offers from leading brands.A group of about 600 further companies currently have a score of 81 or below.Larger companies will face more extensive requirements under the new standard, including declaring their tax policies and setting science-based emissions targets across all areas of the business.One source said the changes could even affect companies that now score highly, such as the private bank Coutts, which has a score of 107.6 and does not have to recertify until 2028.This is because the bank invests in fossil fuels, although it has committed to reduce its carbon investments by 50% by 2030.A spokesperson for the bank said: “Coutts is committed to supporting clients with their sustainability ambitions and to demonstrating strong environmental, social and governance practices. Our current B Corp certification runs until 2028 and we will review the updated criteria in the normal course ahead of that.”Some B Corps appear to be at much lower risk of losing the kitemark. The highest-scoring UK company, with more than 200 points, is Scotland’s ACS Clothing, a “circular clothing hub” that facilitates recycling and repair of old or damaged clothes.B Lab UK said: “As the B Corp community has grown, so too have consumer expectations; businesses must keep up with these evolving demands to stay competitive and remain innovative. And with that growth comes a natural tension between scaling up and maintaining high standards. By choosing to strengthen the latter, we believe B Lab is future-proofing the movement and prioritising long-term relevance, even if it means slower expansion in the short term. B Lab’s new standards provide greater rigour as to what it means to be a B Corp.“Our goal is not for every business to become a B Corp, but for every business to behave like one.”VoucherCodes declined to comment and Sleeping Giant did not return requests for comment.