Glossy 101: What is a B Corp and why does it matter?

Glossy 101: What is a B Corp and why does it matter?

In the landscape of corporate terminology, a term is emerging in the beauty and personal care industry that is meant to signify a company’s focus on humanism over profit. That term is Certified B Corp.

B Lab, a nonprofit founded in 2006, administers B Corp certification and determines that companies receiving certification “meet the higher standards of verified social and environmental performance, public transparency and legal accountability.” The intent behind B Corp certification is to peel back the layers on a company’s operations and business model to assess their positive impact on the world. It goes beyond something like Fair Trade standards, which only evaluate the supply chain rather than the whole business, said Andy Fyfe, B Corp business development and activation steward.

“It’s a way to separate a good company from good marketing, especially as [brands] continue to lean on sustainability or green initiatives or non-toxic chemicals,” Fyfe said.

There are presently over 3,000 B Corps around the world. Within beauty, they include publicly-traded companies such as Natura & Co., subsidiaries of publicly-traded companies like Unilever-owned Sundial Brands and Natura & Co.-owned Body Shop, as well as indie companies like CBD brand Prima. According to B Lab, between 2014 and 2019, there was a 347% increase in the total number of B Corps, and a 166% increase in beauty, wellness and personal care B Corps.

“At its core, what B Corp certification means is that the business has multiple stakeholders,” said Jessica Assaf, Prima co-founder and chief education officer. “It’s not just about your fiscal bottom line, but also the environment, your community and your employees. And it has to be part of your business charter and how you make corporate operating decisions.”

How a brand becomes a B Corp
B Lab offers a free, 183-question online assessment tool, which measures a company on five areas of business: corporate governance, employees, community, environmental impact and use of products to create a direct positive impact with customers. Because companies across multiple sectors — like finance, consumer products and machinery — can register to be a B Corp, the assessment is contextual to those individual businesses.

The assessment measures companies on an impact scale of zero to 200, with 80 as the minimum score a brand can receive while still earning B Corp certification. The score is also weighted based on how long a company has been in business, so older companies with long-term positive business practices can score higher than younger companies. Prima has a score of 87.3, according to B Lab, while The Body Shop has an impact score of 82.6, and Natura’s score is 120.3; Beautycounter’s is 94.9.

After completing the assessment, companies that wish to pursue certification are paired with someone from B Lab to do an in-depth audit. The audits are performed via documents and do not include on-site visits. Documents show how a brand calculates its carbon impact and how its emissions are offset (to prove a company is carbon-neutral, for example). They also show a company’s ingredient supply chain, to show that products are safe to customers, and information on employee benefits like paid time off and health insurance. Most of the papers are pieces most companies already have on hand, said Assaf. Chris Davis, Body Shop director of sustainability and activism, said the Body Shop brand provided nearly 4,000 documents to B Lab to verify its certification.

So far, in 2020, 228 assessments have been performed in the U.S. and Canada, according to Fyfe, which is a 32% increase compared to the same period in 2019. Fyfe said that that the number has increased even during coronavirus, and that the traditional assumption that companies might not be interested in prioritizing initiatives like sustainability during a crises is inaccurate.

To achieve B Corp certification, companies need to also be a public benefit corporation, which is a type of for-profit incorporation. In some states, public benefit corporations are not a type of corporate designation and in that case, the requirement is waived by B Lab. For an indie brand like Prima, the company always had B Corp certification in mind and incorporated as a public benefit corporation in 2018. In addition, B Corp certification reviews a company’s entire operating history. Prima only achieved B Corp certification in June 2019, after a five-month process.

“We encourage all businesses to measure their impact, for free and confidentially,” said Fyfe. “[The phrase] that you can’t manage what you don’t measure typically applies to finances, but we are trying to broaden that aperture so that companies will look at their social and environmental impact through that lens.”

Costs associated with B Corp
Companies pay an annual certification fee, which allows them to also use intellectual property like the Certified B Corp logo. The fee starts as low as $1,000 for companies that earn $1-$150,000 in revenue per year, and scales upward reaching $50,000 for companies that earn $750 million to $999.9 million per year. Companies that make $1 billion or higher in annual revenue pay a fee determined by B Lab based on the size and complexity of the business.

Benefits of B Corp certification
Ultimately, B Corp certification validates that a company is transparent, credible and operating according to principles it has expressed publicly. Therefore the ultimate benefit is to the environment, employees and customers. Assaf said another benefit of B Corp certification is the association with like-minded brands, such as Allbirds, Ben & Jerry’s, Patagonia and more. There are also local chapters for B Corp companies to connect.

“For us, it wasn’t just about making sure that we were doing things the right way, but it was also about joining a community of businesses and like-minded thinkers in reimagining how to use a for-profit business model to create change,” she said.

Additionally, using the B Corp logo, companies can promote their B Corp status to customers and thereby demonstrate their commitment to positive impacts. The Body Shop promotes its B Corp connections through in-store signage in its nearly 3,000 storefronts in 69 countries, and trains sales associates to talk about it with customers, but does not currently have the B Corp logo on its product packaging. Natura & Co-owned Aesop will seek certification in 2021, as will Avon by 2030, according to Davis.

“B Corp as a movement is well-placed to reassure consumers that if they want to shop for good, then they should choose a B Corp,” said Davis.

Assaf said that, for some time, customers have wanted the brands they shop to act responsibly and reflect their values. That stance is more relevant than ever due to the global climate crisis, systemic racism and economic impacts driven by coronavirus. Companies that were B Corp certified back in 2009, amid the previous financial crisis, had a 63% higher survival rate during that economic downturn compared to non-B Corp companies. Fyfe said this demonstrates that companies that are focused on more than just money are often more resilient during tough times.

“Everything is interconnected and intersectional,” Assaf said. “We have so many societal, cultural, human rights and environmental issues that must be addressed, and we cannot do it without the partnership, cooperation and leadership of businesses.”

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