In order to take different complexities into account, B Lab uses a discovery and scoping process to analyze a company’s legal and operational structure. This process determines how complex companies should complete the B Impact Assessment and meet the legal requirement.
All companies with over $100MM in annual revenue are required to go through this process via direct engagement with B Lab by emailing email@example.com. Most companies with similar complexity factors listed above and annual revenues below $100MM do not need to go through a formal discovery & scoping process, and should be able to determine how to approach the certification process with the information on this page.
Skip to one of the following complexity categories to learn how to manage your company’s certification process.
Make sure you have read the certification page. When ready to begin your certification journey, create a free account on the B Impact Assessment. You should complete and submit the assessment only after fully understanding how to take your company’s complexity factors into account, either by reading through the details below or completing the discovery & scoping process.
The following scoping review framework provides a guide to the scoping process.
These guidelines provide a starting point for companies working on B Corp Certification. Please note that they are not a comprehensive guide to the scoping process. Exceptions may apply for each company, depending on operating and legal context. Not all companies are eligible for B Corp Certification.
- Private or public for profit companies that have been in operations for at least 12 months are eligible to certify.
- Wholly owned subsidiaries are eligible to certify, if they operate independently from their parent company. Those wholly owned subsidiaries that share a common name with their parent company trigger additional certification requirements for the parent company upon initial certification.
- Companies must include the operations of all of their consolidated and controlled subsidiaries in the certification process, with no exceptions.
- Minority-owned subsidiaries may be excluded from the scope unless they overlap significantly with regard to operations or branding.
- Parent companies may be implicated in the scope if they are non-operational non-trading entities that wholly own the certifying company, and do not own any other operational entities. Otherwise, they may be excluded from the scope assuming Complete and Distinct operations.
- Affiliate entities related by brand or operations, or related by brand and common natural person ownership may be required to certify together or congruently.
- Joint venture entities may need to be included in the scope if they are consolidated and controlled by the certifying company, or if they operate under the same brand as the certified company.
- Companies should complete the B Corp legal requirement at the highest level fiduciary in their organizational chart when possible, covering the requirement for all of that entity’s wholly owned subsidiaries (at 99% owned or more).
- Majority-owned subsidiaries must complete the B Corp legal requirement independently.
- Minority-owned subsidiaries, if excluded from the scope, do not need to meet the B Corp legal requirement.
- Companies should aggregate B Impact Assessments in such a manner that at least 80% of employees within the scope of a single B Impact Assessment reside in a single market (country or economic union), and where there is a shared industry, or uniform policies and practices.
- Companies that generate less than $5MM in annual revenues are encouraged to consolidate all operations into a single B Impact Assessment, except for instances of significantly diverse industries where an even revenue share split across industries exists.
- Companies should take separate B Impact Assessments where <80% of employees reside in a single market/region and/or their operations reflect different industries*
*Note: Should a company require two or more B Impact Assessments, these should be submitted simultaneously, and will be rolled together via weighted average to produce a single certified B Impact Assessment score for the company. Please contact B Lab at firstname.lastname@example.org if your company is submitting more than one assessment.
What Certification Approach Should the Company Be On?
The B Corp Certification process is divided into three main generalized approaches that help target the services needed by the company, per that company’s size, structure, risk profile, and other factors. B Lab operates sole discretion in determining a company’s certification approach.
The standard certification approach is used for the vast majority of certifying companies. All companies under $100MM in annual revenue will be on the standard approach, regardless of company complexity factors.
Companies with revenues between $100MM — $1B should be on the standard approach only if they have a simple structure and simple operations. A company with over $100MM in annual revenue may use the standard approach if:
- They have fewer than 10 subsidiaries; and/or
- Over 80% of their employees are in one geographic market.
If your company is using the standard approach, learn more about how to address these complexity factors.
The Large Enterprise Approach (LEA)is applicable to companies who have over $100MM in annual revenue and have material complexity factors that will impact the company’s B Corp Certification pathway.
Most companies with consolidated annual revenues between $1B — $5B must be on the LEA. Companies of this size may alternatively be directed to the B Movement Builders program at B Lab’s discretion.
Companies on the LEA go through specific pre-certification steps managed by B Lab Global, which may include: additional risk and diligence processes, a more in-depth scoping process, and a preparation and consultation phase in filling out the B Impact Assessment. Many companies in the LEA will need to complete three  or more B Impact Assessments in order to assess the full scope of their business.
The first step in the certification process for a company in the LEA is to complete an application, which will outline the requirements for the remainder of its certification journey, including confirmation of these pre-certification offerings. Please contact B Lab at email@example.com to start a Large Enterprise Approach application or for help in determining if your company should be on this approach. Learn more about the Large Enterprise Approach.
What Parts of the Business Should Be Included in the Certification?
B Corp Certification is a company level certification and is intended to assess the impact that a business has on all its stakeholders — including its employees, community, supply chain, customers, and the environment. As a company level certification intending to capture the impacts of a business operations in this comprehensive manner, B Lab does not certify brands or divisions of a business, but rather certifies independently operating businesses or Complete and Distinct subsidiaries. Your business needs to walk, talk and look like a business that controls its impact across its stakeholders and operations in order to be eligible to certify and to maintain your B Corp Certification. A company’s certification scope may therefore be expanded by B Lab in order to meet this stated intent.
Businesses need to include the full scope of their operations in their certification efforts. Companies with affiliated entities and complex organizational charts should continue reading to determine which entities to include in the scope of their certification. B Lab’s rules for determining the scope of certification rely on the company’s legal and organizational structure.
The first step in analyzing the scope of certification is identifying the main operational entity (or entities) in a company’s structure — in many cases, this is the entity that generates the majority of revenue and employs the company’s workers. B Lab’s standards determine that all consolidated and controlled subsidiaries of the main operating entity should be included in the scope of certification. While parent companies cannot certify without involving their subsidiaries, in most cases, a subsidiary company can certify independently of its corporate parent as long as it meets the requirements outlined below.
A company must include all of its consolidated and controlled subsidiaries in the scope of B Corp Certification, but, in many cases, can exclude minority-owned subsidiaries, if they are not consolidated nor controlled.
Being included in the scope of certification means that the entity’s operations must be reflected in a B Impact Assessment if it has any (non-operational holding companies can be included in the scope but have no material impact on the B Impact Assessment). Entities in the scope must also meet the B Corp legal requirement, either by making the legal change themselves or by being covered by their parent entity.
If a subsidiary seeking certification shares the same name as its parent company, it will trigger a requirement for the parent company to certify within six years. Read more on the Affiliated Company Requirement.
Brands may not independently pursue certification if they are part of a broader business with multiple brands, or do not meet B Lab’s Complete and Distinct criteria. A company that has one or more subsidiary, brand, or division in the scope of certification whose name is different from the parent company and that wishes to independently use the B Corp IP, will need to go through a brand review conducted during the verification stage. For any differently named brand that falls under the umbrella of a B Corp, B Lab has an obligation to ensure that the verified B Impact Assessment score applies consistently across the brands and thus permits the company to use the B Corp IP for all brands in question. The brand review fee, paid during the review process, is based on the revenue of the certified parent company and covers the review of up to three differently-named brands.
See more details on the brand review process here.
Companies can certify and maintain certification independently of their corporate parent as long as they qualify as Complete and Distinct; that is, a business unit that is able to control its impact and meet the B Corp legal requirement. The list below outlines the five criteria a company must meet to be able to certify independently:
- Legal Accountability: Your business retains a separate legal entity that is a for-profit business, with the ability to meet the B Corp legal requirement. It’s a good idea to ensure that the existing or new legal entity is fulfilling the B Corp legal requirement as a sale occurs.
- Executive Accountability: Your business has a dedicated executive team or equivalent that is accountable for, and has decision making authority over, all business operations, reflected on the businesses profit & loss statement.
- Control Over Product Purchasing and Supply Chain Impact: The executives and managers residing over your company must exercise control over at least 90% of the product or service your business delivers. The company must have visibility into and the ability to improve the social, environmental, and financial performance of at least 80% of the company’s products’ supply chain.
- Complete and Distinct Reporting Accountability: Your business must have a separate profit & loss statement (P&L) that encompasses all operations of the business being certified. The P&L must include salaries of the executive team, often either captured under labor costs or as shared service costs. The P&L does not have to be publicly reported.
- Generation of Revenues From Competitive Market Activities or Sales: Eligible companies must generate a majority of revenues from trading activities (sales), compete in a competitive marketplace, and must not be a charity or public body. Furthermore, internal business entities or units such as sales and distribution entities or R&I entities would be ineligible for independent certification.
If a company does not meet all of the criteria outlined above, it cannot certify independently of its corporate parent or related affiliate entities. This means that the parent company should start its own B Corp Certification process and include the initial company as a subsidiary or brand.
If a certifying company meets the Complete and Distinct criteria but has the same name as its parent company, it is able to certify independently, but its certification will trigger a certification requirement for the parent company. In most cases, the parent company will have four years from the certification of its subsidiary to be making significant progress on its own B Corp Certification. Learn more about the affiliated company rule and contact B Lab if this applies to your company.
Certifying companies should include complete information about their parent company when providing company details on the B Impact Assessment, regardless of whether it is in or out of scope.
For Other Affiliated Companies
If two or more entities do not have a subsidiary-parent company relationship but are owned by the same parent (corporate or individual), they can certify together if they have integrated operations and/or uniform branding. Common ownership by itself does not qualify two entities to certify together. Companies should include all entities that have common or integrated operations and uniform trading/branding with the main certifying entity in the scope of the certification.
The certification process for franchises depends on whether the corporate parent (the franchisor) is a B Corp or not, given that the ownership of an entity directly relates to its business decisions and therefore its eligibility to certify. Franchisors are eligible to certify if they directly own greater than 50% of store locations, or directly operate all of the store locations in their market (country). If the franchisor is a Certified B Corporation, any franchisee can pursue independent B Corp Certification. Franchisors will need to align with B Lab directly on B Corp IP use guidelines.
If a franchisor is not certified, independently owned franchisees can certify only if they are in a distinct market (country). Each franchise and each independently certifying entity will have to complete the legal requirement. The exception to this is if they are wholly-owned (at 99% or more) by a holding or parent company that completes the legal requirement on their behalf. If there are multiple franchisees in a distinct market, all franchisees in that market must achieve a reviewed score of 80 or above for the franchisees in the region to certify.
Companies operating in multiple locations should include all locations directly owned and operated by the main certifying entity, or one of its subsidiaries in the scope of their certification. Any locations/offices set up through a licensing agreement with a third party may be considered out of scope. This means that their employees/operations may not be reflected on the company’s B Impact Assessment and will not be able to claim B Corp designation. For example, a food chain that owns most of its restaurants but set up their university campus locations through licensing agreements can only certify their non-university locations. The same guidelines apply for franchises owned by the parent company vs. franchises owned by a third party.
Fund managers are eligible to pursue B Corp Certification, but not funds themselves. The certification is intended for corporate entities with decision-making power over their operations. Investment firms should include the general partner and all consolidated and controlled operational entities in the scope of certification. If a subsidiary is legally exempt from financial consolidation, it does not need to be included in the scope. Limited Partners (LPs) are always excluded from the scope as long as they are not the general partner. Even if included in the scope, non-operational and holding companies will not impact the assessment.
Any joint venture (JV) owned by a company seeking certification should be included in the data submitted to B Lab for the scoping process. Minority-owned JVs can be excluded from the scope of certification if the certifying company does not consolidate and control the JV. If a company controls a JV via a deciding vote in the Board of Directors or consolidates a significant portion of a JV’s revenues on its financial statements, it should include the JV in the scope of certification. If the JV trades under the same name as the parent company, it should be included in that parent company’s certification scope, even if it is a minority-owned JV.
How Should I Complete the B Impact Assessment?
In order to provide a comprehensive assessment of a company’s social and environmental performance, the B Impact Assessment considers all of a company’s operations even if it operates in multiple locations or includes multiple legal entities. Companies with multiple entities in scope can either aggregate data from multiple entities into one assessment, or submit multiple assessments. Being assessed with multiple B Impact Assessments will produce a single B Impact Assessment score, one B Corp profile, and one annual certification fee. Multiple B Impact Assessments may require multiple verification fees.
Whether multiple entities can be assessed together or should each complete their own assessment depends on the nature of company operations, such as industry, consolidated management and reporting lines, as well as the number and location of their employees. Aggregating entities will still be on a single B Impact Assessment track, meaning that entities aggregated into one B Impact Assessment should be in the same industry, sector, or region. Notable exceptions include business units that represent a minority of the overall company (fewer than 20% of employees or total revenue), which can usually be aggregated into the assessment of a larger entity in a different industry, sector, or region.
If over 80% or more of your company’s employees are in the same market, then you should submit a single B Impact Assessment covering all of your operations and workers. For example, if your company has 80 workers in Canada, 15 in the U.S. and 5 in Mexico, you should submit one B Impact Assessment covering all 100 employees and list Canada as your operating country. A company’s operating address in the B Impact Assessment should reflect its market of operation (where the majority of its employees are) even if that address is different from the company’s incorporation or headquarters.
If your company’s employees are spread out so that no market contains 80% or more of your workforce, you should disaggregate your data into two or more B Impact Assessments. The calculation of how many B Impact Assessments to submit and which entities to include in which B Impact Assessment should follow the 80% rule and the B Impact Assessment’s track drivers. For example, if your company has 100 employees in your Canadian office, 20 in your French office, and 80 in your Chinese manufacturing facility, you should submit one B Impact Assessment covering the Canadian and French entities (in the developed global services track), and one for the Chinese entity (in the developing global manufacturing track). Notable exceptions, however, include if a company’s policies and practices across its diverse markets are uniform (or as close to uniform as local compliance allows). If your company cannot determine how it should separate its operations into multiple assessments, please contact B Lab to conduct a scoping exercise.
Companies that require two or more B Impact Assessments must submit them at the same time as the assessments will be reviewed simultaneously and have their scores rolled up into one single company-wide score. Companies with multiple assessments need to reach out to their local B Lab partner to coordinate the submission and verification assignment process.
B Impact Assessment score roll-up happens at the end of the verification process and the two (or more) scores are weighted according to the corresponding entities’ revenues or headcount. If the company has 10%+ of revenues derived from intra-company transactions, B Lab uses headcount to produce the weighted average. Barring this material threshold of intercompany transactions between entities in the scope of company certification, company roll-up scores are always produced via a weighted average of revenue reflected in the scope of each assessment submission. The final certification score for the certifying company (including all B Impact Assessments) will thus be the weighted average of both scores. Even if one score is below 80, the final score must be above 80 for companies to be eligible for certification. See more on the score roll-up.
If your company requires two or more assessments to evaluate the full scope of your operations, please contact B Lab before you submit the assessments to arrange for their simultaneous review and, if necessary, scoping. All companies, regardless of how they fill out the B Impact Assessment, should complete the entire company details section of the assessment and submit information on their structure and operations.
Note on employees not in the organization’s payroll: The B Impact Assessment should encompass all of a company’s workers, even if they are contracted by an affiliated entity outside of the scope of certification. If your company has dedicated workers fully dedicated to your operations but are payrolled under a sister company or an employment organization, you should still count those workers as part of your workforce. See more on how to determine the total number of workers.
For more information on how to answer specific questions, see this document.
Using the B Impact Assessment across multiple locations can be challenging because specific practices can vary by location. In order to make the process more efficient while maintaining the comprehensive approach of the B Impact Assessment, questions include specific guidance on the scope of a company’s operations that should be considered when answering. This is true particularly in the workers and environment sections, as benefits and wages offered to employees, as well as the exact characteristics of facilities, are likely to vary by location. Companies should answer questions based on all locations, and only if they apply to 80% of their relevant operations, either by workforce or by facilities (i.e. by square feet or square meters). Use either workforce or facilities when selecting the 80% applicability rule, whichever factor makes the most sense for each question. For example, if the answer to a question about living wages is “yes” for 80% of the workforce and “no” for 20%, your answer on the B Impact Assessment should be “yes.” Follow the same principle and consider 80% of facilities when answering a question about GHG emissions, for example. In cases where there are discrepancies between the locations/entities and no one grouping represents 80% of the population, use the common denominator and make a note in the comments section of the questions outlining how you got to the answer provided.
A Note on Pricing: Companies submitting multiple B Impact Assessments will still maintain one B Corp profile and be charged a single certification fee, but will be subject to an additional verification fee per additional assessment. Please see the fee table below for the verification prices to be charged for each additional assessment, calculated based on the company’s overall annual revenue.
Verification Pricing Structure
|$2,500 USD / $3,000 CAD
|$5,000 USD / $6,500 CAD
|$7,500 USD / $9,000 CAD
|$10,000 USD / $13,000 CAD
How Do I Meet the Legal Requirement When My Company Has Multiple Entities?
All entities within the scope of a company’s B Corp Certification should meet the B Corp legal requirement, either by adopting a relevant legal structure themselves or by having their parent company do so. As a standard rule, a company adopting a legal structure that meets B Lab’s legal requirement will cover all of its 100% owned subsidiaries, meaning if an entity is wholly-owned by a company that itself has met the legal requirement, the wholly-owned company does not need to meet it separately. The following options outline the range of legal requirements as informed by the group’s legal structure.
- Companies with wholly-owned subsidiaries need only adopt the legal requirement at the parent level. However, majority-owned subsidiaries also need to adopt legal separately. Subsidiaries owned for 99% by the parent are considered wholly-owned subsidiaries.
- Wholly-owned subsidiaries whose parent is out of scope of certification can do the legal change at their parent or at the main certifying entity; if they choose the latter they must meet additional transparency & accountability terms for certification.
- Companies with a shell holding company may need to adopt the legal change at the holding company, if that holding wholly owns the certifying company, and owns no other operational entities out of scope of certification. The legal requirement should always be applied at the highest level possible in a certifying company’s organizational structure and scope.
- Non-consolidated subsidiaries in which the group’s parent directly or indirectly holds less than 50% of shares and has no control over are not in scope of the certification and therefore do not need to meet the legal requirement separately. Entities falling into this category will have to be considered separately for branding implications.
- Non-operational entities should follow the same rules as operating entities to identify their need to meet the legal requirement. They are excluded from the requirement if the company plans on dissolving them before achieving certification.
How Do I Take Into Account Recent Changes in the Company?
Given the current wait times during the review process, many companies go through material changes in their structure while waiting to speak to an analyst. In cases like this, the best practice is only to notify B Lab if the restructuring involves a change of ownership; in most other cases, the change will not impact the company’s current certification process. The B Impact Assessment is meant to capture a company’s operations and impacts at a specific point in time, meaning it is perfectly acceptable if it does not reflect the most current version of the company. However, in some specific cases, a significant change in the company’s structure will impact its certification. Prospective and existing B Corps undergoing changes to their organizational structure should read the instructions below and, if necessary, contact B Lab as early as possible in the restructuring process to determine how to account for the new structure. B Lab has developed the following best practices to advise companies going through a few common structural changes.
Existing B Corps undergoing an acquisition should notify B Lab as early as possible about their change in control; prospective B Corps will not be impacted by this change if they meet all five Complete & Distinct criteria outlined in the subsidiary section. Provided the company’s structure under the new ownership meets these criteria, the business will be eligible to maintain its independent certification. If the business loses its independence in the new structure, the parent company would need to pursue certification itself.
Existing B Corps that go through an acquisition or another change of control will be asked to recertify early by following the steps outlined below:
- Notify B Lab within 90 days of the sale date by emailing firstname.lastname@example.org and committing to recertifying. Companies can commit to recertification by signing the change in control commitment letter. B Lab will maintain all information shared confidentially. To maintain certification, B Corps must submit their assessment for recertification no more than one year after the sale date.
- Once a commitment to recertify is signed, B Lab will conduct a scoping process to determine which parts of the company should be included in the scope of certification. The scoping process explores how your business meets the Complete & Distinct criteria along with additional details on your new structure. B Lab will ask questions about your business’ incorporation details, organization chart, revenues, locations, employee figures, and more. This exercise, which can take one to three months, will result in a memo provided to your team from B Lab, outlining your approach to certification.
- Submit updated B Impact Assessment(s) for review one year from the sale date for verification.
- Once you recertify as a subsidiary, your business will be subject to additional transparency & verification requirements.
If your company is a prospective B Corp, the acquisition of a new company, brand, staff or other assets, whether they are structured as a subsidiary or are absorbed into a company’s existing operations, should be incorporated into the current certification. If that is the case and the company has already submitted its assessment, the review will be paused until B Lab has analyzed the acquisition. However, if the newly acquired asset retains a significant degree of separation and meets the five Complete and Distinct criteria outlined above, it can be assessed and certified independently.
If your company is an existing B Corp, the new acquisition will be required to be included into your B Impact Assessment upon your existing recertification date. You will not be required to recertify early. If the acquired assets operate a different brand from the Certified B Corp, they will not be able to use the B Corp IP until the recertification is complete. However, if the new asset meets the five Complete and Distinct criteria and wishes to use B Corp IP before the recertification term, it can get certified independently of its parent company.
A note on branding for existing B Corps: Given the high demand for B Corp Certification, there is currently not a mechanism to have those newly acquired brands reviewed before recertification. Companies with annual revenues over $1B can pay for a mid term brand review; those with revenues under $1B have to wait for their recertification date or certify the new subsidiary independently. Regardless, companies can publicly communicate that they were acquired by a B Corp, or that their parent company is a B Corp.
When companies with <$1B in annual revenue launch a new brand or create a new subsidiary (with a different name than the certified parent) that wishes to use the B Corp IP, it can decide to use the B Corp IP at its own discretion if the new brand/subsidiary shares identical operational practices as the ones assessed in the B Impact Assessment (e.g. same staff, same governance, people management, community engagement, supply chain, manufacturing, and environmental practices).
The B Corp Agreement contains a liability clause that explain these conditions as well as the fact that B Lab will review and confirm the above mentioned identical operational practices during recertification and it finds them as not true and the new brand/subsidiary does not meet the 80 bar independently, the company will have to remove the B Corp IP from its products within a six months period. Stock carrying the B Corp IP can be sold off.
If an existing B Corp with over $1B in annual revenue is planning on launching a new brand, it should contact B Lab at email@example.com and request a brand review to assess the new brand’s ability to use B Corp IP.
Public companies inherently meet the requirements of being a Complete and Distinct business and are eligible for B Corp Certification, just as private companies are. If your company is considering going public, please contact B Lab as early as possible in the filing process to ensure that you have all the appropriate and applicable language, resources and information that will be relevant for your filings. We will always honor the confidentiality of the event. Existing B Corps are required to recertify early following an IPO by following the steps outlined below:
- Notify B Lab early in your filing process by emailing firstname.lastname@example.org if you are an existing B Corp, and email@example.com if you are a prospective B Corp.
- Commit to recertifying within 90 days of the IPO, by emailing firstname.lastname@example.org with a signed copy of the change in control commitment letter.
- Complete a scoping process within four to six months of the filing, providing details on your new structure. This exercise will result in a memo provided to your team, from B Lab, outlining your approach to certification.
- Submit updated B Impact Assessment(s) for review one year from the sale date for verification.
- Once you recertify, as a public company, your business will be subject to additional transparency & verification requirements.
It’s certainly best practice and of growing market interest to file for an IPO as a legal entity that already meets the B Corp legal requirement, such as benefit corporation status. Please do not list B Lab as a technical expert on your S-1.
Certified B Corps that have not already become a benefit corporation or have not met the B Corp legal requirement, should ensure this is accomplished prior to the IPO or ensure that it’s a commitment that is included into the SPAC merger documents or process to go public. Many B Corps and legally incorporated benefit corporations have paved the way for SPACs and IPOs and proven that both the certification and the legal requirement can be valuable to public market investors. While publicly traded companies have adopted benefit corporation status, such as Amalgamated Bank, Veeva Systems and United Therapeutics, the process is more expensive and onerous than the process for private companies.
We recommend that the B Corp ensure that the resultant publicly traded entity will meet the legal requirement for certification. In most cases, but not all, the B Corp legal requirement will need to be completed at the publicly traded entity level and not at a subsidiary level. If you’re doing a SPAC, ensure that the merger documents, e.g. your S-4, include a stipulation that the resulting publicly traded company will achieve the B Corp legal framework upon completion of the merger.
Please refer to these additional documents outlining some of the processes and requirements mentioned in this page. If you still have questions about your company’s B Corp journey, please contact email@example.com.