The Purpose & Stakeholder Governance Standards, Simplified

For decades, corporate governance has been shaped by shareholder primacy: the belief that a company’s sole responsibility is to maximize returns for its owners. That narrow focus has helped fuel today’s compounding crises, from climate disruption to social inequity. B Lab’s new standards are designed to move business beyond that outdated model.

In practice, that means a company must do more than publish lofty values. It must:

• Establish a public purpose to make a meaningful positive impact (PSG1)
• Consider its impacts on stakeholders in decision-making (PSG2)
• Have adequate procedures in place to address stakeholder grievances (PSG3)
• Engage in responsible marketing and public relations (PSG4)
• Ensure the highest governing body monitors and integrates impact and stakeholder considerations (PSG5)
• Be transparent about its social and environmental performance (PSG6)

Not every requirement applies to every company. A smaller business may only need to define a public purpose and provide a basic channel for grievances. Larger or more complex companies are expected to go further, with board-level oversight, formal stakeholder engagement, and detailed public reporting.

When implemented, these practices help ensure that a company operates in line with its stated purpose, is accountable to the people and communities it affects, and contributes to a more inclusive, equitable, and regenerative economy. In this way, “success” is no longer just financial; it’s social, environmental, and human.

PSG1: Establishing a Public Purpose

The first requirement in Purpose & Stakeholder Governance is for every company to establish a public purpose to make a meaningful positive impact. This expectation applies to all companies, whether they’re micro-enterprises, companies without workers, or the largest multinationals.

By articulating their purpose clearly, strategically, and publicly, businesses create the foundation for everything that follows in stakeholder governance. A public purpose is a north star for strategy, the starting point for accountability, and the context in which stakeholders will later be engaged.

PSG1.1: Establish a public purpose

From the start of certification (Year 0), all companies must adopt and publish a purpose statement that:

• Sets out a specific positive impact: defines the meaningful contribution the company intends to make to society, the environment, or both
• Links to business strategy: ensures the purpose has clear business relevance and is integrated into operations and growth plans
• Is made public: publishes the purpose (typically on the company’s website) so it’s transparent to stakeholders
• Is formally endorsed: secures approval from the company’s highest governing body

The intent is to ensure that every company has a purpose statement that’s enforceable: aligned with the B Corp legal requirement, embedded in strategy, and endorsed at the highest level of governance. Done well, this statement not only declares why the company exists but also frames how decisions will be made, how stakeholders will be involved, and how impact will be measured over time.

PSG2: Considering the Impacts on Stakeholders in Decision-Making

At the heart of stakeholder governance is a simple idea: businesses should weigh the interests of every stakeholder they affect—workers, customers, communities, the environment, and beyond—not just their shareholders.

PSG2 puts that idea into practice by requiring companies to create mechanisms for stakeholder input, formalize governance policies, identify the issues that matter most, set meaningful goals, and make financial decisions with transparency.

PSG2.1: Create mechanisms for stakeholder input

For companies that are Micro, Small, Medium, or without workers, stakeholder input must be built into decision-making from the start. Larger companies meet this expectation through formal policies (see PSG2.2), but smaller businesses can adopt lighter-touch mechanisms suited to their scale.

To comply, companies must:

• Identify and prioritize stakeholders: Map the people and groups most affected by the company’s operations, such as workers, customers, or suppliers
• Engage stakeholders in decision-making: Create ways to gather their input, whether through surveys, advisory groups, consultations, or regular feedback loops
• Ensure broad representation: Specifically include workers, suppliers, customers, investors, local communities, and the environment in at least one form of engagement

PSG2.2: Adopt a stakeholder governance policy

From Year 0, this requirement applies to Large, X Large, and XX Large companies. These companies must adopt a formal stakeholder governance policy, approved by the highest governing body.

To meet this requirement, the policy must:

• Define the stakeholder governance model: Spell out what it means for the company to operate with affected groups at the center
• Map and prioritize stakeholders: Identify the full set of groups affected by the business and clarify which are most material
• Explain decision-making: Describe how leaders weigh both positive and negative stakeholder impacts in practice
• Establish engagement mechanisms: Outline how affected groups are regularly consulted or represented
• Describe value delivery: Detail how the company considers stakeholder interests when creating outcomes and benefits

PSG2.3: Conduct regular materiality assessments

Large, X Large, and XX Large companies must also conduct regular materiality assessments: comprehensive reviews that identify which social, environmental, and governance issues are most significant to both the company and its interested parties. These assessments must be completed at least every 36 months, with an interim review in between.

A compliant assessment must:

• Engage key groups: Include workers, suppliers, customers, investors, local communities, and the environment
• Address critical issues: Cover human rights and environmental topics, as well as other concerns raised by affected parties
• Apply double materiality: Go beyond financial risk to include real-world impacts on people and planet
• Have board oversight: Ensure the process and results are reviewed by the highest governing body
• Be publicly available: Share results transparently, often in the form of a matrix or summary report

PSG2.4: Set targets for additional material topics

When a materiality assessment highlights significant issues not already covered by the B Lab Standards, Large, X Large, and XX Large companies must set clear goals to address them. These often reflect sector-specific, geographic, or stakeholder-related concerns (e.g., data privacy in the tech sector, water usage in agriculture, or air quality in regions facing high pollution).

A compliant process must:

• Set SMART targets: Establish at least one specific, measurable, achievable, relevant, and time-bound goal for each additional material topic
• Integrate goals into strategy: Embed them into the company’s business plan rather than treating them as side projects
• Secure board approval: Have targets reviewed and endorsed by the highest governing body
• Publish and report: Make targets public and update progress annually
• Renew commitments: Once a target is achieved, set a new one that meets the same criteria

PSG2.5: Consider stakeholders in dividends and stock buybacks

For the largest companies (XX Large), additional responsibility applies beginning in Year 3: dividend and stock buyback decisions must account for stakeholder impacts as well as shareholder interests.

A compliant process must:

• Account for all interested parties: Show how workers, suppliers, customers, investors, communities, and the environment were factored into dividend and buyback decisions
• Balance competing interests: Document how conflicting needs were weighed and resolved
• Ensure transparency: Explain how decisions about profit distribution were weighed against reinvestment in the company’s social and environmental performance

This provision addresses one of the clearest expressions of shareholder primacy: distributing profit without regard for long-term impact. By requiring stakeholder consideration in capital allocation, the standards help redirect financial power toward lasting value creation for people and the planet.

Together, the PSG2 requirements ensure that stakeholders aren’t an afterthought but an integral part of governance. Whether through simple feedback channels at smaller companies or formal policies and assessments at larger ones, these practices ensure that business decisions account for their wider impact.

By embedding stakeholder voices into everything from strategy to capital allocation, companies shift the definition of “success” from short-term shareholder returns toward long-term value for the public good and the natural world.

PSG3: Addressing Stakeholder Grievances

If PSG1 establishes a company’s purpose and PSG2 brings all affected parties into decision-making, PSG3 ensures that stakeholders also have a way to raise concerns.

A grievance mechanism is essential to accountability: it gives workers, communities, and other groups a safe and transparent channel to flag issues; and it commits companies to respond. Without such systems, even well-intentioned companies risk overlooking problems or eroding stakeholder trust.

PSG3.1: Provide a public grievance procedure

For Micro, Small, and Medium companies and companies without workers, Year 0 certification requires a simple grievance procedure that anyone can access. Having procedures to formally report grievances—whether they arise from employees, customers, or other parties impacted by the company’s operations—ensures stakeholders know where to turn if something goes wrong, and that their concerns will be taken seriously. (Note that larger companies, by contrast, are expected to go further in PSG3.3, making procedures more widely accessible, impartial, and formally communicated to stakeholders.)

A compliant procedure must:

• Offer accessible channels: Publish a grievance form online or provide another easily available way to raise concerns
• Set expectations: Explain what qualifies as a grievance, the steps in the process, and the timelines for response
• Protect whistleblowers: Describe safeguards against retaliation for those who come forward
• Close the loop: Keep complainants informed of the resolution process, or explain why a grievance was not accepted

PSG3.2: Track and assign accountability

For Micro, Small, and Medium-sized companies, Year 0 certification also requires tracking grievances and assigning responsibility for resolving them. This step ensures issues don’t fall through the cracks but are actively monitored, managed, and resolved.

A compliant process must:

• Monitor and summarize: Keep annual records of grievances, including their status and subject matter
• Assign ownership: Designate a staff member responsible for managing grievances
• Demonstrate resolution: Show evidence that grievances have been closed—or, if none arise, demonstrate that an appropriate process is in place

PSG3.3: Make procedures accessible to all stakeholders

For Large, X Large, and XX Large companies, grievance procedures must meet a higher bar of accessibility. This reflects their wider footprint: more stakeholders, in more places, with more diverse needs.

A compliant procedure must:

• Be widely available: Publish in relevant languages and formats so all stakeholders can use it
• Avoid conflicts of interest: Explain how decision-making on grievances will remain impartial
• Notify stakeholders: Proactively inform key stakeholder groups of the procedure
• Follow fair process: Meet the same requirements for transparency, protection, and resolution outlined in PSG3.1

PSG3.4: Report grievances to leadership and the public

For Large, X Large, and XX Large companies, grievance procedures must also include oversight and public reporting. This makes grievance oversight part of leadership’s mandate, signaling its importance to the company’s integrity.

A compliant process must:

• Produce annual reports: Analyze grievances raised, evaluate the effectiveness of procedures, and recommend improvements
• Engage leadership: Ensure reports are reviewed by the highest governing body
• Communicate results publicly: Disclose outcomes such as the number and type of grievances, resolutions, and stakeholder satisfaction levels

Public reporting ensures stakeholders see not only that grievance mechanisms exist, but that they also work, meaning that feedback actually gets considered, properly contextualized, and can affect company practices and policies at a significant level. The work that goes into reporting also provides companies with valuable insight into patterns or recurring risks, helping them address root causes rather than reacting issue by issue.

Together, the PSG3 requirements make grievance procedures a core part of stakeholder governance. They provide people and communities affected by a company’s actions with a clear, safe way to raise concerns—and with confidence that those concerns will be addressed.

By scaling expectations based on company size, the standards balance accessibility with rigor: simple procedures for smaller firms, and more formal, transparent systems for larger ones. In each case, the goal is the same: to strengthen trust, prevent harms from being ignored, and make responsiveness to stakeholders part of how the business defines success.

PSG4: Engaging in Responsible Marketing and Public Relations

Marketing and public relations (PR) shape how the world perceives a company’s values and impact. Done well, they build trust and communicate real progress. Done poorly, they risk misleading stakeholders or contributing to “greenwashing”—when companies exaggerate or otherwise misrepresent their environmental or social performance.

PSG4 sets standards that require companies to market responsibly, make accurate claims, and give stakeholders a truthful view of their impact.

PSG4.1: Establish principles for responsible marketing

For Micro and Small companies, Year 0 certification requires documenting basic principles to guide marketing and PR practices. These principles provide a framework to ensure environmental and social claims are credible, proportionate, and ethical.

A compliant set of principles must:

• Base claims on evidence: Guarantee that all social or environmental statements are precise, verifiable, and substantiated with reliable or scientific data
• Be transparent in scope: Communicate honestly about both positive and negative impacts, rather than cherry-picking or overstating achievements
• Follow ethical practices: Apply clear standards when using sensitive marketing or PR channels
• Be shared internally: Ensure the principles are communicated to workers and made easily accessible inside the company

PSG4.2: Adopt a responsible marketing policy

For Medium, Large, X Large, and XX Large companies, requirements are more formal. From Year 0, these companies must adopt a responsible marketing and public relations policy overseen by senior leadership or the board.

A compliant policy must:

• Define scope and reach: Describe its coverage and apply to all audiences
• Set company-wide requirements: Outline expectations for anyone creating marketing or PR content
• Secure leadership approval: Ensure the policy is reviewed and signed off by the executive team or highest governing body
• Require accurate claims: Ensure claims are precise, verifiable, and proportional to company actions
• Communicate impacts clearly: Reflect both positive and negative effects of the company’s operations, using language that’s accurate, accessible, and available in relevant languages or formats
• Apply ethical guidelines: Govern the company’s use of sensitive channels and practices
• Assign accountability: Designate responsibility at the executive or board level to enforce compliance
• Be shared internally: Make the policy available to all employees

For larger companies with greater reach and influence, this requirement secures credibility in communications, so they accurately reflect the company’s social and environmental footprint and hold leadership accountable for how the business presents itself to the world.

Together, PSG4 requirements help companies avoid the pitfalls of exaggerated claims and greenwashing. By making honesty and proportionality non-negotiable, they strengthen stakeholder trust and align a company’s public voice with its real-world performance.

PSG5: Embedding Oversight in Governance and Leadership

For purpose and stakeholder governance to hold real weight, oversight must come from the top. PSG5 ensures that boards and executives actively monitor a company’s purpose and performance, tie accountability into leadership targets, and integrate social and environmental goals into the fabric of decision-making. Without this level of leadership involvement, purpose risks remaining a statement rather than a standard.

PSG5.1: Review purpose and performance annually

From Year 0, all companies with workers—whether small or multinational—must ensure their highest governing body reviews purpose, performance, and stakeholder governance at least once a year. This review creates a regular checkpoint at the top, where the most senior leaders reflect on whether the company is living up to its commitments.

A compliant review must:

• Check alignment with purpose: Evaluate progress on advancing the company’s public purpose (as defined under PSG1.1)
• Assess performance: Review social and environmental outcomes against goals
• Monitor governance: Examine how stakeholder interests are being considered in decision-making

PSG5.2: Enshrine oversight in the responsibilities of the highest governing body

For Large, X Large, and XX Large companies, governance responsibilities must be written directly into the board’s charter or terms of reference. This transforms oversight from a matter of good practice into a binding part of governance.

A compliant charter must:

• Explicitly assign oversight: Make the board responsible for purpose, social and environmental impact, and stakeholder governance
• Formalize accountability: Ensure these duties are clear in the governing body’s official mandate

PSG5.3: Set executive impact targets

This requirement applies to Large, X Large, and XX Large companies starting in Year 3. It ties senior leadership responsibility directly to impact by making social and environmental performance part of every executive’s annual goals.

A compliant approach must:

• Include every executive: Each member of the executive team has at least one annual target tied to social or environmental performance
• Use SMART targets: Goals must be specific, measurable, achievable, relevant, and time-bound

PSG5.4: Link incentive pay to impact

For Large, X Large, and XX Large companies that already offer executive incentive pay, social and environmental targets must be integrated into those schemes starting in Year 3. This ensures that financial rewards reflect more than profit; they also reflect how leadership advances the company’s broader commitments.

A compliant approach must:

• Integrate with reviews: Link targets to annual performance evaluations or fiscal reviews
• Track reward data: Record what proportion of pay is tied to social/environmental performance
• Set SMART criteria: Ensure impact-related targets are concrete and measurable

PSG5.5: Extend impact targets to managers

For the very largest companies (XX Large), starting in Year 3, impact accountability must cascade beyond executives to managers. This applies specifically to managers with responsibility for people, budgets, or decision-making authority. Holding these leaders accountable ensures that those translating strategy into daily action are also evaluated on impact.

A compliant process must:

• Include all managers: Assign at least one performance target tied to social or environmental goals
• Document goals: Record all impact-related objectives as part of review processes
• Use SMART criteria: Make targets specific, measurable, achievable, relevant, and time-bound

Extending targets to managers ensures integrity runs throughout the company, not just at the top. It reinforces that achieving social and environmental goals is a collective responsibility, embedded in every layer of leadership.

Together, the PSG5 requirements ensure that oversight of purpose, impact, and stakeholder governance isn’t peripheral but embedded in the structures of leadership. From annual board reviews to executive and managerial targets, these practices align stewardship with authority. By putting impact on the same footing as financial performance, PSG5 demonstrates that leading responsibly is a central duty of modern governance.

PSG6: Ensuring Transparency

Integrity means little without transparency. PSG6 ensures that companies openly communicate their social and environmental performance to stakeholders, using credible reports and worker feedback to show whether commitments are being met in practice. These requirements make performance visible, verifiable, and trustworthy.

PSG6.1: Report impact publicly and annually

Beginning in Year 3, this requirement applies to Large and X Large companies. At minimum once a year, the company must publish a social and environmental performance report, approved by its highest governing body, and make it accessible to all stakeholders.

If the company does not produce a comprehensive annual report, it must still provide lighter interim updates each year (e.g., via its website or topic-specific disclosures) and issue a full comprehensive report at least every two years.

For the very largest companies, additional rigor is introduced through third-party reporting standards (see PSG6.2).

A compliant report must:

• Demonstrate progress: Show results against all relevant measures of the company’s social and environmental performance, and summarize stakeholder engagement
• Secure board approval: Be reviewed and signed off by the highest governing body
• Be publicly available: Sit on the company’s website and be accessible to stakeholders

PSG6.2: Use third-party reporting standards

Beginning in Year 3, this requirement applies to XX Large companies. These companies must align their public impact reporting with a recognized third-party standard, ensuring consistency and comparability over time.

A compliant report must:

• Follow a recognized framework: Use a third-party standard for structure and metrics
• Be board-approved: Receive sign-off from the highest governing body before release
• Maintain consistency: Be prepared annually and follow a format that allows stakeholders to track progress year over year
• Provide substance: Include progress against performance goals, specific actions taken, and management strategies for achieving them

PSG6.3: Assess worker capability to enact strategy

Also beginning in Year 3, this requirement applies to Large, X Large, and XX Large companies. These companies must periodically assess whether their workforce understands and is prepared to carry out the company’s social and environmental strategy.

A compliant assessment must:

• Measure understanding: Gauge how well workers grasp the company’s impact goals and strategy
• Test readiness: Evaluate whether workers feel prepared to put that strategy into practice
• Collect perceptions: Capture how workers believe the company is implementing its strategy in daily operations
• Run regularly: Conduct assessments at least every 24 months
• Respect choice: State explicitly that participation is optional and record both feedback and follow-up actions
• ​Take action: Analyze the feedback and define an action plan

By gathering this feedback, companies can identify gaps between leadership’s commitments and employees’ capacity to deliver them. This due diligence ensures strategies are not only ambitious but also implementable.

Together, the PSG6 requirements create a culture of openness: performance is reported, validated through third-party standards, and reinforced by worker feedback. Transparency allows stakeholders to see whether a company is making progress, strengthens accountability at the top, and ensures social and environmental strategies are lived out at every level of the business.

Why Purpose & Stakeholder Governance Matters

These six standards define what it means to govern with purpose. They translate ideals into practical steps: setting a public purpose, engaging those affected by the business, listening to concerns, communicating responsibly, embedding oversight, and reporting transparently.

Why does this matter? Because credibility, trust, and real responsibility are built when companies put purpose into practice. The standards scale appropriately: a micro-company may only need a purpose statement and a grievance channel, while large multinationals are expected to implement board-level oversight, executive targets, and rigorous public reporting.

By meeting the PSG standards, companies not only qualify for B Corp Certification; they also model a future in which business success is measured by its contributions to people, communities, and the planet. To learn more about how your company can start measuring and improving performance, explore the B Impact Assessment.