HM Insights

What you need to know about becoming a B Corporation in Scotland

What is a B Corporation?

A 'B Corporation' is a for-profit business which has social and/or environmental outcomes that are central to how it conducts its business.

The concept of a B Corporation was first established in the USA, when in 2006 Jay Coen Gilbert and Bart Houlahan, along with Andrew Kassoy set up B Lab, the non-profit organisation which certifies B Corporations. B Corps are not just a US phenomenon – in fact they are global. The movement has been rapidly growing over the past 18 months the UK has embraced B Corporations.

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In order to become a certified B Corporation there is a rigorous assessment process that each business applying must pass – more on this later.

In the USA there are also legally recognised entities called Benefit Corporations. These are actual legal entities and are not just certified businesses - Benefit Corporations and B Corporations are not one and the same thing. The latter is a certification that existing or new businesses can apply for, and these are the subject of this article.

Sounds like a great idea, how can I become a B Corporation?

B Corporation certification in the UK is dealt with by B Lab UK. If you are a company limited by shares, company limited by guarantee or either of these operating as a CIC, then you can apply to become a B Corporation.

You will have to meet the following criteria:

  • Generate the majority of your revenue from trading;
  • Actively compete in a competitive marketplace;
  • Not be a charity; and
  • Not be a public body or be majority owned by the State.

Applying is a multistage process:

  • If you meet the above criteria then you should take the B Impact Assessment on the B Corporation website. To pass this assessment, you will have to score at least 80 out of 200;
  • Once you have passed the assessment there follows a process whereby you have to submit supporting documents and your assessment will be reviewed;
  • Complete a disclosure questionnaire;
  • Meet the legal requirements which may require your company's constitutional documents to be updated; and
  • Sign the B Corporation declaration of interdependence.

Can start-ups apply?

Yes! B Labs classify businesses that have been operational for less than a year as start-ups.

If you are a start-up then you can apply for a Pending B Certification. Whilst not a full certification, this in B Labs' own words acts kind of like a patent pending certification, and this certification lasts for a full year to allow your business to work towards the full requirement.

Why would I want to become a B Corporation?

Each business will have its own reasons for applying to become a B Corporation and certification can help your business in a number of ways:

  • There has been a 'Greenwash' revolution over recent years with many businesses claiming to be 'Green' but not necessarily being able to back up such claims. B Corporation certification provides proof that your business is committed to and engaging in social and economic change;
  • Consumer trends show that consumers want to deal with businesses that are committed to more than turning a profit. B Corporation certification can help to make your business more attractive to consumers and other businesses alike;
  • If you are a start-up or high growth business in the UK then B Corporation Certification could help to attract investors to your business;
  • B Corporations are big news in the USA and around the world. If you are a business looking to grow and expand internationally then achieving B Corporation certification may help you to enter foreign markets and attract a customer base from early on in the process;
  • Help to attract top talent that want to work for businesses committed to making a difference; and
  • There is a wide network of B Corporations globally for your business to link into – you never know who you may be able to add to your network.

What businesses are already B Corporations?

There are more than 2000 B Corporations across 50 countries and 130 industries, including some very high profile brands such as Ben & Jerry's, Patagonia and Etsy.

Within the UK there are 117 certified B Corporations, including big names such as Ella's Kitchen, JoJo Maman Bebe and The Big Issue Group.

Remember, it's not all about the big names in business. Many national and regional businesses are certifying as B Corporations as they seek to make a difference within their local communities.

How can Harper Macleod help me?

If you are a start-up or high growth business that is considering whether B Corporation status is right for you, we can advise you on the benefits of certifying in light of investor attitudes and the potential benefits certification can have in making your business a more attractive investment opportunity.

If you have made your mind up about becoming a B Corporation, have passed the assessments and meet all of the other criteria, Harper Macleod can assist you with the necessary legal steps that you have to take to update your constitutional documents to record your commitment to a triple bottom line (social, environmental and financial) and the positive impact you intend to make on society.

B Corporations Event

Harper Macleod will be running an event on B Corporations later this year. Please contact [email protected] to register your interest in this event.

Get in touch

If you'd like to find out more about becoming a B Corporation, please get in touch.