The B Corps movement has found itself in the spotlight following Coutts' controversial decision to close Nigel Farage's accounts. Will Hazell, Political Correspondent for The Telegraph, notes that the dossier which Mr Farage obtained from Coutts under a subject access request cites Coutts' B Corp membership among a list of potential reasons for closing his account. The Telegraph quotes Mr Farage as suggesting that corporates are "too scared not to sign up" to B Corp, "because if they don't, they get the Twitter mob attacking them" (Telegraph, 30 July 2023).
Nonetheless, a detailed discussion by Jill Treanor in The Sunday Times indicates that an increasing number of UK firms aspire to B Corp status, although there are drawbacks too. The UK already has nearly 1,400 certified B Corp businesses (up from 1,000 in November 2022), and London has the most B Corps of any city in the world, with 700.
B Corps are companies verified by B Lab to meet high standards of social and environmental performance, transparency and accountability. In the UK, certification is run by B Lab UK, a registered charity. Businesses pay for certification on a sliding scale, depending on their annual sales, as well as a one-off submission fee of £250 plus VAT when the company is first submitted for certification. All certified B Corps in the UK are required to write an annual impact report, and to undergo recertification every three years. UK companies must obtain a shareholder vote in favour and amend their articles of association to reflect the so-called "triple bottom line" - people and the planet, as well as profit - rather than the conventional "enlightened shareholder value" model.
So - what are the upsides? B Lab UK's research indicates that B Corps outperform their peers on several business metrics, having, on average, faster growth in turnover and employee headcount and higher expectations about future growth; and greater levels of employee retention, engagement and diversity. Business people quoted in the Sunday Times article state that their motivation was because customers are becoming more interested in ESG issues, and that being a B Corp is good for employees.
Some aspects of controversy around B Corp might be regarded as more significant than the current clamour over Nigel Farage and Coutts. Divisions of large companies may become B Corps whilst the overall parent is not - for example at Danone, the French group, where three-quarters of the divisions are registered B Corps. But Nestlé subsidiary Nespresso's certification as a B Corp was greeted with "dismay" by smaller businesses (The Struggle for the Soul of the B Corps Movement, Financial Times, 19 February 2023). B Corp veteran Bart Houlahan points out that this is by no means the first time in its 17-year history that the B Corp movement has faced criticism and says he is at ease with dissenting opinions. B Lab argues that the bar is far higher for larger companies. The recertification process also requires companies to improve every three years. Defenders of the B Corp movement also point to the fact that it is not a box-ticking exercise and it is possible for companies to lose their certification. Interestingly, Coutts is said to be due for recertification next year. No doubt many people will be watching the outcome with interest.
Howard Kennedy LLP advises companies on a wide range of environmental, social and governance issues. For information, contact Gillian White, or your usual Howard Kennedy contact.