B Lab's New Standards Impact Topic: Environmental Stewardship & Circularity
B Lab’s standards define the performance that a company must meet and continuously improve upon to achieve and maintain B Corp Certification. Since 2006, we have evolved the standards to improve their impactfulness and clarify what it means to be a leading business, incorporating feedback from diverse stakeholders.
To achieve these goals, the new standards require companies to meet specific requirements across seven Impact Topics. While we have developed the new standards with the existing standards in mind, you can expect to see new topics and evolved requirements where topics overlap, designed to improve business impact.
After all, the B Corp community is built on the principle of continuous improvement.
With climate change intensifying and ecosystems reaching critical tipping points, businesses must fundamentally shift how they interact with nature. Brigitta Nemes explains how this topic challenges companies to take responsibility for their environmental footprint by prioritizing sustainable resource use, circular design, and responsible procurement practices.
Describe the Impact Topic in a nutshell:
Businesses must assess their environmental impacts and take meaningful action to minimize them in their operations and value chain.
What is the purpose of the topic, and why does it matter in today’s world? We have reached a point where headlines about record-breaking storms, floods, droughts, and wildfires barely surprise us anymore. But the climate crisis is just one of the symptoms of a much deeper imbalance. Our current economic systems have pushed the planet past six of the nine planetary boundaries, which include, among others, land-system change, freshwater change, and biosphere integrity—vital for Earth’s stability. One million species are on the brink of extinction, yet we continue to introduce harmful new substances—microplastics, pesticides, nuclear waste—into the environment, further destabilizing the natural systems we depend on.
The time has come to rethink our relationship with nature. We are not separate from the environment but part of it. Businesses, communities, and entire economies rely on healthy ecosystems to function. Recognizing this interdependence isn’t just a shift in perspective; it’s a call to action to reimagine how we operate within the natural world.
How has the emphasis of the topic changed throughout the development process and what factors contributed to that?
The focus on nature in business has gained momentum, especially after the December 2022 signing of the Kunming-Montreal Global Biodiversity Framework. This agreement, which commits 196 countries to halt biodiversity loss by 2030 and live in harmony with nature by 2050, has fueled a growing expectation for businesses to assess and disclose their impacts on nature.
New regulations, such as the EU’s Corporate Sustainability Reporting Directive and voluntary frameworks like the Taskforce on Nature-related Financial Disclosures and the Science Based Targets Network, are pushing companies to understand their environmental impacts and take action. In line with this shift, this new Impact Topic requires companies to assess their material¹ environmental impacts across operations and supply chains—moving away from the previous voluntary approach and making this assessment a core responsibility.
Legislation is also urging companies to adopt due diligence practices, such as Corporate Sustainability Due Diligence Directive, and the EU Regulation on Deforestation-free Products. These regulations emphasize the importance of understanding and managing the actual and potential environmental impacts of supply chains more effectively. To support this shift, the focus of this Impact Topic is on enhancing traceability, particularly for high-risk raw materials that are known or suspected of causing significant environmental harm. Additionally, there’s more emphasis on engaging suppliers to help prevent and mitigate these negative impacts.
At the same, circular economy² practices are playing an increasingly vital role in addressing climate change and biodiversity loss. Nevertheless, there is growing scrutiny of companies' circular practices, where recyclability is often presented as the main circular action. However, circularity does not equate to recycling, raising concerns about potential greenwashing (see the difference between recycling versus circular economy explained by the Ellen MacArthur Foundation). The new Impact Topic, therefore, places greater emphasis on the hierarchy of circular actions, encouraging companies to use renewable³ , reused⁴ , or recycled materials over virgin ones and eliminate single-use products and packaging. These practices should be considered as part of a broader strategy to reduce pressure on natural resources and work towards continuous improvement by moving up the hierarchy of circular actions.
What Impact Topic requirement(s) are you most excited about - and why?
One of the most exciting aspects of this Impact Topic is its emphasis on assessing material environmental impacts—something that’s becoming increasingly vital as nature nears a tipping point. By making it standard for businesses to identify where in their operations and value chains they have their material negative impacts, this Impact Topic allows companies to focus their efforts where it matters most, resulting in more targeted, meaningful action.
What similarities are there between this new Impact Topic and the existing standards?
This new Impact Topic builds on the solid foundation of environmental best practices found in the existing standards. Companies will recognize familiar themes, such as tracking water and energy use, or managing waste production. Another key area of continuity is the focus on managing the environmental impacts across the supply chain.
Additionally, the new impact Topic reinforces the importance of circular practices—encouraging businesses to prioritize environmentally friendly input materials and design packaging with circularity in mind. Where are the biggest growth areas for companies?
Some of the below concepts might still be new for companies, but they are key to driving meaningful action:
Assessing material environmental impacts: Companies from Medium size onwards (in all sectors except for the Service sector with minor footprint⁵ ) will need to conduct assessments to identify their key environmental impacts. To support this, several Implementation Resources are provided to guide them through the process and clarify expected outcomes.
A biodiversity transition plan for larger companies: With global efforts to halt and reverse biodiversity loss by 2030, larger companies will be required to develop a dedicated biodiversity transition plan. Recognizing that this is an emerging area, the initial focus will be on engaging with their material suppliers, with more comprehensive value chain targets introduced over time as part of a company's continuous improvement journey.
Service sector with minor footprint to screen clients: These companies are asked to have a process for assessing the potential negative environmental impacts of their work with clients and projects. They should also take appropriate mitigation actions when necessary, with guidance and examples to help implement this approach.
Smaller companies to consider environmental impacts in procurement: Smaller businesses are asked to consider the environmental impact of their procurement decisions. To assist with this, guidance on determining materiality and examples of mitigation actions are provided.
Larger companies to enhance supply chain traceability:
For larger companies, the biggest environmental impact often lies within the supply chain. While the complexity of tracing this can be challenging, it's essential to have a clear, time-bound plan to track the origin and potential environmental impacts of high-risk raw materials. The environmental impacts assessment required in this Impact Topic can guide companies in identifying their key material impacts and determining which suppliers to focus on.
What is your biggest tip for companies working towards the new standards / this topic in particular?
Start by understanding what the company’s most significant environmental impacts are in its operations and value chain, including potential negative impacts on animal welfare. Here are a few good resources companies can use to get started:
The smallest companies may utilize the joint guide by B Lab and Fairtrade International: People and planet in business - A simple guide to how small and micro companies can start or strengthen their due diligence.
Medium and large companies can leverage various resources, among others:
Understanding the most significant environmental impact areas will help prioritize action to ensure the company focuses on the areas where it matters most.
What is the overarching expectation of B Corps for this Impact Topic?
B Corps demonstrate environmental stewardship and contribute to the circular economy in their operations and value chain, minimizing any negative impact and pursuing positive impact.
What are the most significant differences between the current standards and the new standards in relation to Environmental Stewardship & Circularity?
Conducting an assessment to identify actual and potential environmental impacts in the company’s operations and value chain will not be optional anymore, but expected (except for small companies and companies in the service sector with minor footprint).
This Impact Topic has also increased expectations around having an environmental strategy to address a company’s negative environmental impacts. This includes a stronger emphasis on the hierarchy of actions such as circularity and biodiversity.
In addition, the new standards introduce a new requirement for those in the service sector with a minor footprint. These companies would need to assess the potential negative environmental impacts of working with prospective clients and projects and take necessary mitigation actions.
How will the standards related to Environmental Stewardship & Circularity be responsive to the different contexts of companies?
Small companies may focus their actions on mitigation without having to develop a dedicated environmental strategy, which may be too resource-intensive and not necessary for small companies to take meaningful action.
There are more expectations towards larger companies. For instance, they are required to have a dedicated water stewardship strategy and a dedicated biodiversity transition plan.
The supply chain-related requirements are also increasing in rigor; smaller companies are required to demonstrate how their procurement practices consider environmental impacts, while larger companies are asked to engage their suppliers to mitigate actual and potential negative environmental impacts and have a traceability roadmap for their high-risk raw materials.
The environmental actions for the service sector with a minor footprint focus on where their most significant impact may be: the clients and projects they take on.
Do you have more questions on the content of B Lab’s new standards? Join the Q&A session with the Standards Management Team on 29 April 2025. Log in to your regional community hub or reach out to your regional B Lab team to register.
Want to learn more about the other Impact Topics in B Lab's new standards?
🪧 Purpose & Stakeholder Governance
🪧 Government Affairs & Collective Action
🪧 Justice, Equity, Diversity & Inclusion [COMING SOON]
🪧 Fair Work [COMING SOON]
🪧 Human Rights [COMING SOON]
🪧 Climate Action [COMING SOON]
¹ Material (topics) represent the organization’s most significant impacts on the economy, environment, and people, including impacts on their human rights (GRI-Material topics). ² Circular economy is centered around reducing the pressure on natural resources to a level that respects the ecological thresholds and does not compromise the well-being of other stakeholders who rely on those natural resources. It involves industrial processes and economic activities that are restorative or regenerative by design, enable resources used in such processes and activities to maintain their highest value for as long as possible, and aim for the elimination of waste through the superior design of materials, products, and systems (adapted from EPA, Ellen MacArthur Foundation with modifications for the B Corp certification).
³ A renewable material is continually replenished at a rate equal to or greater than the rate of depletion. Renewable materials include, for example, cotton, hemp, maize, wood, wool, leather, agricultural by-products, nitrogen, carbon dioxide, and sea salt. (Circulytics - Definitions List - Ellen MacArthur Foundation).
⁴ The repeated use of a product or component for its original intended purpose without significant modification, but potentially involving cleaning or small adjustments so it is ready for the next use. (Circulytics - Definitions List - Ellen MacArthur Foundation).
⁵ Service sector with a minor footprint: A company that earns revenue through the provision of non-physical services. A company that does not sell a physical product or does not own/operate a retail, wholesale, or manufacturing facility. (e.g. law firms, marketing/communications agencies, software companies). This sector is one of the sector categories in the B Corp Certification.