B Lab Suspends New B Corp Certifications for Entities Based in Russia & Belarus
Update, 16 September 2024: While companies incorporated within Russia and Belarus remain ineligible to certify at this time, corporations who operate in Russia and Belarus but are headquartered elsewhere will be able to proceed with B Corp Certification provided they meet the additional steps related to their certification journey, increasing transparency regarding their operations in the region. Existing B Corps who operate in Russia and Belarus are expected to adhere to the new requirements within 90 days of the measures being introduced. Impacted companies will be contacted directly by B Lab.
Effective immediately, B Lab is instituting a moratorium on new B Corp Certifications for any entities, including subsidiaries, operating in Russia and Belarus.
The circumstances surrounding the Russian government’s invasion of Ukraine introduce very significant and complex questions about the role of business and what it means to be using business as a force for good in this context.
We believe business has a responsibility and opportunity to use its influence — economic and cultural — to promote peace and justice. As seen in Ukraine and in ongoing armed conflicts around the globe, the devastating effects of war have long-term negative impacts on people, communities, infrastructure, economy, public health provisions, and social order. The private sector is accountable for the influence business has on these stakeholders — as well as for the consequences when they are threatened by attacks on the foundation of stable democracies. As the stewards of a global movement working towards an inclusive, equitable, and regenerative economy, we know our vision cannot be realized without strong democratic guardrails.
We acknowledge that B Lab's moratorium stands among responses from the business world that treat this invasion and refugee crisis as unprecedented in this century. The fact is that in recent decades “business as usual” has been maintained through acts of war and humanitarian crises around the world, including conflict and invasions instigated by the U.S. and its allies. While the invasion of Ukraine is a tragedy and Russia’s actions must be condemned, racism coupled with American- and European-centric worldviews underlies the amplified response to this refugee crisis, in comparison to recent crises in Yemen, Syria, Palestine, Ethiopia, Myanmar, Afghanistan, and Texas, among other places. This, like many civil rights movements of recent years, is serving as yet another wake-up call to the business community — and to B Lab. We acknowledge this is a moment to reaffirm the improvement of our standards from the standpoint of justice, equity, diversity, inclusion, and human rights. Doing so can enable the collective action of the business community to develop a truly inclusive, equitable, and regenerative economy that ensures the safety and well-being of all people and the planet.
The decision to issue this moratorium comes after serious consideration and discussion with key B Lab stakeholders and B Corp movement leaders. We continue to welcome feedback on this decision from our global community and network.
What is a moratorium? A moratorium is a suspension of normal business engagement with an entity or within specific contexts or regions. In this context, B Lab’s moratorium means that companies operating in Russia and Belarus are not eligible to obtain B Corp Certification.
Why is B Lab instituting this moratorium? The circumstances surrounding the Russian government’s invasion of Ukraine introduce very significant and complex questions about the role of business and what it means to be using business as a force for good in this context. This invasion and the resulting chaos also limit B Lab from carrying out the necessary processes to verify companies seeking B Corp Certification in Russia and Belarus — therefore it is impossible for B Lab to confirm whether a company is in fact meeting B Lab’s certification requirements.
How long is this moratorium in place for? The moratorium is effective immediately. This is a Provisional Certification Moratorium that will remain in effect until further notice and could be extended indefinitely. The extension of this moratorium is at the discretion of the B Lab Global Board of Directors.
When will we reconsider this decision? This is a rapidly evolving situation that will require ongoing monitoring. Factors that will be considered in decisions about changes to the moratorium will include changes in the conflict, possible resolutions, changing sanctions or regulations, new information to inform the potential impacts of business decisions, among others. The moratorium will be in place for a minimum of 90 days. With input from key stakeholders, and at the discretion of our board, B Lab will determine whether to continue the moratorium or to develop more complete standards requiring businesses to take specific actions in this context to achieve B Corp Certification moving forward.
How do we define “operations”? B Lab defines operations to be any business activity.
How is B Lab verifying that companies seeking to certify are complying with the moratorium? Included in the Disclosure Questionnaire of the B Impact Assessment is a question referring to operations in conflict zones during the certification period. Companies will be required to select this item if they have or have had recent operations in Russia or Belarus, and will subsequently be required to provide additional information about their response to the invasion and whether that response therefore falls within the scope of the moratorium. If publicly available information, including that which is submitted via B Lab’s complaint mechanisms, indicates that a company has misrepresented their activities in the process, their B Corp certification will be revoked.
Does this moratorium affect or apply to all industries? Yes, this moratorium applies to all industries.
Why does this moratorium include Belarus? Belarus’s financial sector holds close ties to the Russian economy. In extending the moratorium to Belarus, B Lab is following the example of major financial services companies and other corporations taking similar action.
Does this moratorium imply companies would need to withdraw from Russia or Belarus, or simply suspend their activities in order to be eligible for continuing their certification process? Companies are required to suspend their operations while also avoiding the negative potential impacts of their decision by maintaining their support for their key, non-complicit stakeholders in Russia or Belarus (at the expense of the company), by for example continuing to financially support their employees and not terminating their contracts.
How does this affect companies who are certifying different subsidiaries incrementally? Will all the company’s subsidiaries be put on hold or simply the certification of subsidiaries with operations in Russia or Belarus? Companies with subsidiaries in Russia or Belarus will be able to continue to pursue certification of subsidiaries based in other regions; however, for the duration of this moratorium full certification of the parent company is not attainable.
Does this position affect existing Certified B Corporations with operations in Russia or Belarus either immediately or during their recertification process? In alignment with the nature of a moratorium, and with past certification moratoria applied by B Lab, this is a pause for new certifications. All B Corps with operations in Russia and Belarus are encouraged to evaluate their particular situation as it relates to their business operations and impacts on their stakeholders, and to take appropriate action in accordance with their fulfillment of the B Corp legal requirement. If and when existing B Corps with operations in Russia or Belarus go through the recertification process (which happens every three years) while the moratorium is still in place, they will undergo a risk review during recertification to understand their specific business practices in this context and B Lab's ability to confirm whether a company is in fact meeting B Lab’s standards and certification requirements at that time. As the moratorium is reviewed, the potential need for more complete standards and certification requirements related to this conflict and future conflicts may be considered. Such standards would be applied to both new and existing B Corps moving forward.
How will the decision to issue this moratorium be reflected in our future standards? This an important consideration, and comes as B Lab continues in our process of improving core performance requirements for B Corp Certification, including with regard to human rights; justice, equity, diversity, and inclusion; and collective action. As this moratorium and the ongoing crisis continue to unfold, we will need to consider the ramifications for new and existing B Corps, and will update our community when this is determined.
Has B Lab taken similar stances in the past to address injustices and inequality? B Lab has not in the past taken a position in response to military action. The moratorium in response to the invasion of Ukraine sets a new precedent in terms of scale and consequence, and is an inflection point that we must take under consideration as we continue to develop our standards. However, B Lab has responded to the condemnable behavior of state and business actors in the past. We withdrew our Champions Retreat from North Carolina in 2016, responding to the state’s proposed HB2 “bathroom bill,” which discriminated against transgender and gender-nonconforming people. We also issued a moratorium on any companies serving prisons or utilizing prison labor in the United States in 2019. Furthermore, the existing Standards include additional risk reviews for companies who are operating in conflict zones, and impose specific requirements for those companies who work with defense contractors or serve governments tied to human rights abuse.
Where can I find resources to learn more about how businesses can support refugees and communities impacted by the invasion of Ukraine? B Lab Europe is compiling a continually updated list of resources, including organizations to support, actions being taken by B Corps in the region, and initiatives being led by B Corp movement leaders in Poland. The UN Global Compact has created a Ukraine Humanitarian Crisis Business Guide, providing concrete steps for businesses to take in support of UN response to the crisis.