Impact Topic: Government Affairs & Collective Action
B Lab’s standards define the performance that a company needs to manage and continuously improve upon to achieve and maintain B Corp Certification. Since 2006, they have been developed to improve their impactfulness and clarity around what it means to be a leading business and to incorporate feedback shared along the way.
In order to achieve these goals, the draft standards have departed from the current framework where companies have flexibility in how to achieve a verified 80-point score, and instead meet specific requirements across the standards’ Impact Topics. While the components of the draft standards have been developed with the existing standards in mind, you can expect to see new topics, designed to optimize and improve our certification processes. After all, the B Corp community is on a journey of continuous improvement.
Using business as a force for good requires acting beyond one’s enterprise to have a broader systemic impact. While the credibility of these actions is nonetheless rooted in leadership in the former, it is also necessary to embrace the role of influencing and supporting collective solutions that address social and environmental topics more broadly and systematically. Additionally, governments require tax revenue to fund critical services upon which society and businesses depend. Companies have an obligation to their stakeholders to be diligent in their approach to tax payments.
Brigitta Nemes shares how businesses can lead in fostering shared understanding, solutions, and implementation for our shared future, including contribution to the public infrastructure they utilize and rely upon for their success, in our latest blog on the upcoming draft standards.
This impact topic houses two relevant areas. The first one, focusing on collective action, is one of the secret sauces of the B Corp certification. Using business as a force for good requires acting beyond one’s enterprise to have a broader systemic impact. While the credibility of these actions is nonetheless rooted in leadership in action within one’s enterprise, it is also necessary to embrace the role of influencing and supporting collective solutions that address social and environmental topics more broadly and systematically, regardless of the chosen topic to lead on.
The second area focuses on ethical behavior concerning government affairs. This entails, on the one hand, responsible lobbying(1) activities. It is highly relevant since many large companies are positioned to lobby governments for legislation that may benefit their operations but may also be at odds with their sustainability strategies and undermine the best interests of society. Under government affairs, responsible tax management is also called out. Governments require tax revenue to fund critical services upon which society and business depend. Companies have an obligation to their stakeholders to be diligent in their approach to tax payments.
Collective action has long been a key driver of the B Corp movement, and as part of becoming a B Corp, companies must sign the Declaration of Interdependence to signify a commitment to the shared collective purpose of the community of B Corporations. With the ever-growing social and environmental crises it is even more critical to join forces for accelerated action. To reach net zero emissions globally and a nature-positive world by 2050 (while also protecting the social foundation), there needs to be enabling legislation in place, and supporting infrastructure. Further technologies need to be developed, and knowledge and resources need to be shared widely, leveraging the collective power of individual actors. We have seen great examples of collaboration recently in the B Corp community. For instance, the B Corp Beauty Coalition was brought to life to tackle the industry’s biggest challenges together. Even smaller initiatives, like the Black Friday campaign from November this year by various B Corps to fight overconsumption, are great examples of taking a bold stand together. The draft standards embrace these and other types of meaningful collective actions.
With regards to government affairs, the draft standards integrated and built further on the current Baseline Requirements for multinational companies with over US$ 5 billion in revenue. Aligned with emerging legislation (see Corporate Sustainability Reporting Directive in the EU), there is more transparency expected in companies’ lobbying activities (let it be direct or indirect, for instance via trade associations). This is because there is ongoing concern about companies influencing legislation in a way that is not aligned with social and environmental progress (see also the recent report: “Net Zero Greenwash”: The Gap Between Corporate Commitments and their Policy Engagement). It is important to mention here that under the Foundation Requirements of the draft standards, there is an eligibility criteria related to this, meaning in case the company’s lobbying position contradicts the B Corp values, it will not be eligible for certification.
This African proverb says it all: If you want to go fast, go alone. If you want to go far, go together. B Corps play a leadership role in fostering shared understanding, solutions, and implementation towards an equitable, inclusive, and regenerative economy, including contribution to the public infrastructure they utilize and rely upon for their success.
The second consultation will run from 16 January 2024 to 26 March 2024.
(1)Lobbying: entails any direct or indirect communication with public officials, political decision-makers, or representatives for the purposes of influencing public decision-making and carried out by or on behalf of an organized group. Lobbying can also include direct or indirect attempts to influence public opinion, outside of normal advertising and marketing activity, with a view to impacting public decision-making. (Corporate Political Engagement Index, 2018, Transparency International)
B Corps play a leadership role in fostering shared understanding, solutions, and implementation towards an equitable, inclusive, and regenerative economy, including contribution to the public infrastructure they utilize and rely upon for their success.
The new standards build on the existing good practices in the B Impact Assessment. These include public policy advocacy, contributing to research, and multi-stakeholder initiatives. The new standards made it more specific what threshold is acceptable for these actions. For instance, when a company is involved with a multi-stakeholder collaboration, there needs to be a demonstrable contribution, like assuming a position in the initiative (e.g. chair, lead), or being active in working groups.
In addition, additional collective action categories are also recognized. These include thought leadership and mentoring(2). Specific contributions to these are also determined.
With regards to the integrated MNC Baseline requirements (Tax & Government Affairs), the scope has been extended, as these apply now to companies with over US$350 million revenue or more than 1000 workers and not only to companies with over US$ 5 billion revenue. In addition, a responsible lobbying policy and a more specific disclosure of lobbying activities are required.
(2)Mentoring: may include among others training, knowledge sharing, providing feedback, and sharing expertise, as long as there is no financial compensation received by the mentor.
The requirements in this impact topic are adjusted to the size of the company. Meaning, that the number and the rigor of actions required are increasing with the size. For instance, while mentoring one company to advance its environmental and/or social impact(s) may be sufficient for a small company, a larger company would need to demonstrate that the mentoring has a systematic approach (with a plan, deliverables) targeting a specific group of mentees (like suppliers), as well. In addition, the integrated Baseline Requirements (Tax & Government Affairs) only apply to larger companies due to their impact.
This impact topic intends to drive systemic change and accelerate action toward an equitable, inclusive, and regenerative economy. This topic intends to also ensure companies contribute to society and public services they rely upon through responsible tax management.
If I’m a current B Corp, or seeking to become one, where should I focus my impact efforts for this core topic of Government Affairs & Collective Action?
Start by understanding what your biggest challenge or obstacle is to meaningfully improve your social and environmental impact. Once you know the area to focus on, you can identify where and how to intervene (in what kind of collective action your company can add more value by its positioning, characteristics, or business model) to accelerate or contribute to systemic change.
Collective action is inevitable to find solutions to the most pressing social and environmental issues the world is facing.
🪧 Purpose & Stakeholder Governance
🪧 Environmental Stewardship & Circularity