Balance between reputational standards and changing the world
Not everyone is happy about multinationals becoming part of the B Lab movement, as they believe this goes against the original mission of B Lab – to change the way capitalism works in order to save the world.
Nespresso is a case in point. Following the B Corp certification of the Nestle-owned coffee company in April this year, B Lab faced a backlash. Some 30 certified B Corps signed an open letter to B Lab protesting the coffee maker’s certification, pointing to a history of child labour and wage theft on farms, that grow its beans, along with reports of abuse of factory workers.
The B Corps argued that B Lab risked undermining the authority of the B Corp mission.
B Lab contests this, arguing that not only is its standards and processes for multinational B Corp certification more rigorous, but that bringing multinationals into the movement is important to the mission.
“B Lab will not be revoking Nespresso’s certification due to the open letter,” Alexa Harrison, Senior PR Manager at B Lab US and Canada said in response. “Nespresso, following an intensive three-year process, has met all of the certification requirements – which include scoring a minimum of 80 on the B Impact Assessment, meeting the legal requirement; a risk assessment, disclosure and transparency; as well as additional requirements for a company of its size.”
It’s a difficult balance to maintain between protecting the reputational standards and rigour of the B Corp certification while also bringing in new members.
But for B Lab, and other sustainability advocates, getting multinationals certified is an important step in its mission to transform the global economy – and a logical step in scaling systemic change.
“When multinationals show leadership on positive social and environmental performance, and take steps to minimise their negative impacts, they are working not only to improve their own practices, but to drive economic systems change at scale,” says B Lab.
Simply put, when the biggest companies are working to be better for the world, they influence the broader business ecosystem to do the same.
B Lab argues that “the size and impact of multinationals, as well as their greater influence on the economy” means that they can be valuable members of and advocates for the B Corp movement – if, and when they meet B Lab’s rigorous standards and requirements for certification.
Standards and criteria for multinational B Corp certification even more rigorous
And the standards and requirements for multinational certification are even more rigorous than for other sizes of business, B Lab says.
“If anything, it is more difficult for a multinational to certify than a smaller group,” says B Lab.
To start, not all multinationals in any industry can pursue certification, with coal, casinos, and prison operators excluded, while for other controversial industries, specific requirements are required to be met.
And then the standards themselves, and the processes designed to verify whether a company is meeting them, are higher for larger companies – “largely a recognition that the obligations to stakeholders are greater when a company has greater scale, influence, and impact.”
Not only are the indicators of the B Impact Assessment adjusted to a company’s size, but US$5 billion-plus parent companies are required to meet additional Baseline Requirements in order to be eligible – and achievement of these is reviewed by the Multinational Standards Advisory Council (MSAC), an independent governing body set up in 2020 and composed of a multi-stakeholder group of experts to ensure application of the B Corp and B Movement Builder performance requirements to multinationals.
More stringent criteria and standards are just one of the many challenges faced by multinationals wishing to undergo certification.
Like all B Corps, large companies must meet the legal requirement for certification by adopting stakeholder governance. While this is relatively straightforward for privately and closely held companies (most SMEs), for largely publicly held companies the shift to stakeholder governance is complex and significant, requiring approval from shareholders.
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