B Corp 2.0 | Purpose & Stakeholder Governance

The evolution to “B Corp 2.0” marks a pivotal shift in how businesses become ‘the change the world needs’. The new minimum requirements, introduced by B Lab this year, reflect their commitment to driving systemic change by raising the bar for B Corp certification. 

Under the old standards, there was more pick and choose, more flexibility about whether or not a business has a purpose statement and whether or not that included addressing societal and or environmental challenges.

To further entrench Mission Lock, companies hoping to become or remain a B Corp all need to think hard about their business model and then act by publicly committing to that societal good. Everything else in this topic follows from this fundamental principle. 

Why is This Topic Important to the World? 

Profit maximisation, while externalising the costs, has been the primary purpose of companies since the 1980s when the Friedman Doctrine took hold. This has caused a host of negative outcomes, from environmental degradation to human rights violations. There are countless examples, from sweatshop labour and the 2008 financial crash, to the opioid epidemic in the United States and the 2015 Volkswagen Emissions scandal. Shareholder-centric profit leads to social and environmental harm. The world needs companies to contribute to the long-term well-being of people and planet.

There has been an explosion in purpose statements in recent years and while there has been a lot of meaningful action, there has also been a lot of purpose washing. B Lab’s new Purpose & Stakeholder Governance topic ensures that companies harness the purpose concept thoroughly to make an optimal and strategic contribution to the well-being of people and the planet. This topic ultimately redefines corporate accountability. By emphasizing legal and operational accountability to stakeholders, businesses are no longer only measured by profit but also by their contribution to planetary and social well-being. This shift helps businesses transition from extractive to regenerative practices, creating systems that restore, rather than deplete, natural and social capital.

Why Will This Topic Make Businesses More Resilient?

Purpose-driven, stakeholder-centric businesses build resilience by demonstrating accountability, transparency, and deep engagement with their stakeholders. They enjoy 40% greater employee engagement and 52% lower staff turnover. Companies that don’t orient themselves around a social purpose are at risk of demotivating and losing talent. Further, consumers have changed their purchase drivers; purpose-driven consumers—those who prioritize brands that align with their values and lifestyles—now make up the largest consumer segment across all product categories. Companies that fail to become purpose-driven will lose out on market share. 

By balancing short-term pressures with long-term value creation, purpose-driven, stakeholder-centric companies are better equipped to navigate crises, adapt to market changes, and maintain their competitive edge.

What’s Required in This Topic? 

To meet the new standards under the Purpose & Stakeholder Governance topic, businesses must satisfy several sub-requirements:

• Purpose Beyond Profit: Companies must legally integrate a purpose that goes beyond financial performance, ensuring that their mission aligns with the well-being of stakeholders and the planet.
• Stakeholder Governance: Companies must implement governance structures that enable accountability to a diverse set of stakeholders, including employees, communities, and the environment.
• Inclusive Decision-Making: Companies are required to formalize practices ensuring that stakeholder voices are represented in decision-making processes.
• Transparency: Companies must publicly disclose their governance model and performance against stakeholder-focused metrics.

For example, a large business with a minor footprint, such as a global consulting firm, could integrate stakeholder governance by including environmental and social criteria in client evaluations and tying executive bonuses to sustainability metrics. Meanwhile, a medium-sized manufacturing company might focus on creating worker councils to ensure employee input in operational decisions or adopting regenerative supply chain practices.

For both companies, adopting the B Corp 2.0 framework solidifies their leadership in sustainability and corporate purpose, ensuring greater resilience and stakeholder trust. 

How Can Your Company Prepare? 

Navigating the B Corp 2.0 standards is best done with a strategic partner with a deep understanding of purpose-driven business. If you have someone in your business who can spend some time becoming familiar with the compliance and evidence guidance then start by focusing on your purpose statement, and ensuring you have a valid double materiality assessment in place which takes into account the duties and obligations you have to your rightsholders (or stakeholders), as well as an assessment of human rights across your value chain. If you don’t have that person, we can help you… 

Looking for support from a partner? 

Whether you want support with the new B Corp standards or want to embed purpose within your company, we can help. For over 25 years, we’ve been using sustainability to strengthen companies. Get in touch now.