The Quest for B-Corp Certification, What Does it Mean for Businesses?

PUBLISHED: 23rd January 2023

B Corp status is a certification that a business prioritises its social and environmental impact over profits.

Any Irish for-profit company can become a B Corp keeping its existing Irish Company type once all stakeholders are aligned and the company implements the appropriate constitutional changes to adopt the B Corp ethos.

In the current climate a B Corp certification is extremely attractive. Companies can use a B Corp status to better align their business strategy with changing demands in order to build loyalty with their investor  and consumer base.

What legal commitments must companies make?

A company seeking B Corp certification will need to amend its constitution to allow directors, or rather require them, to consider interests other than just shareholder interests. To that effect the constitution of a B Corp will include the following confirmations:

• That the company shall endeavour to create a material positive impact on society and the environment, and
• That the directors, when discharging their duties to a company, must consider stakeholder interests, other than profit.

The stakeholder interests which the directors must consider when deciding how the company should act include:

• The interests of members
• The interests of the employees
• The interests of the customers and suppliers of the company
• Community and societal factors, including in particular those relevant to each community in which the company operates or where its suppliers and customers are located
• The impact of the company's business and operations on the local and global environment
• The short-term and long-term interests of the company.

The members of the company must also acknowledge that endeavouring to create a material positive impact on society and the environment may have an effect on the financial position of the company and that affect may be positive or negative.

Once the constitution is amended to this effect, the board of directors are legally obligated to comply with its terms.

If you have any questions about B Corp certification or if you are considering seeking certification for your company, please contact Gemma Forde at gforde@lkshields.ie or Colm Hanley at chanley@lkshields.ie.

The content of this article is provided for information purposes only and does not constitute legal or other advice.