There are now more than 2,000 B Corps in the UK, currently the second biggest B Corp community in the world. This is no small achievement given the fundamental commitment these businesses must make to pursuing positive impact as well as profit: B Corp certification includes requiring UK businesses to amend their constitutions to adopt the B Corp purposes. This article considers what this means for the board, and how Bates Wells’ dedicated training can help directors feel more confident in applying the B Corp lens for governance.

Adopting the B Corp purposes

B Corp directors have a framework for governance that is significantly different from the starting point for the vast majority of businesses. By default, the directors of UK companies have an overarching duty to make decisions in pursuit of the success of the company for the benefit of the shareholders. This position is understood as ‘shareholder primacy’. The directors can consider other stakeholder interests, such as those of employees, the local community and the environment, but where the interests of other stakeholders conflict with the interests of shareholders, the latter prevail.

Companies can amend their articles of association to state their intended purposes, enabling them to override this default hierarchy of stakeholder interests. For B Corps, this means adopting the wording of the UK B Corp Legal Requirement (the ‘Legal Requirement’), which can be found within the guidance document published by B Lab UK, here. The 5 paragraphs of the Legal Requirement include the B Corp purposes – a dual commitment to pursuing profit as well as a material positive impact on society and the environment – and must be adopted into a business’ constitution to be eligible for B Corp certification.

Enabling a mindset shift

Adopting the Legal Requirement into the articles makes the pursuit of the B Corp commitment, to people, planet and profit, the new overarching duty of the directors, reshaping the lens for decision-making across the business. It enables the board to weigh up different stakeholder interests in its decisions without being obligated to always give priority to the interests of the shareholders. It enables the business to drive the positive impact it aims to achieve.

This can raise questions for the directors, such as how this new lens for governance could impact upon the discretion they have in their decision-making, and how it affects the obligations the directors have towards shareholders and wider stakeholders in executing their duties. There’s also more to think about for company groups and businesses with franchise arrangements, or where the business has a primary social purpose (such as a social enterprise). 

Governance training for certified and prospective B Corps

Boards need to understand how adopting the Legal Requirement affects the application of their fiduciary duties, and to feel confident in applying the B Corp lens for governance. To help, Bates Wells offers bespoke governance training for certified and prospective B Corps.

This is suitable for businesses considering certification, to better understand how their approach to governance is likely to change in relation to key aspects of the business when the Legal Requirement is adopted. The training can also be tailored for businesses that have already certified, to help with understanding how to implement the B Corp commitment to people, planet and profit, starting with its approach to governance.

We can work with you to create a bespoke session. The topics we can cover include:

  • how the B Corp certification requirements, including the constitutional requirement and disclosures, apply to your business;
  • how the directors’ duties are reshaped by adopting the B Corp constitutional requirements, under the key regulatory framework for your legal structure;
  • the B Corp requirements for groups, subsidiaries and franchisees, as relevant to your business; and
  • how the B Corp lens for governance might be applied in practice, to help the business live out its B Corp commitment.

To find out more about how these sessions could help your board, please get in touch.