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Can you certify a business if there are subsidiaries or related entities involved?

Most businesses applying for B Corp certification are simple contexts where only one operating and legal entity is involved. However, for some applicants (and an ever-increasing number) the business is spread across a variety of subsidiaries or partnerships. For example, a multinational or an investment management firm.

There are two primary areas of concern for B Lab when considering whether a company is eligible for independent certification:

  1. Governance. Does it have independent governance that meets the operational and strategic requirements of the B Corp standard?
  2. Brand. Is it the only corporate entity using that brand name?

Addressing Subsidiaries

If a subsidiary is sufficiently independent and distinct from its parent by way of its brand, governance and operations then B Lab will allow that subsidiary to certify as a B Corp alone, without a formal commitment from its parent to do the same. Examples include Innocent Drinks and Coca Cola; Athleta and Gap; Ben & Jerry's and Unilever.

However, B Lab will not allow B Corp certification of that subsidiary if they believe it to be highly interconnected with its wider organisation, be that through a shared platform, central support function, brand name or governance structure. 

In these cases case, B Lab will want a B Corp commitment from the parent and wider group if it wishes to certify one of its entities, as is the case with Danone.

So, whilst Innocent Drinks may be able to be a B Corp whilst Coca Cola as a whole is not, Coca Cola UK can not certify independently of Coca Cola Global also making the commitment.

This approach is designed to ensure that:

  • There is protection and market differentiation for businesses who are authentically committed to being deeply purpose-led right across their whole organisation, not just part of it
  • Use of the B Corp brand is not leveraged across entities that have not - or will not - meet the B Corp standard
  • The governance of all related entities meets the B Corp standard

Addressing Sister Companies

A similar situation exists between sister companies within a group, small or large. For example, to stick with the Coca Cola example, because there is shared brand between Coca Cola UK and, say, Coca Cola France, Coca Cola UK cannot certify unless Coca Cola France is also going to do the same. In essence, the entire Coca Cola family - parent and all Coca Cola branded subsidiaries - must go down the B Corp pathway.

But the situation can also arrive where a group has different companies, each with their own brand, within its family of companies. In that case, because there is a differential in brand, whilst Company A may be able to certify, a separate assessment may be needed for its sister company, Company B, if Company B also wants to be branded as a B Corp.

Addressing Brands vs Companies

In the above examples, we are talking about actual corporate entities (and its associated brand). What we are not talking about is a single corporate entity which has multiple brands. That is reviewed under a different process because whilst it meets the same governance test, it fails same brand test.

There is a separate process for this brand situation, see:

What is a brand review?

The Scoping Process

If there are multiple entities involved in an organisation of any kind then you will need to undertake B Lab's Scoping Process before you submit.

What is B Lab's Scoping Process?

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  1. John Featherby

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