B Impact Assessment: A new framework in CSR reporting
Sep 7, 2022
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The B impact assessment is a unique CSR reporting framework that comprises a comprehensive approach for organizations — it outlines a direction that can be followed, helps in the evaluation of the activities, and also provides an audit check.
Conceptualized by B Lab, a non-profit organization that is paving the way for stakeholder-driven businesses, the B impact assessment is used by 1,50,000 companies the world over. It is a digital tool that can help measure, manage and improve the influence that the company has through its CSR activities.
The B Lab also became known for initiating a B Corp movement – designating companies that meet high standards of social and environmental performance, accountability, and transparency as ‘B corporations’.
A B Corporation certification is tremendously prestigious. Companies that do get it are known for acting in the best interest of their stakeholders and can draw a balance between their own profit and the good of the larger community. However, obtaining this certification is not an easy achievement and that is why it functions as a glorious branding tool. As of March 2022, there were only 4,623 B Corp-certified companies, across 155 industries in 78 countries.
The elements of assessment
This B impact assessment is a questionnaire-based self-assessment and covers 5 different areas:
Governance – This relates to the mission of the company, its stakeholder engagement, its governance structure and controls, and transparency.
Workers – This looks at the company’s relationship with all its employees. It takes into account whether or not the employees are financially secure, whether their health, wellness, and safety are accounted for, and if there are enough plans for their career development and engagement. It also considers the work ownership that employees embed and the overall working environment.
Community – The company’s relationship with its external environment is recorded in this section. It measures different aspects such as how inclusive/diverse the company is, its economic impact, its supply chain management, and local economic development.
Environment – This includes the company’s direct and indirect impact on its environment. The company’s consumption of or damage to scarce resources, its management of toxic wastage, and its environmental innovation practices are a few dimensions this section covers.
Customers – How well companies serve their customers, those who are in need but cannot afford to be their customers, and the support they provide for purpose-driven enterprises are some of the things that are considered here.
For a company to be known as a B corporation, it has to score above 80 on this assessment.
Implementing the B Impact assessment
The B Impact evaluation can be carried out internally and allows companies to benchmark themselves against their competitors. The findings of this assessment can also be communicated to impact investors as it uses a very well-known unit of measurement. Below are the steps that companies need to undertake to carry out this assessment:
Decide on the business unit to be assessed – The questionnaire for this assessment varies with the location of the business unit being assessed (whether it is in a developed or an emerging country), its employee headcount, and the industry or sector within which it operates. It is also possible to run the assessment at the global level for the sole purpose of understanding where your company stands in comparison with others. To do this, any surrogate country can be picked keeping in mind that the assessment will be subject to it being in an emerging or a developed economy.
Run the first round of assessment – As per the choices made in step 1, the company will be given a questionnaire consisting of 100-200 questions. It will be almost impossible for any 1 person to answer all these questions in one go, so it is recommended that as many questions as possible are answered initially and those that require more insights are marked out.
Identify data gaps and liaise with the respective people to obtain them – As the major data gaps would have been identified under step 2, this step entails furthering your research and reaching out to people who can help complete the remaining data points. The questions can be labeled on their level of difficulty, the operational area under which they lie, or the weightage of the scores being allotted. This will help in prioritizing which question should be further dwelled into.
Run the second round of assessment – Post collecting all the relevant data, the requisite questions can be answered. The different areas in which the company excels and is yet to succeed in will now become evident. The company should then conduct an analysis and review the questions on which it scored below the industry average.
Identify practices that are suitable for your operation – Lastly, the company should review the areas in which it obtained a good ranking. These areas, if focused on, could become the company’s sustainability management strengths. This entire exercise will help the company with insights about implementing industry-wide practices, improving its sustainability management, and driving better performance.
The benefits of undertaking B impact assessment
While the benefits of obtaining the status of a ‘B corporation’ are manifold, solely undertaking this assessment with the purpose of analyzing a company also holds in itself many benefits. Some key advantages are:
Comprehensiveness – This assessment takes into account the management of the company’s entire value chain. It also covers a wide range of potential impact areas and ultimately provides an in-depth review of the entire management system.
Inspiration – The stringent questionnaire and the performance of other companies within the same industries can become a source of inspiration for everyone in that company to do better.
Customization – As the questions are specific to the industry sector, company size and geographical location undertaking this assessment will automatically tell the company where it stands in its respective areas.
Community of peers – This assessment will allow companies to link with their peer communities and they also provide a one-hour free consultation and back-end support.
Whether you are planning on applying for a B impact assessment to enhance your brand image or publishing your CSR report or your sustainable report or your ESG report, you need a specialized team to help you do so.
Report Yak is a purely business reporting design agency that conceptualizes, creates content, and designs CSR reports, ESG reports, annual reports, and impact reports for corporations.
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