What: The ESG initiative pledges to turn companies into forces for good, but some are wary of its growing focus on multinational corporations.

Why it is important: When companies that create large amounts of waste and do not pay workers fairly, such as Nespresso, are awarded a B Corp certification, the entire system’s accountability is put into question.

Although it started as a way to note companies that are tackling issues that are in line with environmental, social, and governmental ideals, there is a wide debate about the future of the B Corp movement following recent companies that have successfully achieved certification. Originally B Corp set out to be the gold standard of certifications as firms would need to meet high levels of overall performance, provide transparent information, and adhere to legal accountability to balance profit and purpose.

Today there are about 6,400 certified B Corps across 158 industries. The B List used to be made up of smaller businesses that were trying to challenge how business was being conducted, but now major companies want to be included on the list. In order to gain B Corp status, companies need to score 80 points out of 200 across a variety of metrics covering governance, treatment of workers and customers, community, and the environment. The benefits of obtaining B Corp certification are that it is good PR for the business and creates a list of companies that are seen as good to do business with.

But there are limits to the certification as fair wages are only monitored for direct employees and not in relation to the company’s supply chain. Also, how companies deploy increased profits is not dictated by B Corp so the money can either be used to create more positive business practices, or it could be used to ramp up executive pay and dividends.

In order to address the criticism, B Corp is planning to change its standards to be more prescriptive about where they stand on specific topics to make points more difficult to achieve. Many critics are pushing B Corp to go back to its roots of awarding smaller organizations that are actually operating responsibly and leaving behind the idea of being a club for large multinational businesses that are not in line with the certification’s purpose.

The struggle for the soul of the B Corp movement