Subsidiaries, Franchises, and Divisions Roadmap

The ability to certify subsidiaries and other corporate units gives new and existing Certified B Corporations more opportunities to scale or exit in mission-aligned ways, and also maintain a high level of social and environmental performance, accountability, and transparency through B Corporation Certification.

B Corporation Certification is a third party certification for companies. Certification entails both a performance requirement—B Corps must take complete the B Impact Assessment and earn a reviewed minimum score of 80 out of 200 points—and an accountability requirement to legally consider stakeholders in the company’s decision-making. (See more about How To Become a B Corp here). Since only entities can meet the dual requirement of performance and accountability, B Lab only certifies entities and not business divisions, brands or units.

This roadmap is intended to help companies with related entities navigate certification, while simultaneously preventing consumer confusion around the Certified entity. If your company is or has a Subsidiary, Franchise, Division, or Multinational Corporation, please review the guidelines below to determine next steps towards B Corporation Certification.

Parent Companies   Subsidiaries   Affiliated Entities   Franchises

Parent Company with Subsidiaries

As B Corporation Certification is a company-level certification, companies pursuing certification that have subsidiaries must include their subsidiaries in the certification. Depending on how the subsidiaries are related to the company certifying, there may be options for how subsidiaries can be included to meet the requirements for certification.

Option one: Certify separately: Each subsidiary can take their own B Impact Assessment and have their own profile page on www.bcorporation.net if certified. In this scenario, each company will have to be above the 80-point bar and pay separate certification fees.

Option two: Certify together: In this case, the company would have a single certification with only one listing on bcorporation.net if certified. However, subsidiaries and parents may or may not complete the same B Impact Assessment depending on company structure.

Certifying on one assessment: If aspects of the company like governance, procurement or other operations are centrally managed and it’s easy to aggregate data, the company may complete one assessment.

Certifying with multiple assessments: If the opposite is true, subsidiaries should complete their own B Impact Assessments and complete the review process separately. The overall combined score will be a weighted average based on revenue/employees and needs to be 80 or above for the company to obtain/maintain certification; subsidiaries that would not meet the 80 bar on their own will be reviewed by B Lab for eligibility to use the B Corp logo.

The B Corporation Annual Certification fee includes the review of one assessment, and there will be an additional verification fee for each additional assessment review required for the certification. The certification fee will be based on combined revenue. The verification per subsidiary (tiered by size) is based on the subsidiary’s revenue. Verification fee prepayment is required for companies with revenues over $100M.
< $50 million; $500 fee
< $100 million; $1,000 fee
< $500 million; $2,500 fee
> $500 million; $5,000 fee

Note on use of B Corp IP: Brands, divisions, and affiliated entities, including subsidiaries, with a different name than the certified parent may only use the B Corp IP if they meet the minimum performance requirement independently.

Subsidiaries

Independent Subsidiary Certification

Subsidiaries can sometimes certify independent of their parent company. B Corporation Certification is a third party certification for companies. Certification entails both a performance requirement—B Corps must take complete the B Impact Assessment and earn a reviewed minimum score of 80 out of 200 points—and an accountability requirement to legally consider stakeholders in the company’s decision-making. (See more about How To Become a B Corp). Since only entities can meet the dual requirement of performance and accountability, B Lab only certifies entities and not business divisions, brands, or units.

Learn more about Independent Subsidiary Certifications.

Subsidiaries with the Same Name as their Parent

In this case, “same name” means the subsidiary’s name is either identical to the parent’s or differentiated exclusively by geography or industry (e.g. Ace Spain or Ace Auto) or corporate type (e.g. Inc, LLC). If the subsidiary is in has distinct branding in the geographic market where it operates, and has a separate webpage, the subsidiary can certify. Typically, distinct branding in its geographic market means having a different country of operations than its parent company and not having other subsidiaries with the same brand names in that country to avoid brand confusion of the Certified entity. In order to maintain certification, the parent company will need to certify within four years.

There are two exceptions. Subsidiaries with the same name that do not operate in a distinct geography or have a separate webpage may certify for internal use only if the parent corporation commits to certify within four years. Use of the IP may not be used on the company’s external-facing materials. To maintain internal certification beyond four years, the parent company would need to certify.

Company Headquarters that are distinct subsidiaries are not eligible to certify on their own.

Subsidiaries with Different Names from their Parent

If the subsidiary has a different name, then the subsidiary can certify independently. In this case, “different name” means the subsidiary’s name is not identical to the parent’s and is differentiated by something other than geography (e.g. country), industry, or corporate type (e.g. Inc, LLC). However, Company Headquarters that are distinct subsidiaries are not eligible to certify on its own.

Subsidiary Brand Guidelines

The B Corporation Intellectual Property, including but not limited to the name ‘Certified B Corporation’TM and the ‘B CorporationTM Seal,’ can only be used by the entities that are certified and not by the non-B Corporation parent or subsidiaries that share the same name. Use of the B Corp intellectual property should also be clear that it relates to the distinct subsidiary certifying.

Example: ‘Ace Solar UK is a Certified B Corporation’
Example: Ben & Jerry’s is a Certified B Corporation, but their parent company Unilever is not.

If the certified subsidiary sells products or services outside of its distinct geographic location of operations and there is an affiliated company with the same name where the company’s products/services are sold, the B Corp Intellectual Property can only be used in the geographic location of the company certifying.

Example: If all of Ace Solar UK’s products are sold and labeled for the UK, the subsidiary may use the IP on its products in UK. However, if Ace Solar UK also sells products in Spain, and Ace Solar products sold in Spain are also sold by companies not Certified, Ace Solar UK may not use the B Corp IP on products sold in Spain.

Transparency and Verification Guidelines

Wholly-owned subsidiaries, and subsidiaries of public companies as described in greater detail here, are required to make non-sensitive answers of their full impact assessment transparent on their B Corp profile page and are subject to an onsite visit every two year Certification period at the company’s expense. If the Parent company has revenues in excess of $1 bln, and the subsidiary applying for Certification has the same name, but is not wholly-owned, it is subject to B Lab’s transparency requirements, similar to wholly-owned subsidiaries.

Affiliated Entities with the Same Name without a Common Parent

Independent Certification

Affiliated entities with the same name without a common parent can certify independently only if the entity seeking certification has a separate webpage and is located in a geographically distinct region from its related entities with the same name. In this case, “same name” means the names are either identical or differentiated exclusively by geography, industry (e.g. Ace Spain or Ace Auto), or corporate type (e.g. Inc, LLC). Typically, distinct geography means different country of operations to avoid brand confusion of the Certified entity.

Brand Guidelines for Affiliated Entities

The B Corporation Intellectual Property, including but not limited to the name ‘Certified B Corporation’TM and the ‘B CorporationTM Seal,’ can only be used by the entities that are certified and not by the affiliated entities. B Corp intellectual property should also be clear that it relates to the distinct subsidiary certifying.

Example: ‘Ace Solar UK is a Certified B Corporation’

If the certified company sells products or services outside of its distinct geographic location of operations and there is an affiliated company with the same name where the company’s products/services are sold, the B Corp Intellectual Property can only be used in the geographic location of the company certifying.’

Example: If all of Ace Solar UK’s products are sold and labeled for UK, it may use the IP on its products in UK. However, if it sells products in Spain, as well, and Ace Solar products sold in Spain are also sold by affiliated companies not Certified, it may only use the B Corp IP on products sold in UK.

Franchises

Franchisors are eligible to certify. If the Franchisor has geographic distinction and operates stores or operating entities, they can use the IP at those sites; otherwise, they can only use it at the Corporate level and on the Corporate webpage. If the Franchisor is a Certified B Corporation, any franchisee can certify as a B Corporation if they wish, provided they meet the performance, transparency and legal requirements for certification..

Independent Franchisee Certification

If the Franchisor is not certified, franchisees can certify if they are in a distinct geography and have their own web page(s). B Corporation Certification is a third party certification for companies. Certification entails both a performance requirement—B Corps must take complete the B Impact Assessment and earn a reviewed minimum score of 80 out of 200 points—and an accountability requirement to legally consider stakeholders in the company’s decision-making. (See more about How To Become a B Corp). Each franchise will have to complete the legal requirement for certification, unless they are wholly-owned by a holding company that completes the legal requirement.

All franchisees in a distinct geography must achieve a reviewed score of 80 or above for the franchisees in the region to certify. Typically, distinct geography means different country of operations to avoid brand confusion of the Certified entity.

Please click here to learn more about the Independent Franchise Certification process.

Franchise Brand Guidelines

B Corp intellectual property should also be clear that it relates to the distinct geographic region certifying.

Example: ‘Ace Solar UK is a Certified B Corporation’

Note on use of B Corp IP: Brands, divisions, and affiliated entities, including subsidiaries, with a different name than the certified parent, may only use the B Corp IP if they meet the minimum performance requirement independently.

Questions?

Contact B Lab at reviewdesk@bcorporation.net, or +1-610-293-0299 and ask for the Review team.

If any of the following criteria applies to your company, please review this information for multinationals and public companies.

Public (>$100M market cap)
$1B or more in revenue
Has 50 subsidiaries or more
Operates in 5 or more industries
Operations in 10 countries or more