Environmental stewardship that has real integrity: showcasing the new B Corp Environment and Circularity (ESC) standard

The new environmental stewardship and circularity elements of the standard contain broad and detailed requirements that demonstrate accountability and leadership in relation to environmental impact.

The previous version of the B Corp standards were sometimes criticised for not being challenging enough in areas like circularity and supply chain. The new standards provide a step change in what is required to be recognised as a sustainable business including:

• Understanding and addressing organisation specific environmental impacts
• Operating sustainably as part of a circular economy
• Minimising the negative impact of supply chains

We are pleased to see B Corp encouraging companies to consider their operations with a fresh lens, and embrace a holistic, action-oriented approach, while still providing a pragmatic approach to encouraging change.

Below is a summary of the important points to understand as you navigate this complex and multi-layered impact area of the New B Corp standards.

1. The core of environmental stewardship: focus on your key impacts

Certain-sized businesses must now demonstrate they have assessed their whole value chain and scored environmental impacts to highlight those that are most material or significant. This includes an overall value chain assessment of hot spots and detailed impact scoring in line with a specific set of criteria, including the impact on the five drivers of nature loss, for example.

This could be a bit tricky if you have a complex supply chain and, for example, haven’t looked at how your direct impacts really stack up against those of your raw material suppliers. However, the key is to map everything out first and keep adding detail as you find out more information. We also recommend backing up all your impact evaluations with solid data to justify your decisions. The good news is that often this insight can be gathered as part of a robust Materiality Process (which is also a requirement in the Purpose and Stakeholder Governance impact area for Large companies and above) or an Environmental Impact Assessment.

Companies are now expected to identify and track both actual and potential impacts, from waste generation and energy consumption to water usage across all facilities. Additionally, there is a focus on animal welfare. This assessment is directly tied to materiality, requiring an evaluation of the impact, likelihood and severity of each issue.

The ESC impact area then requires businesses on certain tracks* to go deeper into specific areas such as local biodiversity impact and water stewardship. These are critical topics as we face water shortages and the devastating consequences of biodiversity loss.

In these areas, you may want to draw in expertise. There are also a range of tools available such as the World Wide Fund for Nature’s (WWF) risk filters and other scientific databases. This can seem daunting at first, but can be a really eye-opening experience, which can provide insightful data that can then feed into strategic business decisions.

*A ’track’ is the term used by B Lab to determine the business type based on size and sector and, therefore, the applicable requirements a company needs to satisfy.

2. From insights to implementation: crafting your strategy and taking action

Understanding your environmental impacts and material issues is the direct link to a meaningful strategy. The new standards emphasise that a robust strategy should cover basic requirements applicable to most companies, providing a clear roadmap for addressing material issues. This involves defining responsibilities, setting specific, measurable targets and outlining clear implementation plans.

For many, this process will also include developing biodiversity transition plans and water stewardship strategies. In addition, the strategies will require training to ensure policies and procedures are effectively integrated into the company’s culture.

To ensure strategies are truly put into action, it is essential to evaluate both their progress and effectiveness. This includes regular assessment of specific biodiversity and water stewardship initiatives to track impact and guide continuous improvement.

3. Embracing circularity

The concept of circularity is central to the new standards. It goes beyond simple recycling but focuses on reducing waste and impact on natural resources.

Certain tracks must first identify material inflow including material origin and weight. This includes both raw materials, process materials and packaging. Raw materials from sustainable sources must be evaluated and tracked.  There are also requirements to reduce reliance on non-renewable resources and to embed circularity principles into product design, prioritising durability, long-term use and reuse over single-use products and packaging. Beyond ensuring that products and packaging are recyclable, there are requirements to actively increase their recovery and reuse after use.

Circularity strategies focus on both product and packaging design, requiring a data-backed approach that can provide extensive guidance on how to minimise waste and maximise resource efficiency.

4. Working with your supply chain

Furthermore, the new rules place a significant emphasis on understanding and addressing supplier and wider value chain impacts, particularly those related to procurement decisions. This is especially crucial for larger companies and those in sectors dealing with high-risk raw materials or issues like deforestation.

It’s important to  not only understand impacts but make progress to address specific material supply chain issues in partnership with suppliers.

5. Navigating operational control

A common challenge in this shift in focus is determining operational control, in other words : who is responsible for business impacts? This is especially relevant in complex scenarios like leased buildings. The new standards encourage a common-sense approach: if an operation is undeniably related to your company’s activities, it should be included. This aligns with standard practices like carbon accounting. The key question to ask is: does your company have enough control to make meaningful reductions, with materiality serving as the guiding factor in these judgements.

A fundamental shift towards industry leadership

In summary, the new ESC standards mark a significant and positive shift in the right direction. They go beyond simple reporting and encourage a deep, fundamental change in how companies operate. The focus is now on whole value chain materiality, increased emphasis on water stewardship and biodiversity, and a whole section dedicated to human rights.

While complex, these standards are vital for moving the dial towards more responsible operations that play their part towards a sustainable and regenerative economy.  The standards encourage increased transparency and cooperation, while discouraging high-risk practices that negatively affect biodiversity and local environments. 

Get support

You may need expert support in both understanding the ESC impact area requirements as well as creating a suitable and pragmatic action plan to get started. We have in-house experts that can help you with both and are already doing just this with existing and aspiring B Corps. Get in touch with us here to discuss your current position and potential next steps.