New B Corp Standards: Transforming Supply Chain Engagement into Strategic Impact

Supply chain engagement isn’t a standalone requirement in the new B Corp standards – it’s woven throughout, and at Greenheart, we see this as a significant opportunity for companies to not only meet increased expectations but to unlock new levels of resilience, transparency, and positive influence across their value chain. 

Businesses are now expected to take responsibility for their social and environmental impacts not only within their own operations, but across their upstream value chain. This marks a shift from optional best practice to mandatory action, particularly in areas like human rights and environmental stewardship. 

In this article, we explore how the new standards embed supply chain expectations across impact areas and what companies should prioritise to meet them.

Broader value chain considerations

The theme of working with your supply chain is spread throughout the impact topics of the new B Corp standards. Considering the direct social and environmental impacts of the business goes hand in hand with assessing the same impacts in the supply chain. Therefore, it makes sense for supply chain considerations to be required throughout the new standards, not as a standalone “supply chain” topic. This is similar to how we saw supply chain impacts in the previous version of the B Corp standards, for example, engaging with suppliers to take action on environmental impacts. 

However, because the new standards set minimum requirements across all impact topics, so companies that want to certify against the new B Corp standards must now engage with their supply chains, particularly in the human rights and environmental impact topics. This is a pivotal change. Previously, many B Corps might not have fully embraced opportunities for supply chain engagement, leaving potential risks and positive impacts unaddressed.

The new standards define a supply chain as “the range of activities by upstream companies and organisations that provide the products, raw materials, and services a company uses to develop its own offerings”.

Although we are focusing on upstream suppliers here, businesses above the ‘medium’ size threshold will also need to conduct a full assessment of their entire value chain. A thorough look at the supply chain will feed nicely into this, as well as providing insight into which engagement efforts will yield the most significant returns.

How should I engage with my suppliers to meet the new B Corp requirements?

Out of the seven impact topics, our analysis has highlighted three impact topics as having the most significant requirements related to the supply chain in terms of practical implementation. 

These are the human rights (HR) and environmental impact topics, including climate action (CA) and environmental stewardship and circularity (ESC).

Human Rights

The new B Corp standards have a whole impact topic dedicated to human rights issues, which is a significant development from the previous standards. 

Universal commitment: All companies aspiring to certify as a B Corp are now required to publicly commit to respecting human rights, with larger companies doing this through a public policy that also covers the supply chain. 

Proactive Due Diligence (Larger Companies): There is a requirement for larger companies to understand how their operations and value chain may involve negative HR impacts and to conduct effective HR due diligence. This involves assessing and addressing potential negative HR impacts related to their supply chain, including source countries and high-impact raw materials.

In-depth assessment: For companies considered medium size and above (>50 workers), an in-depth salient HR assessment is needed and must consider the actual and potential issues in the value chain. To manage the issues identified in the supply chain, companies are required to prioritise suppliers based on risk level and impact severity. 

Fair wages: The HR section includes requirements for larger businesses (medium and above) to review living wages in their supply chain to assess whether suppliers are paying fair wages.

Procurement processes: All companies must consider HR impacts of their procurement decisions. For bigger companies, this involves working actively with suppliers to prevent or mitigate salient human rights issues through setting targets and monitoring progress annually.

Climate Action

The new standards recognise that the supply chain is critical to meaningful climate action, offering a chance to innovate and collaborate outside of the individual organisation.

Scope 3 emissions (Larger Companies): All large businesses to calculate their scope 3 greenhouse gas emissions across all relevant categories, providing a clear map for targeted reductions

Climate Action and Transition Plans: Smaller businesses require a climate action plan, which may include collaboration with suppliers to achieve emissions reductions. Larger companies will need to develop a full climate transition plan within three years of certification against the new standards, detailing how they’ll meet science-based targets, including supply chain emissions found in Scope 3. This requirement means businesses will need to focus on forward planning for long-term business resilience in the supply chain. 

Environmental stewardship and circularity 

The Environmental Stewardship & Circularity Impact Topic places a strong emphasis on the supply chain and its role in environmental protection and resource conservation. 

Identifying and mitigating negative impacts: This impact topic requires companies to identify all potential and actual negative environmental impacts in their direct operations and indirect impacts in the supply chain. 

Active supplier engagement: To monitor and mitigate the negative impacts, plans are needed with progress demonstrated against the most material impacts identified. This requires engagement with the supply chain through supplier data collection, setting supplier targets and supporting them to manage their impact through knowledge and resource sharing. 

Procurement as a lever: As with the HR issues, all businesses must consider the environmental impacts of procurement decisions and larger businesses must go further to actively work with prioritised suppliers to prevent or mitigate the most material environmental impacts. 

Circularity and raw materials: The requirement for an assessment of environmental impacts throughout the value chain includes identifying high-risk raw materials. For product-based businesses, this includes a full understanding of the input materials and sourcing deforestation-free raw materials. Companies are encouraged to implement circularity principles to reduce waste and promote sustainable use of resources within their operations and supply chains. This involves engaging suppliers of raw materials and packaging to co-create more sustainable solutions, potentially leading to cost savings and new product innovations.

Supply chain considerations across other impact areas

While Human Rights, Climate, and Environment have the most direct requirements, the principle of supplier engagement as a key stakeholder group features elsewhere in the new B Corp standards:

Purpose and Stakeholder Governance (PSG): Suppliers are key stakeholders therefore, the standards require procedures for stakeholder engagement, which should extend to suppliers. A practical example of this is that the company must have adequate publicly available procedures to address stakeholder grievances, and the grievance procedure should also be available to suppliers.

Fair Work (FW): While FW focuses only on direct employees, with no requirements for supply chain engagement, the concept of fair wages in the supply chain is included in the Human Rights topic, as noted above, which highlights the holistic nature of the new standards ensuring the company must consider their own impact and impact in the supply chain across a multitude of topics.

Justice, Equity, Diversity, and Inclusion (JEDI): There’s an opportunity (optional requirement JEDI2.o) to promote diversity among local suppliers by tracking ownership diversity, giving preference to underrepresented groups, and setting targets. For businesses committed to deepening JEDI, requirement JEDI2.e allows extending equity audits to supply chain practices. This is a chance to create more equitable economic opportunities in the supply chain.

Government Affairs and Collective Action: Engaging with suppliers can be a form of collective action. For example, mentoring others in the industry, including suppliers, collaborating with suppliers to conduct research and share knowledge or advancing social or environmental impacts through taking part in an industry working group.

What are the main evolutions from the current B Impact Assessment?

What is the most significant takeaway regarding the approach to suppliers when comparing the new standards with the current version? The key change is that supply chain requirements are now mandatory. This will be new territory for many B Corps and aspiring B Corps, requiring a strategic and operational evolution.

Conclusion: Extending your impact

The new B Corp standards challenge businesses to look beyond their direct operational footprint and embrace a broader perspective on their impact. This is an invitation to engage in “big picture” thinking and using the power of your business to develop impact at a much wider level. 

If you’re new to in-depth supply chain analysis, a pragmatic first step is to map your suppliers and understand the nuances in your supplier groups. This will help you to identify hotspots of material impact, key risks or opportunities to engage and create change. This proactive approach is no longer a “nice-to-have” – it’s a strategic imperative for businesses aiming to lead in the new era of corporate responsibility. 

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We are working with many of our clients to map their supply chain and evaluate opportunities and risks. Schedule a free, no-obligation consultation with our B Corp experts to discuss your specific needs here, or check out our website to see how we help companies prepare for B Corp Certification, including supporting supplier engagement planning and implementation