Certified B Corporations (B Corps) operate at the intersection of profit and purpose, committed to high social and environmental standards. But being a B Corp is not easy. Profits have traditionally been the sole goal of starting a business, so balancing profits with mission or purpose is new—and it's often frowned upon.

And despite it being clearly better for the environment and for people (and especially for natural and organic product brands such as herbal, aromatherapy, chocolate, tea and coffee, clean beauty, cosmetic, and food & beverage makers), a commitment to being a B corp can be difficult. For instance, it generates no support from state or federal governments in the form of incentives, tax breaks, or other perks to lessen the burden of social good.

The Challenges Facing B Corps

Despite being a better type of company and, at its heart, a company that is trying to do good in the world, B Corps can face several significant challenges:

Balancing Purpose with Profit

How do you maintain financial sustainability while committing to social and environmental goals (ESG)? It’s obviously cheaper to pollute the planet and not go to the trouble to treat employees fairly. The B Corp balancing act requires companies to manage operational costs, like ethical sourcing or fair wages, which can be wildly more expensive than conventional alternatives. Maintaining profitability under these tight conditions is a central struggle for many B Corps​.

High Certification and Recertification Costs

The cost and complexity of obtaining and maintaining B Corp certification can be prohibitive, especially for small to medium-sized businesses. The initial B Impact Assessment (BIA) by the nonprofit B Lab that regulates the process requires a rigorous evaluation and often forces a company to make on-the-ground operational adjustments to improve its operations, which usually come with direct and indirect costs.

Then, once certified, B Corps must re-certify every three years. This administrative requirement is great in that it keeps a business transparent and accurate for the long-term, but it can also strain resources and requires ongoing improvements to maintain compliance​.

Greenwashing Fuels Consumer Skepticism

As sustainability becomes a meaningless buzzword thrown around by companies whether they follow sustainable practices or not, there is a growing risk of “greenwashing,” where companies falsely claim or mislead the public into thinking they are eco-friendly.

Although B Corp certification provides a level of credibility, B Corps still face consumer skepticism (and I’ve found, an incredible lack of awareness that the certification exists at all), and they must constantly validate their authenticity to avoid being overshadowed by companies using misleading sustainability claims​ on their labels and in their marketing.

Regulatory and Tax Barriers

While some U.S. states offer benefit corporation status, there are no nationwide tax benefits specifically for B Corps, unlike some incentives for nonprofits or certain sustainable practices. This lack of fiscal incentives can limit financial flexibility and keep some businesses from pursuing or maintaining certification.

Additionally, navigating local regulatory requirements can be complex, especially for companies operating across multiple states​. And, as I’ve discovered, many local tax and regulatory agencies are still unaware of B corps and don’t understand what it means or requires.

Lack of Standardized ESG Metrics

Criteria for measuring a brand’s Environmental, Social and Governance (ESG) is all over the place. Metrics are far from standardized, which complicates the ability of B Corps to benchmark their impact performance consistently and keeps consumers from understanding exactly where a business is in reaching common ESG goals.

While the B Impact Assessment does provide a framework, the broader absence of standard ESG reporting can limit B Corps' appeal to impact investors and complicate comparisons with non-certified companies that claim ESG commitments​. Many investors are calling for a more systematic approach to measuring ESGs.

Why Some B Corps Struggle and Go Out of Business

It probably comes as no surprise that many B Corps face pressures that make financial sustainability difficult, especially for smaller businesses. The added costs of socially responsible practices—such as sustainable sourcing, fair wages, and environmental management—can strain their financial resources, especially in competitive industries like cosmetics. Sometimes businesses lose their certification, losing their competitive edge and consumer trust​.

I advise brands considering B Corp certification and ESG implementation to carefully weigh these risks before embarking on a B Lab assessment. I can help identify risks and goals and structure a strategic and business plan relevant for your brand.

Legal and Structural Supports Needed for B Corps

There are legal and fiscal ways that local and state governments could help companies be better for the environment and for their communities. To help B Corps thrive, certain supports could significantly enhance their resilience and ability to impact positively:

• Tax Incentives for Socially Responsible Practices: B Corps are not nonprofits, but they can provide some similar environmental and social betterments for our communities. Government-provided tax breaks or incentives for activities such as sustainable energy use, waste reduction, or community betterment could alleviate financial pressures and reward B Corps for their contributions to social and environmental goals​.
• Federal Recognition and Support for Benefit Corporations: Expanding benefit corporation recognition at the federal level could streamline regulations, make compliance simpler for multi-state businesses, and possibly open up new funding opportunities or subsidies.
• Funding and Grants for Certification and Improvement Costs: Many B Corps could benefit from access to grants or subsidized loans for certification, recertification, and ESG-related improvements, particularly targeting smaller businesses to reduce barriers to entry​.
• Standardized ESG Reporting Guidelines: Establishing universal standards for ESG reporting would allow B Corps to communicate their impact more effectively to consumers, investors, and partners. This would also enable more straightforward comparisons across industries, improving trust and accessibility to impact investors​.

For my natural and organic brands: don't despair. Do your homework. Decide when and if the time for B Corp certification is for you.

Natural & Organic Brand Coaching

Bellebuono International is an enthusiastic supporter of natural and organic product brands, including herbal and aromatherapy, clean beauty and cosmetics, chocolate, tea and coffee, and organic food and beverage. Our online course Natural Brand Certifications teaches the environmental and social commitments your business or brand can make, including B-corp, organic, fair trade, WBENC, and cruelty-free.

Our powerful coaching services walk your business through these processes and help you strategize and build a solid business plan and vision. We provide the business services you need as a small to medium organic brand, including strategy and business planning, leadership coaching, customized course design and build, and speaking services for events.