New B Corp Standards – Purpose Requirement (FR2 & PSG1)
Introduction
B Lab published their new Standards (version 7) in April 2025, creating the biggest changes yet to how businesses become and remain part of the B Corp movement.
A key change from the current Standards (version 6) is the shift from a points-based system (where a business must accumulate over 80 points from across a range of areas to become a B Corp) to minimum requirements across seven areas. This requires B Corp certified businesses to take a more holistic approach to understanding and addressing their impact on people and the planet. It removes the ability to be very strong in one area (e.g. how you treat your people) while weak in another (e.g. understanding and reducing your carbon footprint), an oft-criticised weakness of the current Standards.
Going forward there are some things that every B Corp HAS to do – there’s no opt out. The requirement around purpose is one of these.
B Corps will start certifying under the new Standards from 1 January 2026. Any existing B Corp with a recertification date in 2026 has been given a year’s grace to align with the new Standards.
However, I recommend you familiarise yourself with the purpose requirement sooner rather than later because articulating and embedding purpose takes time. This article will help you do that.
And if you’re starting to wonder how you meet the requirement - the answer is by finding Product-Market-Impact Fit, which you can achieve by following our proven five-step Amplify approach. Until now this has been optional, now every B Corp has to do it.
“This is giving me goosebumps. Businesses need this. For me this is what the world needs beyond everything else I’ve seen.”
What is purpose?
Before we dive into the detail of the Standards, let’s make sure we’re all on the same page in terms of what ‘purpose’ is.
A business’s purpose statement explains why it exists. I often find it helpful to start with the words “we exist to…”. It’s the reason for being in business.
Your purpose should determine how you create value, for the business and wider stakeholders. The purpose comes first and profit follows. This is different to the perspective that business exists to make profit and maximise profits for shareholders. An analogy which is often used is the human body. We need oxygen to survive – but breathing oxygen is not our reason to live. In the same way, a business needs profits to survive – but making a profit is not their reason to exist.
Your purpose should be timeless – it’s your North Star, always there in the distance, motivating you to move forwards, overcome obstacles and innovate.
Your purpose helps shape your goals and strategy – how you progress on your journey and deliver your purpose. These will evolve over time, but the purpose is constant.
Foundational Requirement FR2
Under the new Standards, B Corps are legally required to consider all stakeholders in their decision making – what is called ‘stakeholder governance’. This isn’t new – it’s a requirement of the current Standards.
But in the new Standards, this has been extended to require that businesses are addressing a specific social and/or environmental purpose. The rationale behind this is that having a clear purpose helps with the adoption of stakeholder governance.
The legal requirement in the new Standards (FR2) requires that all B Corps:
“Adopt a broad purpose to create a meaningful positive impact on society or the environment.”
This is required from when they first certify (or recertify) under the new Standards.
Purpose & Stakeholder Governance requirement PSG1
The Purpose & Stakeholder Governance (PSG) pillar of the new Standards supports the adoption of the legal requirement (FR2) and stakeholder governance.
Requirement PSG 1 (which every B Corp must meet) dictates that every B Corp must have a purpose statement which:
“Sets out the specific positive and meaningful impact the company intends to make on society or the environment, or both;
Has business relevance and is integrated into its strategy;
Is publicly available on the company’s webpage;
Is approved by the company’s highest governing body.”
This helps ensure that every B Corp is genuinely using their business as a force for good.
Let’s dig into each of those purpose statement requirements…
Specific
The social / environmental problem you are addressing needs to be specific. It can be tempting to keep your purpose very broad. But, if you want to maximise your impact, you need to be focused. By being focused, all your activities and investment can add up to make a much greater impact.
Meaningful
A good way of making sure that you’re addressing a problem that really matters (i.e. is meaningful) is to refer to the UN Sustainable Development Goals and the sub-targets beneath these.
There are two types of social / environmental impact that are specifically identified in the new Standards (PSG1):
“Specific social or environmental issues that threaten or enhance wellbeing for people and the planet
Areas of wellbeing that are underserved – particularly in populations lacking adequate support”
Has business relevance
Your purpose has to be relevant to your business and its context. This helps to avoid purpose-washing – where your business states a purpose but doesn’t operate or make decisions in a way that aligns with that statement. The purpose is words on a wall (or a website) that don’t affect the culture of your business or its trajectory.
When your purpose is commercially relevant and contributes to long-term value creation then it is authentic.
For example, if your business is operating in an industry with high levels of gender inequality then it could be relevant to address this. Or, if you are in a product-based business where the industry norms produce high volumes of waste, you might choose to develop a closed loop solution.
Integrated into the strategy
Under the new Standards, your purpose must directly support your business’s “strategic targets and long-term success”. It can’t be a bolt-on that is disconnected from your core business model. It must determine how your company positions itself, the direction you take, the targets you set and how you will achieve your long-term goals. Business success is measured as progress against your purpose.
When your purpose informs your business strategy, it helps guide decisions (especially the more difficult ones) about what you will or won’t do, or what you will or won’t invest in. When your purpose is genuinely integrated into strategy (and governance) then I would expect to see examples of where you have said “no” or stopped doing something because of the purpose.
This essentially means that every B Corp must have what is called an ‘impact business model’ under the current Standards.
Publicly available
Your purpose should be made public with the specific requirement that it’s on your company website. Stating something publicly helps keep you accountable!
Approved by highest governing body
Your purpose must be formally approved at the highest level. This means it can’t just be a statement that the B Corp / Sustainability / Responsible Business team come up with for the purposes of B Corp certification.
That might sound flippant but getting your purpose statement agreed and signed off isn’t always easy. It can highlight any areas of misalignment among senior decision makers or any scepticism about aligning the business behind an impact-focused purpose versus shareholder returns. This can be more challenging in B Corps that have taken on external investment.
This is one of the reasons I recommend you start thinking about this requirement sooner rather than later.
What does good look like?
The new B Corp standards give two examples of purpose statements that meet the requirements and one that doesn’t. I will be sharing more examples of purpose statements in future blogs and LinkedIn posts but for now let’s stick with those three.
Purpose statements that meet the requirements:
“We exist to empower urban communities with data platform solutions that enhance collaboration between cities and mobility operators for more liveable and sustainable neighbourhoods.
To restore and protect the planet’s natural ecosystems, ensuring a healthy and sustainable environment for all living beings.”
A purpose statement that doesn’t meet the requirements:
“Our purpose is to deliver a superior experience to our clients.”
The reason this purpose statement fails is because it doesn’t describe how the business will have a meaningful social / environmental positive impact. Whilst considering customers is important (and a pillar of the current B Corp standards), it is not enough.
Most conventional business advice talks about focusing on your customers or clients – understanding what they need, what their pain points are, and identifying how you can address these. However, doing this brilliantly doesn’t necessarily address any problem that matters in the world. It could even be said to be one of the causes of our over-consumption problem – businesses looking for new ways to make money by addressing needs of problems people didn’t even know they had!
If you want to have a meaningful impact then it’s important to think beyond customers and identify how your business can positively impact society.
The implications for your business
I’ll be honest – a lot of B Corps are currently not meeting this purpose requirement. And creating and embedding a purpose isn’t an overnight job.
Therefore, I encourage you to look at your purpose statement (if it exists) and ask yourself whether it would meet the stringent criteria of the new B Corp Standards. In particular:
Is it specific about the positive social / environmental impact you want to have?
Is it integrated into your business strategy?
If not, and you intend to recertify under the new Standards, then I recommend you start doing something about this now.
The good news is that our proven five-step Amplify approach can get you to where you need to be.
Step 1 – identifying the specific real-world problem you are addressing
Step 2 – fall in love with the problem
Step 3 – understand potential solutions
Step 4 – identify the role you can play
Step 5 – build out your integrated strategy
Here’s what Sarah Whale, founder of Profit Impact said about it when I guided her through this process:
“This is giving me goosebumps. Businesses need this. For me this is what the world needs beyond everything else I’ve seen.”
Find out more about how we can support you to articulate and embed your purpose, and meet the requirements of FR2 and PSG1 here.
For a free tool which will help you articulate the impact you are having as a business, download our Impact Framework Template: