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'B Corporation' and Modern Methods of Construction (MMC)

With an ever increasing focus on sustainability across the world, we are seeing many companies within the construction industry moving away from traditional construction practices and more towards the off-site Modern Methods of Construction (MMC). Complementary to this is the certification as B Corporations (B Corp), which is based on five pillars: governance, workers, community, environment, and customers. Combining MMC with B Corp certification aims to see the construction sector become much more accountable and transparent over the coming years.

What is "B Corp"?

B Corp Companies are companies verified by B Lab, which is a non-profit international network, founded in 2006. B Corp status is an acknowledgement by B Lab that a business is meeting high standards of specific and verified performance, focusing on accountability and transparency in relation to all areas of its business including (but not limited to) benefits to its employees and how it supports charities, it's supply chains and materials it uses. The B Corp certification focuses on a company's overall social and environmental impact, and how this impacts all stakeholders - including its workers, communities, customers, and the planet - not just its shareholders.

There are currently over 1,300 UK B Corps across 58 industries with over 59,000 employees. As Environmental, Social and Governance increasingly becomes a key focus within organisations, there is an increase in the need for UK businesses becoming more transparent and this may see a greater shift in more and more companies aiming for B Corp status.

Becoming B Corp

To become B Corp certified there are a number of steps a company must take including, carrying out the B impact assessment which measures the company based on the five aforementioned pillars.

In addition to the assessment, a company must update its constitutional documents and include the prescribed form wording within its articles of association. The size of the company will dictate when these changes need to be made, with companies with less than 50 employees needing to amend their articles prior to certification.

The amendments required to the articles of association include:

• wording that the company exists to promote the success of the company for the benefit of its members as a whole and, through its business, to have a material positive impact on society and the environment, thereby showing a commitment to a "triple bottom line" approach to business;
• wording in relation to section 172 of the Companies Act 2006 namely, the duty for directors to promote the success of the company however, the prescribed wording places a greater emphasis on this duty ensuring consideration is hard for all stakeholders and not just the company's shareholders; and
• a requirement on the company to produce an impact report to accompany its annual accounts to help shareholders assess the impact the company has had and how it has complied with its section 172 duty.

Such amendments must be passed by a Special Resolution of the shareholders of the Company and filed at Companies House.

For more information contact Rebecca McCann in our Construction & Infrastructure department via email or phone on 0333 207 1140. Alternatively send any question through to Forbes Solicitors via our online Contact Form.

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