Evolution through innovation: a new way to define company size

UPDATE: Please note that this blog was updated on 21 May 2025 to reflect how company size is defined in B Lab's new standards.

Innovation is as much about having an idea as having an opportunity. Fortunately for us, the process of evolving the standards for B Corp Certification presented many opportunities. In addition to shifting from an 80-point scoring system to seven Impact Topics, we’ve also changed how we define company size - which in turn determines which requirements a company is expected to meet. This is to account for the effects of outsourcing and automation, which sometimes lead to size ‘mismatches’ - when the workforce size remains as is or even reduces whilst other size measures increase.

Join Susmita Kamath and Bernard Gouw, Senior Managers in the Standards Team, in exploring why the size definition matters, and how a new table sits at the heart of this innovation.

What’s changed?

Currently, the B Impact Assessment (Version 6) defines the size of a company by using the number of workers. In the new standards, we changed this to the number of workers or revenue, whichever is higher. We also added two size categories: X Large and XX Large. The table below shows these changes and the cut-offs for each category.

Size is determined by the number of workers or revenue, whichever is higher.

USD = United States dollar

FTE = full-time equivalent

 Examples:

• A company with 55 workers and USD 100 million in revenue would be large.

• A company with 55 workers and USD 9 million in revenue would be medium.

Why does this matter?

Our standards consider a company’s size because it’s a shorthand for their ability, potential impacts, and responsibility for global challenges. We expect more from larger companies. But what determines a company’s size?

Already in the first public consultation in 2022, our stakeholders asked if other measures, like revenue or profit, could be considered. We also received feedback from the Standards Advisory Council and those verifying company performance against the standards about the size ‘mismatch’ that outsourcing labor can cause. Outsourcing can reduce the number of workers without decreasing other size measures, like revenue, resulting in perceived mismatches.

We see across the B Corp community, and beyond, that the type and likelihood of outsourcing varies by industry. In the clothing industry, manufacturing is usually outsourced to countries with lower labor costs. A clothing brand rarely owns a factory. In the food and beverage industry, it’s slightly more common for brands to own their factories, whilst the growing of ingredients is still usually outsourced. Across all industries, it’s common to outsource business services, like cleaning, security, and marketing. Crucially, as we enter into a new era of technological innovation, many parts of a business, like customer services, administration, and sales will change with artificial intelligence (AI). In this context, AI has the same effect as outsourcing. It’s a move that will see worker numbers decrease without revenue necessarily decreasing.

Standards that tailor requirements based only on the number of workers are vulnerable to size ‘mismatches’. More importantly, this mismatch means that standards can inadvertently reward companies that outsource or use automation with easier requirements.

We don’t see outsourcing or automation as inherently bad. However, we do believe standards should account for their potential to distort company size measures.

What do other standards do?

Surprisingly, tailoring requirements to company size is not common. For example, GRI, Future-Fit, UN Global Compact’s Communication on Progress, Rainforest Alliance’s Sustainable Agriculture Standard, SEWF People and Planet, Workforce Disclosure Initiative are all size-agnostic. And where it does exist, size is almost always defined by the number of workers (e.g. Ecovadis) or revenue (e.g. UK Modern Slavery reporting).

The EU definitions stand out for combining multiple measures: number of workers, turnover (i.e. revenue), and balance sheet (i.e. assets). However, they don’t address outsourcing or automation. A company that outsources all manufacturing, for example, will have fewer workers and fewer assets, meaning they are reallocated to a smaller category. Or to put it differently, outsourcing and automation could lower a company’s reporting requirements.

What did we do?

To develop the new approach, we adapted the above EU definitions in two ways. First, we removed ‘assets’ because our stakeholders felt they were less indicative than revenue, and because their verification can be very complex. Second, we kept revenue as a second measure and introduced a ‘whichever is higher’ logic. This new approach should better capture a company’s ‘true’ size, especially for those that use significant outsourcing or automation.

Where do our figures come from?

The current standards (Version 6) for B Corp Certification define the size of a company solely based on the number of FTE workers they employ. The size categories are: 

• 0 worker (or Company without workers) 

• 1-9

• 10-49

• 50-249

• 250-999

• 1000+

Note: The current standards treat large multinational companies with over US$5billion in revenue distinctly.

To define the revenue thresholds, we first reviewed the B Corp community’s revenue data for each size category above. We were looking for revenue ranges that most closely reflected the typical company revenues for the above number of workers on an FTE basis. 

For each revenue data set, we reviewed the statistical outliers. We used these outliers to inform revenue thresholds that correspond to each FTE-based size category. Through this analysis, we also observed that roughly 10% of companies in the B Corp community could get allocated upwards in size due to this size definition change. 

The categories and their cut-off points received broad support during the second public consultation. We therefore did not make any changes since the second draft that was shared at the time.

Through this innovation, we tackle challenges from outsourcing and automation head-on. In considering both worker count and revenue our size assessments become sharper, fostering better alignment between size and expectations.