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Approach to Impact Assessment

B Lab uses an iterative approach to assessing impact that is holistic, designed to recognize positive performance and impact, comparable across company size, transparent and oriented towards action and scalability.

Holistic: The B Impact Assessment (BIA) generates a composite score (out of 200 points) of a company’s overall social and environmental performance. A GIIRS Rating is generated using this data, creating two ratings. One rating captures performance regarding Operational Impact (1-5 stars) and a second that shows Impact Business Model performance (Bronze, Silver, Gold, Platinum, N/A).

Positive performance focused: The BIA allows a company to earn incremental positive points for each policy, practice, input, output, or achievement; there are no negative points or weighted negative screens. The BIA inquires about many different types of positive impact, making it virtually impossible for a company to achieve all practices and achievements covered. A low score on the BIA does not imply any negative performance or malpractice by a company or fund.

The Disclosure Questionnaire asks a company to report any potentially sensitive industries, practices, outcomes or fines/sanctions, however this section is not a weighted component of the overall rating but rather intended to highlight any sensitivities for a prospective investor. B Lab maintains the right not to issue a rating for a company or fund if it finds any egregious information during the ratings process.

Action-oriented: The assessment seeks to weight action above intent. Within the assessment and within a particular Goal, BIA questions related to practices and achievement are generally weighted more heavily than questions regarding policies.

Scalability-oriented: The BIA often requires written formal policies to be in place to receive full credit in the ratings system. Maintaining and executing informal, unwritten policies is more easily achieved when companies are small in size, but as companies grow, take on additional capital, and bring on new employees, it is increasingly important to record formal policies and expectation.

Comparable across organizational size: The BIA is designed to be comparable across company and fund sizes, allowing the user or an investor to evaluate and compare two similar companies (same geography, same sector or same company size).

Leverage of third-party certifications: Whenever possible, the BIA relies on relevant third-party certifications (Fair-Trade, USDA Organic, Cradle-to-Cradle, LEED, etc.) to leverage expertise in detailed product or practice areas and existing industry standards in the overall company rating.

Educational/Management tool: IB Lab has built more than 30 "Best Practice Guides" within the assessment to inform companies on how to implement the positive policies and practices included in the assessment. Companies who have participated in the ratings process report increased knowledge and awareness of their company decisions and the impacts on stakeholders. Many companies choose to set annual goals based on their BIA score and use the assessment as a guideline of future proactive actions to take.

Transparent: B Lab has a commitment to transparency within the ratings system. Assessment weightings for the various assessment tracks are visible to any interested party online, and each question weighting is clearly labeled to demark a question's weight distribution within its Topic area.

Dynamic: B Lab and the relevant Standards Advisory Boards will release a new version of the ratings system every two years in order to reflect current best practices in social and environmental performance and to improve the ratings system over time.

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