INVESTMENT companies certified as ethical by the prestigious B Corp scheme hold £250 million worth of shares in oil giants and weapons firms supplying the Israeli military, a Ferret investigation has found.
The B Corporation (B Corp) status is granted to companies seen as having met the “gold standard” for business ethics in areas such as protecting the environment and the treatment of staff and the communities they operate in.
It is a respected accolade and the B Corp logo adorns the shopfronts of some of the UK’s biggest brands. For the past three years, more B Corps have been registered in the UK than anywhere else in the world.
But our investigation found B Corp-certified financial firms have investments in oil companies such as BP, Shell, ExxonMobil and Chevron, which are all listed among the top 10 most carbon-polluting companies in the world.
Investment B Corps also hold shares in weapons manufacturers including Lockheed Martin and RTX, formerly known as Raytheon. Stakes in these publicly traded arms companies surged following the start of the war on Gaza.
Campaigners said our findings highlighted a “cynical exploitation” of consumers and called on B Lab – the organisation awarding the B Corp credential – to “tighten rules around investing”.
Ekō, a US-based consumer group, said investment companies “may not be making the bombs that are raining down on Gaza, or building the coal mines that will choke our planet, but they are profiting from them”.
“And if that accords with B Corp’s values, then the scheme is worth very little indeed,” it claimed.
B Lab Global, the body which awards B Corp certifications, said it was “vital that businesses transition away from fossil fuels”. It acknowledged its current rules “do not fully account for the nuances” of the certified investment firms.
B Lab revoked the certification of four agencies owned by Havas in July after it was revealed last year that the French advertising company signed a multi-million-dollar public relations contract with Shell.
In recent years, B Lab has had to fight off calls that its credentials are used for greenwashing.
Ekō previously filed a complaint against one B Corp investment adviser, Swiss bank Lombard Odier, after The Ferret revealed its fossil fuel holdings.
After The Ferret approached B Lab for comment in May, it announced it was hiring a consultant to review certification standards and advise on new investment regulations for financial firms.
“Our goal is to create a standard that is both more tailored and more comprehensive in how it applies to financial services companies, including investment advisers,” B Lab Global said of the shift.
It is also planning to require financial firms to screen their investment portfolios for human rights and environmental impact and to “take necessary mitigation actions” from next year.
More than 350 UK companies have so far received the acclaimed title in 2024. Since 2007, nearly 9000 companies from dozens of countries and industries have been certified.
Notable certified brands include the clothing company Patagonia, Ben & Jerry’s ice cream and The Body Shop. The Scots beer giant BrewDog brewery lost its B Corp status in 2022.
‘Exploiting customers’ beliefs’
B CORPS are lauded as “forces for good”. The ethical accreditation recognises high standards in five areas of business, including environmental and community impact.
B Lab’s own surveys in the UK, the US and Canada found that most people who were aware of the scheme associated it with environmental benefits.
If website visitors type “fossil free” into the Find a B Corp search box, on B Corp’s website, they might expect to find firms with investment policies that exclude oil, gas or coal extraction. For example, Genus Capital Management, which has B Corp accreditation, describes itself as Canada’s “first fossil-free mutual fund”, allowing “Canadians to invest in a sustainable future”.
But Genus’ corporate filings with the US watchdog for the period between June and August 2024 show it held investments in major oil and gas corporations, including ExxonMobil and Philips 66, worth £11m. Genus’s total shareholdings were £579m for the same period.
Among the 217 investment advisers certified as B Corporations in September 2024, The Ferret found 48 companies that disclosed their investment portfolios to the US market regulator and examined their latest available quarterly filings. Only companies managing assets of more than £77m are required to make their portfolios public.
Some 20 companies – mostly US-based – were found to hold investments in fossil fuels, worth £148m at the end of 2023.
B Corps has invested nearly £92m in the defence sector, and at least £48m in companies manufacturing weapons and parts used in the Israel-Hamas war. These include Boeing, Lockheed Martin, General Dynamics and RTX, formerly Raytheon.
Among the investors in companies supplying arms and weapon parts are firms that come up as search results for terms “social justice” and “socially responsible investing” on the B Corp website.
B Corps invested £9m in Altria, one of the largest producers of tobacco products in the world.
Tighten rules on dirty investments, say campaigners B CORP companies are not breaking the rules if they fail to demonstrate high standards in environmental performance or a positive community impact.
This is because certification criteria assess performance across five areas – environment, community, governance, workers and customers, and the scores are added together.
“The large number of metrics may lead companies with low performance in certain areas … to be certified,” claimed Vincent Vandeloise, senior research officer at Finance Watch, a Brussels-based organisation advocating for financial transparency and regulation.
US advisory firm DeDora Capital’s B Corp score breakdown shows it received the lowest score for its environmental performance, while its highest score was achieved in the workers section, for paying fair wages and implementing equity and diversity policies in the workplace.
DeDora has 10 full-time employees. Its financial filings show it held £2m worth of holdings in Chevron, ConocoPhillips and ExxonMobil in the period of June to August 2024.
Analysis of the average scores of the B Corps’ industries shows investment advisers perform best in the customer category, and worst in the environment section.
DeDora’s does not hide its investment in oil and gas – its website says that “fossil-free” investing is just one investment strategy, alongside conventional “socially responsible strategies, and fossil-fuel divestment” options for clients wishing to align investments with their “personal values”.
B LAB excludes weapons and tobacco companies from certification and limits the eligibility of energy companies to those producing less than 50% of energy from fossil fuels.
But it currently places no constraints on companies investing in these sectors, despite referring to them as “controversial”.
Ekō’s senior campaign manager, Nick Haines, said: “This cynical exploitation of customers’ genuinely held belief that they are making investment decisions that benefit the planet is a disgrace.”
Haines claimed that B Lab needs to “tighten their rules for investors” and “start taking these issues seriously”.
B Lab Global’s director of standards, Judy Rodrigues, said: “The financial services industry is a unique and diverse sector with a distinctive business model and approach to managing its impacts on society and the planet.
“During the development process for B Lab’s new standards, we recognised that we would need to develop tailored standards for the financial services industry,” she added. “Following the engagement of a consultant announced in May, B Lab will be adding more specificity to the new standards as they relate to the financial services industry.”
Changes planned for 2025 include a requirement for financial firms to assess the negative environmental and human rights impact of their investment. Until it launches new standards, B Lab is using an internal policy by which it may decline to certify companies with investments in tobacco, firearms and other industries, when this stake exceeds 5% of the company’s annual revenue.
B Lab first announced a plan to change its standards for finance firms in 2022.
Certification an ‘ethical sheen’
HAINES said that investment managers recognised the growing demand for ethical investment products, “but rather than actually meet this demand with tightly screened products, they rely on loose certification schemes like B Corp to put an ethical sheen on their dirty investments.”
David Tong, campaign manager at Oil Change International, which campaigns for fossil fuel transition, said that B Lab claims its certification is “rigorous” and requires showing “’high social and environmental performance’, but then helps to greenwash fossil fuel financiers and enablers by certifying them”.
B Lab Global said that while investment advisers were in a “unique position” to influence the economy by recommending responsible investments, their “clients often make the final decision”.
Details of how it will restrict this industry are not yet known. The organisation said the latest draft of B Corp standards already includes requirements for services, media and consulting companies to assess their clients’ negative human rights and environmental impacts.
In 2023, the French marketing giant Havas signed a multi-million-dollar public relations contract with Shell. After it concluded its investigation in July, B Lab decided to revoke the certification of its subsidiaries.
BrewDog was stripped of its status in 2022 after allegations of workplace bullying were revealed in a BBC documentary.
The Scots firm said the decision to “step aside” from B Corp certification was made by its board of directors. It said B Lab had requested additional measures, which BrewDog decided it could not adhere to. While it remained “committed to the values upheld by B Lab”, it was focusing on its blueprint.
Awarding the ethical certification to Nespresso caused a backlash in 2022 when a group of B Corp coffee brands alleged human rights violations on farms run by Nespresso’s parent, Nestlé.
All companies named in this article were approached for comment.
