In the last decade, there has been a movement of entrepreneurs who want to do more than just make money. They want their business ventures to have a positive impact on society and the environment. So they’ve created what is known as a B Corp, or Benefit Corporation.
What makes these companies different from traditional businesses? Unfortunately, too many people think that if you’re not making lots of money for your shareholders then you must be doing something wrong. That’s why it’s so important for these new types of companies to exist – because they offer public benefit in addition to the pursuit of profit. Not only does this help create sustainable businesses, but it also helps redefine success in business by going beyond simply maximizing shareholder value. And you will be surprised what they found.
What are the barriers to becoming a Certified B Corp?
B Lab believes that changing the world requires business as usual. The current system for companies is not conducive to creating sustainable businesses in an effort to both make money and be of service to society. The biggest barrier to becoming a Certified B Corp is the current definition of success in business. Businesses are taught from day one to increase shareholder value, which incentivizes companies to look out for themselves and ignore how their decisions affect others and the planet.
This makes it challenging for businesses to compete with each other to do what’s best for all of us, because the normal way of doing business only considers their impact on shareholders.
It takes a lot of work and effort to change what is considered “normal” in business. Not only that, but it also takes an open-mind and willingness by companies to take into consideration how they can be beneficial and sustainable for years to come. But with an increase in billion dollar storms and increasing weather events around the world, the time to change is NOW, because we have delayed it for too long already.
How is B Corp different from a corporation?
B Corps are different from traditional corporations in that they have a legally binding fiduciary obligation to take into account the interests of workers, community, and the environment along with their shareholders. In the past, corporations have faced numerous lawsuits because they chose to release dangerous products into the market, or pay their workers extremely low wages.
However, with B Corps, there is no legal difference between maximizing shareholder returns and doing good for the world. Businesses like this are seen as an incredible opportunity for corporations looking to make a change in society without giving up their business stability. And this has opened the doors of opportunity.
How many B Corps are there?
B Corps are certified by a nonprofit organization called B Lab in terms of meeting certain criteria in governance, workers’ rights, environmental impact, and so forth. Currently, over 3,500 companies in over 70 countries have been certified as B Corps.
What is the verification process to become a B Corp?
In order to become a Certified B Corp, companies must go through the verification process. This includes submitting documentation and paperwork proving that they meet at least two of the ten B Corp certification standards. This might include a statement of purpose, a corporate social responsibility report, and/or a community investment strategy. Then a third-party verifier conducts an intensive review of company legal and financial records to ensure that they meet all criteria for certification. It is a rigorous and thorough examination.
What is the minimum verified score for B Corps?
The minimum verified score for B Corps is 80 out of 200 points. This score must be maintained for two years before a company can officially call themselves a B Corp and it must be verified every two years after that. If the score falls below 80, then they no longer qualify to use the term “B Corp” in their name. The testing is rigorous and most companies fail at their first attempt.
What is the difference between B Corp and B Lab?
There are many different types of companies that use the term “B Corp” in their name. While all of them are for-profit entities, not all of them are what is known as Certified B Corps. This means that they do not meet at least two of the ten standards required by certification, which includes having a legally binding fiduciary obligation to society. This certification is only available to companies that are required to provide documentation of meeting the requirement, which includes having a certified score of 80 or higher.
B Lab, on the other hand, is an independent nonprofit organization that serves as an advocate for B Corps by powering people who want to change their lives and the world through businesses that compete to do what’s best for all of us. The main goal is to help spread awareness about sustainable, community-minded companies that want to make a difference while doing good.
What are the 10 B Corp standards?
The ten standards that must be met in order to become a Certified B Corp include:
- legal accountability to shareholders
- commitment to transparency
- consideration of employees
- impact on the community
- climate change
- commitment to high standards of environmental performance
- stakeholder engagement
- respect for all communities
- anti-discrimination policies
- commitment to long term goals
What are some popular companies that have become B Corps?
Some well known companies that have become B Corps include Patagonia, Warby Parker, Etsy, Beautycounter, Method Home, and Seventh Generation. There is also a popular company that you have most likely heard of called Ben & Jerry’s.
And it’s not just large companies that have become B Corps, either. There are also many smaller companies such as the New Jersey based outdoor apparel company Diggs, and the Chicago-based accounting firm Faraci Lange LLP.
What is a for-profit company that offers public benefit?
A for-profit company that offers public benefit is one which aims to provide social value in addition to its business operations. This not only allows businesses to create sustainable models, but also changes the way people view success by going beyond simply maximizing shareholder value. These companies help contribute revenue to the community instead of taking it away. The idea behind the B Corp certification is that it allows companies to become an instrument for good while remaining competitive. These are known as Certifiable B Corps.
What is the purpose of a B Corp?
A B Corporation, or Benefit Corporation is a for-profit entity that offers public benefit in addition to the pursuit of profit. Not only does this help create sustainable businesses, but it also helps to redefine success in business by going beyond
What is the difference between a B Corp and ESG?
There are a number of differences between a B Corp and companies that have Environmental, Social, and Governance (ESG) goals. ESG adopts these goals as part of its businesses planning to increase long term value for all stakeholders. In addition to the commitment to public benefit, B Corps are legally obligated to make decisions in the best interest of all their stakeholders, not just stockholders.
What does the B in B Corps stand for?
The B in B Corp stands for Benefit. The full title is Benefit Corporation (B Corp). Benefit Corporations are certified by B Lab, a non-profit organization responsible for the standards and evaluation process. Their goal is to create sustainable businesses that create social good while remaining profitable.
How do benefit corporations get certified in the United States?
B Corp certification is set up by state and there are currently over 5 states that have certified companies including California, Pennsylvania, Colorado, Maryland, New Jersey. Once a company has been verified as meeting the B Corp criteria it is allowed to operate as a B Corp and use the logo on their products.
What is the difference between a traditional company and a B Corp?
A traditional company focuses solely on maximizing its profits for investors, with little regard for the consequences of its actions. This often leads to poor employee treatment, environmental damage, and sometimes even unethical sales practices. A B Corp is legally obligated to create public benefit and sustainable practices. It does this with rigorous independent assessment and transparent reporting on its performance that is available for anyone to see.
What is the Benefit Corporation Act?
The Benefit Corporation Act represents a legal framework under which entities can incorporate as B Corps in certain US states with strong provisions for stakeholder rights and accountability. The most important principle of the act is that “A benefit corporation shall be a for-profit entity, intending to create general public benefit, and meeting standards of verified performance.”
How are B Corps taxed?
B Corps are taxed in the same way as traditional corporations. The company pays its tax when it earns a profit, and shareholders pay their taxes on any dividends they receive.
What is the difference between B Corp and social enterprise?
A social enterprise is a company that creates products or services in order to solve social or environmental problems. They are typically mission-driven, meaning they have an explicit aim to improve the world with their business. B Corp is another way of describing businesses that put purpose before profits. Social enterprises and B Corps may overlap depending on the specific mission, but social enterprises are not necessarily B Corps.
What does B Lab mean?
B Lab is an organization that certifies companies as Benefit Corporations, or “B Corp.” B Lab is the non-profit behind the idea to incorporate public benefit into corporations, allowing for sustainable business practices.
What do you think of social and environmental performance?
Do you think businesses with a social mission can be profitable? Why or why not? Would you invest in a company that is trying to make the world a better place as well as make their shareholders money? What does success look like to you? These are questions that will need to be addressed as we move forward in creating a sustainable society on a global scale.
Caveats, disclaimers & benefit corporation legislation
At ESG | The Report, we believe that we can help make the world a more sustainable place through the power of education. We have covered many topics in this article and want to be clear that any reference to or mention of certified, b, certification, environmental performance, transparency, legal, advice, mission, annual, third party, global movement, status, healthier, force or small business in the context of this article is purely for informational purposes and not to be misconstrued as investment advice or an endorsement. Thank you for reading, and we hope that you found this article useful in your quest to understand ESG and sustainable business practices. Long live planet earth. Please also see our article outlining a related topic of CFA ESG investing certificate.