B Corps are companies that have been certified by B Lab, a global organization with a mission to build sustainable practices that harness the power of business to help address society’s greatest challenges.
According to B Lab’s website, its mission is:
To transform the global economy to benefit all people, communities, and the planet.
The early days
In 2006 a group of entrepreneurs gathered at the University of California-Berkeley’s Haas School of Business with one goal: To create innovative company structures that would help address some of society’s most pressing problems. The result was an entity now called a Benefit Corporation.
Benefit corporations vs. Certified B Corporations
The benefit corporation is a legal structure for a business, similar to creating an LLC. Benefit corporations are legally empowered to pursue positive stakeholder impact alongside profit.
Some companies are both Certified B Corporations and benefit corporations. While the benefit corporation structure fulfils the legal accountability requirement of B Corp Certification, a company cannot legally call itself a Certified B Corporation until it passes B Lab’s rigorous certification process.
Benefit corporations vs. Certified B Corporations
The benefit corporation is a legal structure for a business, similar to creating an LLC. Benefit corporations are legally empowered to pursue positive stakeholder impact alongside profit.
Some companies are both Certified B Corporations and benefit corporations. While the benefit corporation structure fulfills the legal accountability requirement of B Corp Certification, a company cannot legally call itself a Certified B Corporation until it passes B Lab’s rigorous certification process.
Both types voluntarily adopt legal structures that allow them to pursue profit while positively impacting society. They are focused on creating long-lasting and positive change in their communities.
B Corp vs. Non-profits
Don’t confuse a B Corp with a non-profit. They are different legal entities, and the most significant difference is that a B Corp is a for-profit company with a social or environmental mission.
Whereas a benefit corporation pays taxes on its profits, like any other U.S. corporation, a non-profit is generally exempt. So, while a non-profit may have financial assets, those assets are not taxed.
There are some similarities in that both entities must meet specific standards to be certified as such, and each must report its social and environmental impacts annually. Both risk losing their status if they fail to perform their stated missions.
Benefits of becoming a Certified B Corp
As society puts more and more pressure on organizations to do good works, B Corps take advantage of consumer recognition and support.
Consumers have become increasingly disillusioned with big corporations. The move toward B Corps is a way for brands to overcome consumers’ lack of trust in social and environmental corporate social responsibility.
This positively impacts their marketing and public image and, therefore, their profitability. But it’s so much more than a marketing tool — it’s a new corporate philosophy.
According to this Harvard Business Review article, the top reasons companies embark on the B Corp journey are:
- To demonstrate a commitment to the ‘business for good’ model
- Credibility
- Attract top-level talent
- Root out inefficiencies
- Earn loyalty and consumer trust
How to become a B Corp?
A company can become a Certified B Corporation by:
- Meeting rigorous standards of social impact
- Passing the initial third-party certification review, then passing recertification every three years
- Maintaining at least one public benefit corporation status with their state government or other governing body
According to BCorporation, demand is so high that it now takes as long as 6–10 months to undergo the rigorous certification process. Costs begin at $1000 and increase according to the company’s revenue.
Only 1 in 3 companies that apply, will be approved.
Once B certification is achieved, the organization is obligated to consider the impact of all of its business decisions on social and environmental performance, accountability, and transparency.
Famous B Corps
There are more than 3500 B Corps in more than 70 countries.
The world’s largest Certified B Corp is Danone. Other well-known Certified B Corps include Patagonia, King Arthur Baking Company, Avocado Green Mattress, Dansko, Cabot Creamery, Fetzer Wines, Ben & Jerry’s, and many more. You can get a full list here.
In conclusion, B Corps are the model for organizations that walk the walk and talk the talk.
For those companies who want to help solve global problems, becoming a certified B Corp is the best way to solidify that commitment and be held accountable to people, communities, and the planet first; and then to profits.