What Is a B Corporation
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B Corp accreditation has grown to be one of the most recognized symbols of ethical company practices all around the world since it was established in 2006.

It has evolved into something like the Fair Trade or USDA Organic certification given to some foodstuffs—a potent marketing tool that quickly sets items apart from their non-organic rivals.

In a 2019 survey, 47% of customers would be willing to pay at least 25% extra for sustainable goods and services. A Yale University analysis from 2018 claims that certified B Corps have higher revenue growth rates than comparable-sized public companies. Even throughout the Great Recession, this pattern persisted.

What is a B Corp?

A for-profit company that has achieved “the highest standards of verifiable social and environmental performance, public openness, and legal responsibility to balance profit and purpose” is known as a “certified B Corporation,” or B Corp.

This definition was released by B Lab, a nonprofit organization that certifies businesses with B Corp status by evaluating their social and environmental impact by a set of sustainability and transparency requirements.

B Corp website

Companies that become B Corps should benefit all stakeholders with their goods, services, and business methods. Stakeholders are defined by B Lab as the environment, community, employees, and customers.

B Lab asserts that five requirements for B Corps to launch a business are:

  • Accountability. Directors must take into account how the company will affect all stakeholders.
  • Transparency. Public reporting of social and environmental performance is required from businesses.
  • Performance. Companies must submit a recertifying application every three years and receive a minimum score on the B Impact Assessment.
  • Availability. No matter where or how a company was founded, it can become a B Corp.
  • Cost. Businesses pay B Lab certification fees, with the amount dependent on their income.

B Lab sorts certified B Corps into four categories:

  • Startups
  • Multinational and public corporations
  • Companies with related entities
  • Internationally certified B Corps

B Corps freely participate in B Lab's evaluation process. They go through a demanding B company certification procedure, which is described below, as part of that evaluation.

B Corps vs. benefit corporations

A common misunderstanding is that “B Corp” stands for “benefit corporation.” Benefit corporations and B Corps both have similar missions, but they differ in numerous important aspects, including the fact that benefit corporations are not affiliated with the B Lab.

What is a benefit corporation?

A typical corporation, such as a C corp legal entity, that adjusts its activities to commit to better operational standards, accountability, and openness is known as a benefit corporation. Benefit corporations frequently commit to generating sustainable value and public good in addition to making a profit.

Similarities and differences

Benefit companies and B Corps share the same commitment to putting stakeholder benefits both locally and internationally first.

Directors of B Corps and benefits companies are required to take into account how a corporation will affect all stakeholders and to produce reports on that performance, comparing it to external benchmarks. They vary, nonetheless, in terms of the certification's issuance, accessibility, and price.

  • Availability: Only 30 US states and DC provide benefit company status. Maryland and Oregon both have benefit LLC possibilities. Any company, no matter where it is, may become a certified B Corp.
  • Accountability, transparency, and performance: B Lab analysts certify B Corps (and require recertification). Benefit companies must self-report their performance, but state agencies enforce eligibility requirements. Government authorities won't evaluate the continued effectiveness of a benefit corporation.
  • Recognition: B Corp status is a private accreditation offered by an impartial nonprofit organization that provides unbiased performance assessment. Businesses that achieve B Corp accreditation are permitted to use the B Lab's Certified B Corporation emblem in their marketing materials. Government authorities recognize a benefit corporation as a legal entity, but their involvement ends once a benefit corporation's eligibility is established.
  • Cost: Benefit companies must pay between $70 and $200 in state filing fees, and depending on the company's size, B Lab certification costs can vary from $500 to $50,000.

Consider whether your company satisfies or comes close to satisfying B Lab's guidelines if you're interested in becoming a B Corp. Do you currently employ sustainable strategies with the community in mind?

If yes, you should get ready to take the free B Corp Impact Assessment. If your objective is to make your company more ecologically and socially conscious in its processes, even if you decide not to pursue certification, evaluating your own company's sustainability policies in this way might be helpful.

How to get certified as a B Corp

Several variables, such as a company's sector, industry, score, and ownership structure, will affect its road to certification as a B Corp.

According to B Lab, the procedure takes small- to medium-sized businesses six to eight months. The steps are, generally speaking, as follows:

1. Register

Become a participant in the B Impact Assessment. This action has no associated cost.

2. Complete pre-work

Learn about your company's B Corp certification's unique legal requirements. On its website, B Lab offers an interactive tool for figuring out legal requirements based on region, industry, corporation status, and other variables.

To assess whether your company qualifies as a B Corp, you must complete a risk review that B Lab will give if you are applying as a multinational corporation. This pre-screening approach looks more closely at a multinational's history, operational practices, objectives, and public perception.

Amass the necessary information and supporting documents for the B Impact Assessment.

3. Apply

For the first score, complete the B Impact Assessment online. (Note: Finishing the B Impact Assessment does not make an application final.)

Examples of queries may relate to the company's procedures for exchanging financial data, how its pay structure stacks up against the competition, how supplier quality control is handled, or whether it has any energy efficiency initiatives. Answers are frequently multiple choice and occasionally scaled (i.e., very often, often, somewhat often, rarely, never, etc.).

After finishing the majority of the evaluation, you will be requested to create a company profile and launch a disclosure questionnaire. Your starting point score will now be shown. If it is below the 80-point threshold, you might need to reassess your business and make some improvements before retaking the evaluation.

You should submit your B Impact Assessment for assessment if you score more than 80 points. You must now pay a $150 submission fee.

4. Verify

After finishing the majority of the evaluation, you will be requested to create a company profile and launch a disclosure questionnaire. Your starting point score will now be shown. If it is below the 80-point threshold, you might need to reassess your business and make some improvements before retaking the evaluation.

You should submit your B Impact Assessment for assessment if you score more than 80 points. You must now pay a $150 submission fee.

5. Certify

You will undergo post-verification and sign a B Corp Agreement if an analyst confirms you have exceeded the 80-point cutoff. The agreement must be signed for you to receive formal B Corp certification. A yearly certification cost will be charged to you, based on the size and revenue of your business.

Want to become a certified B corp? Apply today

Supporting the B corp movement will increase your revenue. Companies like Patagonia and Ben & Jerry's have taken use of the accreditation to promote their social missions, boosting shareholder value and improving the planet.

B corp FAQ

What does “B Corp” mean?

B Corporations are for-profit businesses with an emphasis on social responsibility. B Lab, a nonprofit organization, verifies business organizations taking part in the program to make sure they add value to their workers, community, and environment.

What are B Corp requirements?

A company must be for-profit and operational for at least a year to qualify for B Corp accreditation. Any size for-profit organization can turn into a B Corp, but the process is different.

Is B Corp certification worth it?

A B Corp accreditation can increase the value of your business but has no tax advantages. The business can draw clients if it uses distinction in its marketing.

How is B Corp different from a benefit corporation?

Although the phrases Benefit Corporations and Certified B Corporations are not synonymous, they are frequently used as synonyms. Benefit corporations are legal entities, whereas “B Corporations” are certifications like Fair Trade or USDA Organic.

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