While you were developing your small business you might have waded through the alphabet soup of S Corps and C Corps and their tax implications. Now there's another kind of Corp—a B Corp—and it is more about social and environmental practices than dividends and draws.
What Is a B Corp?
To achieve B Corporation status, your business must be awarded a special legal certification by the non-profit B Lab. B Lab, based in Philadelphia, judges a company on its social and environmental accountability as well as its transparency. Here's how B Lab explains the certification on its website: "B Corp certification is to sustainable business what Fair Trade certification is to coffee or USDA Organic certification is to milk." More than 600 companies in 15 countries in 60 different industries have been certified as B Corps.
What Does it Take to be a B Corp?
B Lab puts companies through a series of impact assessments and guides them in amending their legal structure to allow them to go about the business of working for change while working for profit as well.
The legal structure used by B Corps protects business owners from stakeholders who want them to focus solely on making money and not on social and environmental accountability.
B Lab uses the following five categories to assess businesses interested in B Corp certification:
- Accountability. Being accountable and transparent in business matters.
- Employees. Providing a good work environment and fair compensation as well as allowing employee ownership.
- Consumers. Making or providing beneficial products and services through beneficial manufacturing processes.
- Community. Giving back to the local community.
- Environment. Eco-friendly measures in place from the corporate office to the distribution system.
"Becoming a certified B Corp means that a third party non-profit has evaluated a company's claims of social and environmental responsibility." says Katie Kerr, communications director at B Lab.
"You can actually go to the profile pages of the company and see the individual certifications," Kerr says. "We have the data to back it up."
Why Become a B Corp?
Why would a company want to become a certified B Corp? It can be a tool for attracting funding and employees and it is a like-minded community for business owners.
"It can help you save money through people who want to support B Corps and offer discounts and free services," Kerr says. "Companies may be chosen over the competition because they are a B Corp. It's a branding strategy for many."
In a world where many companies claim to be environmentally friendly and socially responsible, the B Corp status sets a standard recognized by both consumers and investors.
Understanding Benefit Corporations
Benefit Corporations are companies that voluntarily work toward a higher corporate purpose, accountability and transparency. Eleven states have passed laws recognizing the structure of the benefit corporation and lobbying is underway in 16 other states.
B Corps are benefit corporations that have been certified by B Lab.
It's not necessary to be doing business in a state that has passed the legislation to become certified by B Lab nor is it necessary to be certified by B Lab to conduct business as a benefit corporation.
B Corps at Work
B Corps enter into a mission to do good things in the world and promote shareholder value as well. Guayaki Sustainable Rainforest Products is a B Corp that believes in that mission.
"As a certified B Corp we are committed to leveraging business as a force for positive change," says Chris Mann, CEO of Guayaki.
Guayaki operates under a business model that melds sustainability and profitability. The company imports a beverage called yerba mate that is made from a tree in the rainforest. Profits go back into the rainforest to fund reforestation and jobs.
"The principles of our B Corp and our B Corp peers create a rich ecosystem, which we all contribute to and learn from. In doing so we are leading a powerful grassroots movement to use business to restore ecosystems, drive social equity and build the economy," Mann says.
"I think this is an exciting community redefining success in business and they are the vanguards of what is going to become the new norm," Kerr says. "Businesses should recognize and embrace the fact that consumers are looking for these types of companies and employees, especially Millennials, want to work for these companies. It's time to start measuring what matters and look at the whole picture."
Carla Turchetti is a veteran print and broadcast journalist who likes to break a topic down and keep her copy tight. That's why this bio is so brief! Carla blogs via Contently.com.
Read more about creating a sustainable business.