Not many people understand what it means by becoming a B Corp even before they can know whether it is good for them or not. Actually, many confuse it with Benefit Corporation but there is a difference.
Well, B Corporation or simply written as B Corp is a somewhat new certification and a means through which entrepreneurs identify their outlets as something more than a for-profit establishment. Social entrepreneurs seek to use their business to engage in good deeds and provide solutions to environmental and social issues.
The B Corp status is ideally a certification process from a third-party organization that recognizes the commitment of a company towards particular practices that are sustainable.
B Corp versus Benefit Corporation
These two terms are quite different despite being used synonymously. In a nutshell, a B Corp is a stamp of approval or certification through a third party acting as a certifying organ. On the other hand, Benefit Corporation is a particular legal corporate structure in a state.
In much broader terms, a B Corp is a certification that is given the B Lab Company to sustainable profit-making businesses that adhere to rigorous standards of environmental and social performance, transparency and accountability. An assessment is usually conducted by the B Lab Company on the company’s practices and policies to know its environmental and social responsibility.
Understanding Benefit Corporation
A Benefit Corporation is a specific legal business entity that exists in certain states. It is an entity comparable to a corporation (Inc.), Limited Partnership (LP) or Limited Liability Company (LLC) in the formation state. The reasons to become a Benefit Corporation are quite different from a conventional corporation when it comes to its transparency, accountability and purpose.
Various states have a different corporate form that warrants Benefit Corporation. Notable examples include New York, California, Oregon and most recent ones like Washington DC and Virginia among several others. Benefit Corporations don’t necessarily have to be certified specifically through the B Lab Company or any other body. That’s where the difference starts.
The objective of B Corps that are emerging from different parts of the world is to work together towards the realization of a unifying goal – redefine stability and success in doing business. To become a B Corp, certification has to come from B Lap Company after an assessment done on your business in general. The assessment score must reach a certain pre-determined value on the rating system. Most importantly, one must be willing to make some legal changes as directed in the articles of incorporation and remit a certain licensing fee every year to the B Lab Company.
The standards are usually set by B Lab Company for B Corps and assess whether a business company is in compliance with the set goals for B Corps. Take note of the fact that B Lab needs certain legal requirements in order to become a B Corp. Along with the change of the articles of association; other changes may include that of formation documents, board resolutions, bylaws and provisions for shareholders.
Benefits of Being a B Corp
There are a number of reasons why business outlets would want to get B Corp certification and here are the main ones:
- B Corp certification helps businesses grow, scale with integrity, command higher valuations and attain greater influence. These are compliance standards for all B Corps that must be met hence the reason why they are good for serious investors.
- It’s a way of differentiating yourself as unique in the mind of the consumers especially those who know what a B Corp status means. Consumers may incline to B Corps more than those that are not certified.
- With a B Corp stamp, a business’ mission is protected. The core principles of B Corps is about sustainability inside your company’s DNA as it develops and tags along outside capital, or makes plans for succession, making sure that the mission therein can survive well under any new management, new ownership and investors as well.
- To generate buzz as the media and press focus on B Corps continues to increase. This has a high impact on the growth of B Corps in general.
That’s the difference between B Corps and Benefit Corporation. According to the B Lab Company, B Corps such as Giving Assistant represent a much better way of doing businesses. B Corporation certification is issued on the premise of what marketing experts are pushing for nowadays – ensuring that consumers are happy about the company and its way of doing business and not the products alone.