B Corporations

Ethical Business Options for the 21st Century.

Business as we know it is in a transitional state where shareholders are not the only thing that matters anymore, but the environment and the people are a consideration as well. Ethical or responsible industry is progressing towards being the norm in the world of business. In Thailand, I worked for a social enterprise that was based out of New York City and funded both social and environmental projects in various countries via profits made elsewhere. For example, in Thailand, a few of our funded projects dealt directly with reforestation in ethnic regions and qualified health trainings for a non-profit woman’s shelter. This model sounds very similar to something along the lines of corporate social responsibility (CSR), where corporations will, for a number of reasons not discussed here, fund conservation efforts in developing countries. However, one growing area of business that is gaining momentum is the growing trend and rise of Benefit Corporations or better known as “B Corporations.”

First, there are Benefit Corporations and then there are certified B Corporations. Occasionally, the two are called B corporations and, therefore, confusion can develop.

The nonprofit organization B Lab, which certifies corporations on their “B” level status states the difference; “Certified B Corporation is a certification conferred by the nonprofit B Lab. Benefit Corporation is a legal status administered by the state.” Furthermore, “Benefit corporations do NOT need to be certified. Certified B Corporations have been certified as having met a high standard of overall social and environmental performance, and as a result have access to a portfolio of services and support from B Lab that benefit corporations do not.” Essentially, B Lab is a third party that certifies a corporations status on a points basis, interviews, documentation, and, possibly, a visit.

According to Kooperman/Gillespie, a boutique law firm based out of Ohio, to be certified as a B Corporation, your company must agree to take on additional corporate responsibilities.

These responsibilities include –

  1. Redefining the best interests of the corporation
  2. The consideration of employees
  3. Consumers
  4. The community
  5. The environment

Some cities, such as Philadelphia, offer tax incentives for corporations to go through the certification process of becoming a B Corp. Michigan, along with a handful of other states, have introduced or partially passed similar legislation. Contact a Michigan State University Extension educator if you want further information about B Corp certification.

Some may ask then, why certify your corporation as a “B”? Given the growing trend in consumer behavior and desires, B Corps are acting on their own behalf and in accordance with consumer trends and expectations. In 2013, some consumers of industrialized countries want to know and support businesses which are doing more than selling goods for profit, but acting for the betterment of the environment and community they produce their products in and to the people they sell to there or elsewhere. Naturally, if these issues are important to you as a consumer or professional you may (or may not) gravitate towards companies that are conducting themselves in a manner in line with your values. In 2008, there were 125 certified B Corporations across North America. As of 2013, nearly 700 exist throughout nearly 30 countries representing over 60 industries. Some examples of B Corporations are Patagonia, Ben & Jerry’s, and Seventh Generation.