B Corp 101: A Quick Overview
What is a B Corp?
Certified B Corporations are companies that have been certified by the nonprofit B Lab to have met rigorous standards of social and environmental performance, accountability, and transparency.
B Corp certification is similar to Leadership in Energy and Environmental Design (LEED) certification for green buildings, Fairtrade certification for coffee, or USDA Organic certification for milk. A key difference, however, is that B Corp certification is of an entire company and its practices (such as worker engagement, community involvement, environmental footprint, governance structure, and customer relationships) rather than looking at just one aspect of a company (such as the building or a product).
This big picture evaluation is important because it helps distinguish between good companies and just good marketing.
Today, there is a growing global community of thousands of Certified B Corporations across hundreds of industries working together toward one unifying goal: to redefine success in business so that one day all companies will compete not just to be the best in the world but also to be the best for the world.
How Do I Become a B Corp?
As a quick overview, companies that wish to become Certified B Corporations must meet three basic requirements: verified social and environmental performance, legal accountability, and public transparency.
1. Verified social and environmental performance. To meet the performance requirement, a company must earn a minimum verified score of 80 points or above on the B Impact Assessment. The B Impact Assessment measures a company’s overall impact on its workers, community, customers, and the environment.
2. Legal accountability. Certified B Corporations are legally required to consider the impact of their decisions on all their stakeholders. The legal requirement can be fulfilled through a variety of structures, from the limited liability company (LLC) and traditional corporations to benefit corporations and cooperatives.
3. Public transparency. Transparency builds trust. All Certified B Corps must share their B Impact Report publicly on bcorporation.net. The B Impact Report is the summary of a company’s scores on the B Impact Assessment, by category, and contains no question-level information.
To finalize the B Corp certification process, prospective companies must sign the B Corp Declaration of Interdependence (a document outlining the values that define the B Corp community), sign a B Corp Agreement (a term sheet that defines the conditions and expectations of B Corp certification), and pay their annual certification fee (which is calculated based on a company’s annual sales).
The certification term for B Corps is three years. After three years, companies are required to complete an updated B Impact Assessment and go through the verification process again in order to maintain their certification.
What Types of Organizations Can Certify?
Nonprofits, such as 501(c)(3)s in the United States, and government agencies are not eligible to certify as B Corps. Companies with any of the following corporate structures may become Certified B Corps: benefit corporations, C corporations or S corporations, cooperatives, employee stock ownership plans, LLCs, low-profit limited liability companies (L3Cs), partnerships, sole proprietorships, wholly owned subsidiaries, or for-profit companies based outside the United States.
This list is not exhaustive; see bcorporation.net for more details.
What Are the Benefits of B Corp Certification?
Why go through this demanding process? The benefits of becoming a B Corp are numerous and impactful. Here are some of the key advantages:
Enhanced Brand Reputation: Consumers are increasingly choosing to support businesses that align with their values. Being a B Corp signals to customers that your company is committed to making a positive impact, which can strengthen brand loyalty and attract new customers.
Attracting Talent: Today’s workforce, especially younger generations, are looking to work for companies that prioritize purpose alongside profit. B Corp certification can help attract and retain top talent who are passionate about your mission.
Community and Networking: B Corps are part of a global community of like-minded businesses that support and learn from one another. This network can provide valuable opportunities for collaboration and shared growth.
Sustainability and Innovation: The rigorous standards required for B Corp certification encourage continuous improvement, pushing companies to innovate in ways that benefit society and the planet.
Is B Corp Right for My Business?
Deciding whether to pursue B Corp certification is a significant step for any business. It requires a deep commitment to transparency, accountability, and continuous improvement. However, for companies that are genuinely dedicated to making a positive impact, the rewards can be substantial.
If you’re considering becoming a B Corp, start by taking the B Impact Assessment. This free tool not only helps you gauge where your company stands but also provides insights into areas where you can improve. Whether you ultimately pursue certification or not, the process of evaluating your company through the lens of the BIA can be a powerful catalyst for positive change.
Conclusion
In a world where businesses are increasingly held accountable for their impact on society and the environment, B Corp certification offers a clear pathway to demonstrate your commitment to doing good. By becoming a B Corp, your company joins a global movement of businesses that believe in using business as a force for good. The journey may be challenging, but the impact—on your company, your stakeholders, and the world—can be profound.
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