B Corps: To "B" or Not to "B"

B Corps: To "B" or Not to "B"

The B Lab is more than a certifying body. It is a platform for companies (B Corps) to contribute to – not just profit from – community and environment.
Kevin Hurren Tara Hadler April 14, 2015
Ask the average person what sustainability looks like. He or she will start to tell you about a non-profit organization or a grassroots environmental movement.

But businesses are increasingly making their mark in and through sustainability – and B Corporations (B Corps) are proving that for profit and for good fit hand-in-hand more than the average person might first think. 

B Corps are businesses that integrate positive impacts on society and the environment directly into their corporate strategy. Some of today’s well-known brands such as Ben & Jerry’s, Patagonia and Warby Parker are B Corps.

But what exactly is a B Corp? What does it take to become one? Who regulates the B Corp status? And finally, what effect does the certification have on day-to-day operations?

To answer these questions, we turn to the B Lab.

The "B" in B Corp: Not Quite What You Think

B Lab is the platform that certifies B Corps. Representatives from B Lab headquarters point out that the “B” in B Corp does not actually stand for anything specific. It is meant to be an indicator to point to corporations that are beneficial to society. But a benefit corporation is not the same as a B Corp.
People use the terms interchangeably, but the difference is important to note. A benefit corporation is a legally defined entity much like an LLC or a non-profit. A B Corp is a corporation that has gone through the B Lab’s independently administered certification process.

A benefit corporation may decide to go through the B Lab certification process to become a B Corp – or not. A B Corp may decide to file articles of compliance to become registered as a benefit corporation – but again it doesn’t have to.

Nearly thirty states in the US now have legislation for benefit corporations. Shareholders in these companies can legally sue a company for straying from its social mission. And B Lab has been instrumental in championing such legislation in the US and beyond. While some might say this creates confusion, it is actually a fundamental component of the work that the B Lab platform supports.

Off to the Lab: Becoming a B Corp

The other fundamental – and perhaps better-known component – is certification. B Lab outlines social and environmental performance standards as a rubric for corporations – much like the Generally Accepted Accounting Principles (GAAP) are applied in financial reporting. B Corp standards are compiled in the B Impact Assessment, by which firms can voluntarily and cost-effectively input their current social and environmental portfolios. The concept is gaining popularity among investors and consumers, who laud the notion of the so-called “triple bottom line” – people, planet and profits.

Certification is then achieved by scoring at least 80 points out of a possible 200 in the assessment. Interested corporations must then satisfy the supplementary document requirements, pay an annual certification fee based on a tiered system and enter a two-year term as a B Corp.

Every two years companies must recertify to ensure continued validity of their B Corp status. Each certified B Corp also has a one-in-five chance of being randomly selected for an on-site audit by a B Lab representative in a single B Corp term.

From B to Why? Reasons for Becoming a B Corp

The impetus for corporations to earn B Corp certification varies. Ben & Jerry’s did so, in part, to re-affirm existing CSR priorities. Other firms want continuity of values. Plum Organics, an organic baby food company, retained its environmental and social values by maintaining its B Corp certification after it was sold to Nest Collective.
Others still hope to attract quality employees. Since employees increasingly place high value on a corporation’s capacity to create positive impact, B Corps naturally pique the interest of job seekers. B Lab’s online job board has become an attractive domain for creative and skilled workers with an inclination towards community investment and environmental initiatives. Whatever the case, corporations want to take part in the momentum. Certification is an affordable process that has the potential for tremendous return on investment. All certified B Corps can take advantage of the Global Impact Investing Ratings System (GIIRS) to attract impact investors and leverage the network of support from other B Corps and the B Lab itself.

Not Getting Left B-hind: B Corps Take the Global Stage

B Corps are also popular outside of North America.

Latin America has the most active B Corp community outside of the US. Called Sistema B, the platform has certified over 160 B Corps since 2012, adapting certifications and evaluation metrics for the context of each country. Chile alone has 68 B Corps. In December 2014, Natura, Brazil’s top cosmetics, fragrance and toiletries manufacturer became the largest – and first publicly traded – company to attain B Corp certification.

Some of the buzz may stem from the entrepreneurial spirit currently surging in South America. Attracted by business support programs and facilities in Chile, entrepreneurs are gathering in the south to create start-ups – causing some to dub the zone “Chilecon Valley.” B Corp certification is one way these new businesses can engage with pre-established networks and positive business practices. Israel’s start-up community has taken note of this.

And, just as in the US, Sistema B is working to introduce legislation. “With partners of the B system, we have been working on new social enterprise strategy and law, currently in discussion in the Chilean parliament,” explains Pablo Muñoz, Director of NBS Chile. In Chile, B Corps are at the point where they are becoming an economic force in many parts of the region, proactively identifying areas for change and progress.

Solid Good

Of course there are skeptics of the B Corp model and the “mushy rhetoric” surrounding it writes James Surowiecki, author of “The Wisdom of the Crowds.” But B Lab aims to turn that mush into solid good.

The B Lab is more than a certification scheme; it is a platform that is finally helping like-minded companies succeed. It provides a resource portal and a foundation for these companies to connect and collaborate in-person and online through the B Hive portal, which is currently in beta. It provides marketing and branding to attract consumers and materials to help secure investors.

Ultimately, B Corps are about contributing to – not just profiting from – the community. Certification simply ensures that a company sticks to the positive social and environmental impacts that it set out create. For B Corps these impacts are already integral to their mission, vision and values; they are not an organizational afterthought, but are direct results of day-to-day operations. 

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