B Lab is asking socially and environmentally conscious companies to put their money where their mouth is; to draw on their resources and talent to use business as a force for good; and to balance purpose and profit. B Corporation status is a private certification issued to for-profit enterprises by B Lab, a global non-profit organization. B Lab defines certified B Corporations as “businesses that meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose.” Since its inception in 2006, B Lab has certified over 3,000 for-profit companies in over 50 countries. These B Corporations focus equally on generating profits and fulfilling a purpose.
Impacts of B Corporations
Why would a company want to become a certified B Corporation? Some companies believe in leading by example to show others that a business affects more than just the pocket of their shareholders. These companies identify the importance of taking responsibility for their impact on other stakeholders. Other companies use it to build business relationships and attract talent with those who share these beliefs. Certification allows companies to set standards and goals, as well as track progress toward improving their impact. B Corporations can have influence on market activity by allowing individuals to vote with their dollar. Consumers can choose to support businesses who are certified, which allows individuals to share one voice, which can provide incentive to other businesses to embrace similar values. The legal framework surrounding B Corporations protects the mission through organizational changes.
Pursuing B Corporation Status
How would an entity acquire B Corporation status? The process begins with the completion of a “B Impact Assessment”, an extensive questionnaire that helps assess the positive impact a company makes to its many stakeholders. Applicants must score an 80, or above, (out of 200) to be considered for B Corporation status. Examples of the score’s metrics are governance, workers, community, and environment. Beyond the initial application, there are legal requirements depending on the location of the company, the type of entity (corporation, partnership, sole proprietor), and whether the company is publicly traded or a wholly-owned subsidiary. For example, B Labs may require corporations to elect to become a benefit corporation where applicable, while partnerships may have to amend their partnership agreement. Once accepted as a B Corporation, a company is subject to transparency rules, site reviews, and recertification every three years.
Further Details
If you have any questions about B Corporations or the process for acquiring B Corporation status, please reach out via email, give us a call at (401) 921-2000, or fill out our online contact us form.