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So what is the difference between a Certified B Corp and a benefit corporation? This is commonly, and understandably, confused by those who say both interchangeably as: B Corp. So by saying B Corp, one clear way to distinguish the two is by saying that a company is either (or both): Certified as a B Corp or Registered/Incorporated as a B Corp. The former is a certification administered by the non-profit B Lab and the latter is a legal status administered by the state.
The Benefit Corporation
Benefit Corporation is a new legal corporate form which gives business leaders the privilege to consider non-financial interests when they are running their company. These companies are still turning a profit and creating shareholder value like any other company. But unlike other companies, they are not only looking at operations from a financial perspective but also the impact they can create both socially and environmentally.
Unlike traditional companies, Benefit Corporations are:
1. Purpose – Driven: The company is creating general material positive impact on both people and planet.
2. Accountable: The company is required to consider its impact on not just their shareholders but on other stakeholders such as the community, its workers, and the environment.
3. Transparent: The company is required to make public an annual report on its social and environmental performance backed up by a third-party standard.
Currently, Benefit Corporation is available in 7 states across the U.S. and most recently in California and New York. There are 10 other states moving forward toward passing legislation.
So what’s the difference?
- Benefit Corporations do not need to be certified and B Corp Certification does not change a company’s corporate structure.
- Certified B Corps must hit a threshold of 80 pts. to certify. Benefit Corporations are required to publish an annual report assessing their overall social and environmental performance against a third party standard (does not need to be B Lab’s B Impact Assessment).
- Certified B Corps have access to a wide range of service offers and support from B Lab (marketing, saving/raising money, networking, etc.) Benefit Corporations do not.
- Benefit Corporation is available in 7 states. B Corp certification is available globally.
Can a company be both?
Yes! Many Certified B Corps are reincorporating as Benefit Corporations and many Benefit Corporations are pursuing B Corp Certification. Some, like Patagonia, do both at the same time. If you have any questions on how B Corp can bring value to your company, feel free to let us know.
B Lab: http://bcorporation.net/
Benefit Corporation: http://benefitcorp.net/
Still have questions about B Corps, or Benefit Corporations? Post your questions in the comment box, or share your experience as a Certified B Corp! If you are interested in B Corp Certification for your business, schedule a quick consultation with me.