B Corp vs. Benefits Corporation
Although the names are similar, a Certified B Corporation and a Benefits Corporation are quite different. This article summarizes the difference between the two, and how businesses choose which approach is right for them.
Certified B Corps
Certified B Corporations are companies (both small and large) that earn an extra certification from the B Lab, a third-party 501(c)3 nonprofit. Companies must submit an application to B Lab where the company’s operations and stakeholder impacts are evaluated through the B Impact Assessment.
More Information on Certified B Corp Scores
If you take a look at a company’s B Impact Report, such as Patagonia, you will see specific scores:
Governance
- Mission and Engagement
- Ethics and Transparency
Workers
- Financial Security
- Health, Wellness, and Safety
- Career Development
- Engagement and Satisfaction
Community
- Diversity, Equity, and Inclusion
- Economic Impact
- Civic Engagement and Giving
- Supply Chain Management
Environment
- Environmental Management
- Air and Climate
- Water
- Land and Life
Customers
- Customer Stewardship
Once the legal requirements are met, companies that receive a minimum score of 80 points or more become a part of the certified B Corp network. The B Impact Assessment must be taken every three years to maintain B Corp status. Companies are also expected to sign the B Corp Declaration of Independence and pay their annual certification fees.
Many companies strive for the B Corp certification because it sets the standard for a good business that creates performance standards and legal structures. This certification also brings together a community of business leaders, attracts a workforce that prioritizes these missions, and amplifies their mission.
Benefits Corporations
Benefits Corporations, on the other hand, are a legal designation that puts forth the force of law behind the idea that the company upholds the triple bottom line — people, planet, profit. Companies would incorporate their limited liability company (LLC) with this structure by registering it in a benefit-friendly state* (usually with its respective State Secretary) and invoking the governing statutes in the respective charters or articles. They are also expected to pay administrative filing fees when modifying these documents.
By incorporating this structure companies are not only prioritizing return to shareholders but the general public good as well. Just like the B Corp certification, there are many advantages to becoming a benefit corporation such as increased attractiveness for investors and the general workforce, as well as a reputation for leadership and stockholders.
*Please note that some states do not recognize the Benefit Corporation
Wrap-Up
Below are some key points when distinguishing the difference between a certified B Corp and a Benefit Corporation.
- Certified B Corps are given the certification through a B Lab, a nonprofit, while Benefit Corporations are a legal designation
- Certified B Corps undergo an intensive assessment to receive the certification, whereas Benefit Corporations incorporate documents that ensure they will consider people, the planet, and profit
- Both emphasize corporate social responsibility
