A growing movement is afoot create a new definition of capitalism that includes companies that are as focused on attacking social and environmental problems as they are on profit-making. Businesses of all sizes that want to be known for their adherence to strict standards of social and environmental (i.e, sustainable) performance, accountability and transparency can become certified as a B corporation, with the B standing for “benefit.”
Being a B corporation does not affect your company’s tax status, as, for example, being a S corporation does. Instead achieving the B corporation status carries the kind of positive regard among consumers and other key audiences that the “Fair Trade” label brings to coffee purveyors or being LEED certified brings to green buildings.
Twenty-seven states have passed B corporation laws, and additional states are considering B corporation legislation. You can check the status of your state here. (In some states the term “social purpose corporation” is used instead of “benefit corporation.”)
Once the designation is accepted in your state, you then apply to the non-profit B Lab to become certified as a B corporation. The process of certification is rigorous and covers governance (accountability and transparency), workers (compensation, benefits, ownership, work environment), community (suppliers, local impact, diversity, job creation charity) and environment (facilities, inputs, outputs, supply chain). The effort, however, may be worth it because the benefits of earning the ability to use the B Corp Certified label in your communications with key constituencies, including consumers, are significant. These benefits include:
• Positioning your company as a leader in the growing global movement to redefine business success to include “doing well by doing good.” Over 1,000 companies worldwide have already been certified as B corporations.
• Differentiating your business from competitors who talk the talk but don’t walk the walk. Being certified as a B corporation helps give consumers the confidence they want that your company is operating in a socially and environmentally responsible manner. As the use of this designation spreads and becomes better known, its value will increase.
• Improving your ability to attract and retain top talent. Growing numbers of employees, especially in the millennial generation, are attracted to the idea of working for a company whose mission includes social and environmental responsibility.
• Generating positive publicity. Attaining B corporation status gives you an opportunity to attract positive press coverage that will spread the word throughout your market that your company is focused on sustainability and on addressing social issues.
This white paper from the Network for Business Innovation and Sustainability goes into the topic of B corporations in much greater depth. If you are already striving to have a small business that make a positive impact in your community and for your employees and customers, becoming a B corporation may be well worth your while because of the strong message it sends about your company’s values and mission.