B Corp Certification: What is it?

The conventional wisdom when it comes to business is that, as a business owner, you have to make a choice: you can either make money, or you can do good.

This is, however, a false dichotomy. You don’t have to choose to either ensure your personal livelihood or to live according to your values. As one of my MBA instructors used to say, you can choose “both/and” – you can both make money and do good.

What are Certified B Corps?

Benefit Corporations, commonly known as B Corps, are a new type of corporation. Unlike the traditional corporation that gives priority only to financial profitability, B Corps actually look at the triple bottom line and use the power of business to address social and environmental problems.

How do they do this?

Among other things, they “institutionalize stakeholder interests.” Instead of taking the shareholder as the primary person to which they are responsible, B Corps give primary consideration to the stakeholder. This is a very important distinction. A shareholder, as you know, is someone who owns shares in a company; a stakeholder, by contrast, is someone who has a stake in the company, regardless of whether he/she actually own shares. Who can have a stake in the company? Anyone who is affected by the actions of that company, such as employees, members of the local community in which the business operates, or members of the community in which the business has an environmental impact.

A traditional C Corporation will focus on increasing shareholder profits, often without regard to how that affects other stakeholders. This is why corporations sometimes do not pay living wages or provide inadequate health benefits – because those are costs that, if saved, can provide profit for shareholders. B Corps, however, are committing to taking social and environmental interests into account when making decisions.

They’re also showing that, contrary to what the mainstream business community says, sustainable business practices can make sense financially.

Why are B Corps Important?

B Corps are important for several reasons:

  • They are demonstrating that business can address social and environmental problems. This by itself is important, as it provides a new model for sustainability in business.
  • They are creating rigorous and transparent standards around social and environmental responsibility that support the triple bottom line. In effect, when a company becomes certified as a B Corporation, that company’s practices have been vetted by a third party.
  • There are already over 1000 B Corps in 34 countries representing over 60 industries. This is a growing movement, and this is just the beginning.

However, beyond all of these reasons, there is one primary reason why I believe that B Corps are important. They are fundamentally changing the rules of the game when it comes to business.

Basically, when a company becomes a B Corp, it doesn’t just earn a certification. It also commits to changing its legal organizing documents to include consideration of stakeholders.

One of the co-founders of B Lab, the non-profit that issues the B Corp certification, has explained why this is important:

“Today, there is a critical mass of entrepreneurs, investors, consumers, workers, and policymakers seeking to create social and environmental impact through business. However, they face two systemic obstacles: 1) the absence of transparent standards which allow all of us to support “good companies” not just good marketing; and 2) the legal concept of shareholder primacy which makes it difficult for corporations to include employee, community, and environmental interests in decision making.”

B Corp provides a fundamental alternative to these obstacles by establishing transparent standards and challenging the legal concept of shareholder primacy.

How Can B Corp Certification Help Your Business?

There are several ways that B Corp Certification can help your business:

  1. Meet stringent sustainability standards. B Corps must get a score of 80 out of 200 on the Impact Assessment, a survey that covers all areas of the business, including corporate governance, employee benefits, and more. By certifying as a B Corporation, you will ensure that your own business meets high sustainability standards.
  2. Differentiate from competitors. While many businesses may say that they are being sustainable, very few can actually back up that claim. Having your sustainability practices certified by a third-party will separate you from others in your industry.
  3. Identify areas in which you can improve. Even if you do not get certified right away, the Impact Assessment is a tool that you can use to develop your sustainability strategy. When you take the assessment, you’ll be able to clearly see your areas of strength and identify opportunities for improvement.
  4. Join the movement. When your company becomes a Certified B Corporation, you will join a community of like-minded business owners who are committed to sustainable business. They’re quite an inspiring bunch!
  5. Tap into savings. Once your company is a Certified B Corporation, you’ll be able to access numerous savings opportunity offered through service partnerships. These range from discounts offered by B Corps to discounts offered by companies like Salesforce and Intuit.
  6. Align your spending with your values. B Corps represent 60 different industries. You can green your supply chain and improve your own sustainability practices by shifting your business (and personal) spending to support other B Corps.

Take the Assessment

If you’re interested in B Corps, a great next step is to take the B Corp Impact Assessment. There’s no cost involved to take the assessment, and you’ll be able to evaluate your own company’s sustainability practices!

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