By Delma Iris
The Benefit Corporation (B Corp) movement began from a catalytic idea that shareholder primacy is a flawed concept. On New Year's Day, 2006, Jay Coen Gilbert and Bart Houlihan, the movement's co-founders, first brainstormed the B Corp ideals. Their idea was to do something about the traditional corporate structure in which shareholders' interests superseded those of all other stakeholders, such as employees, suppliers, customers, and the planet.
At first, this seemed like a mission impossible, another one of those New Year’s resolutions that seems great at first but then loses steam over time. But, fast forward to 2013, the state of Delaware, home to almost half of US publicly traded companies, accepted the Benefit Corporation as a new legal structure. The upstart little B was legitimized.
What is a Benefit Corporation?
According to Delaware law, the 'Public Benefit Corporation' legal structure is a corporate form for a "for-profit corporation that is intended to produce a public benefit/s and to operate in a responsible and sustainable manner." Today all Certified B Corps must either change their corporate structures to Public Benefit Corporations (PBC) or add language to their corporate by-laws stating their commitment to consider all stakeholders in their strategic operating decisions.
A company can choose to change their legal structure to PBC without becoming a Certified B Corp. The PBC corporate structure independently adds value to businesses through its sustainability commitment. Investors are taking note that sustainability improves a company's performance. Non-financial disclosures, such as sustainability reports, are becoming a vital layer to assessing risk.
The creation of a new corporate form to account for a company’s intention and obligation to its stakeholders is a revolutionary step for U.S. corporate law. To this day there has been no legal arbitration in response to a breach of the clause which aims to consider all stakeholders in the board of directors’ decisions.
Various private equity and mainstream investors are noticing PBCs. Allbirds, the shoe and clothing company, raised $202.5M at a 1.78B valuation from Fidelity, Tiger Global and others. Many well-known companies have adopted the PBC corporate structure like Patagonia, Plum Organic (acquired by Campbell's Soup), Kickstarter, Vital Farms, and more than 1,200 others across the United States. Today, according to Forbes, there are more than ten publicly traded companies listed as PBC’s in the United States alone.
What is B Corp Certification?
Becoming a Certified B Corp requires taking the extra step of verifying that your stated commitments to be a sustainable business are aligned with your verified practices. The non-profit organization B Lab is responsible for auditing candidate B Corps.
B Lab distributes a publicly available questionnaire called the B Impact Assessment (BIA). Companies must complete this form so they can be measured and rated with respect to their performance regarding their employees, community, and the environment. The BIA is also a tool meant to score a company's impact. It is intended to guide and educate companies that may be unaware of where or how to begin their sustainability journey.
To become a Certified B Corp, a company must score an 80 or above in the BIA and pass various B Lab reviews of documentation, calls, and on-site visits. The B Corp Certification process will determine whether that your company is either on the journey towards improvement (if you don't meet the requirements initially, just keep trying) or are already part of the global movement towards a more inclusive, sustainable economy.
As of April 4th, 2022, according to the B Corporation site, there are 4,881 Certified B Corps in 79 countries. They cover 153 industries and impact 402,505 workers. If those numbers don’t speak for themselves, ask the people who work for B Corps. Certified B Corps all have one thing in common: they believe that “business as usual” needs to change drastically. They believe that, to make the world better, they must act. For them, the step to becoming a Certified B Corp is a step in the right direction.
The Global Community of B Corps
A Certified B Corp becomes part of a global movement of companies committed to using business as a force for good. This type of network is powerful, regardless of company size or industry. If you opt into the B Corp movement, you’ll be joining a mega-trend of companies which understand that supply chains, communities, people, and the planet can be impacted positively if we innovate and apply the right methodology.
B Corps are constantly innovating and therefore tend to be among the most resilient companies. They are also eligible to be part of the B Hive, a talent matching platform intended to attract those interested in companies committed to sustainability. Among the many advantages of being a Certified B Corp is this network of like-minded individuals as well as the prestigious recognition of your company as part of this global movement.
So, with this background, we can offer a summary answer to the question we asked at the outset. What is B Corp Certification good for? It’s good for your company, it’s good for your workers and your community. And, slowly but surely, it’s good for our planet.
At Global Imprint, we can guide you in your B Corp Certification process. Contact our team to arrange a call.