Business Owners: Should You Consider a B Corporation?
Business owners and investors alike may consider factors beyond profitability and an ROI when determining what’s important to their business. Similarly, consumers want to know that the companies that they’re buying from are considering more than just the bottom line. Consumers, investors and employees alike are gravitating toward companies that are considering their impact on the world at large and working to be a force for good.
That’s where B Corporations come in.
What Is a B Corporation?
A B Corporation (B Corp) is a special designation provided by B Labs, a non-profit organization that certifies that an organization is operating at the highest standards of social and environmental purpose. Businesses who qualify for a B Corp designation have a great deal of public and legal transparency while demonstrating that they’re providing value to their employees, community and the environment.
The majority of businesses with B Corp designations are small- to medium-sized private companies; however, companies like Ben and Jerry’s and Patagonia have earned B Corp certifications for their commitment to larger goals.
Benefits of a B Corp Certification
There are several benefits to qualifying for a B Corp certification. You and your business will be held to social and environmental standards and are required to be completely transparent about your efforts in those areas. This transparency can attract customers who want to make sure that their consumerism lines up with their values.
Becoming a B Corp may attract employees who are aligned with your company’s values. Because employee culture is a central tenet of a B Corp, you may be better equipped to hire and retain top talent in your field.
There are potential financial benefits to becoming a B Corp. As part of the B Corp community, you’ll have access to data that will allow your business to become sustainable in a cost-effective way. Becoming certified helps your business identify wasteful spending, making your company more solvent in the long run.
How to Obtain B Corporation Certification
The process to become certified as a B Corp is rigorous. It can take anywhere from six to 10 months for the evaluation process to be completed, and only one in 13 companies will end up qualifying for a B Corp certification.1
The first step is to complete the free online B Impact Assessment (BIA). B Labs determines your business’s impact on its employees, the environment and the community to see if you qualify to become a B Corp. Once certified, B Corp businesses are required to make legal changes to their business, including updating their Articles of Incorporation to reflect the values. The legal requirements vary depending on the size of your business and your location.1
If you’ve met these initial requirements, you’ll then meet virtually with the B Labs staff to review your business and the BIA. Once certified, you must complete a BIA and verify your score with B Labs every three years to maintain your B Corp status.1
B Corporation Considerations
If your business is driven by both a mission and profit, you may want to consider applying for a B Corp certification. While businesses large and small have B Corp certifications, becoming a B Corp can help you stand out from the crowd. While larger businesses have the funds to make attempts at social responsibility, only a B Corp certification verifies that their social values are more than just performative. Only a B Corp certification proves that your business is committed to stakeholders as well as shareholders.
Just remember that your situation should be reviewed by your financial advisor, legal counsel and tax professionals. Make sure you talk with your business team before moving forward on a B Corp certification.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.