B Corp certification offers any for-profit business the opportunity to publicly commit to being a force for good. The global non-profit organization, B Lab, started the certification as a way to create a global movement of people and communities using businesses as a way to improve the environment and communities. With the certification, B Lab aims to create a global community of B Corporations that are all certified to meet rigorous standards of verified, overall social and environmental performance, public transparency, and legal accountability. The B Corp community includes companies such as Ben & Jerry’s, Patagonia, and the Prem Group.
The benefits of B Corp Certification are substantial. Firstly, it allows companies to signal their values and commitments to the market. It proves that your business is a for-profit business dedicated to social and environmental issues. Consumers are increasingly disillusioned by the social and environmental consequences of big business. Additionally, consumers are looking to buy into ideas and ideals, not merely products. Being able to prove to consumers that your business is not part of the problem, but rather actively contributing to the solution, is very valuable.
A second advantage is that B Corp businesses are subject to a third-party verified certification procedure during which the company is required to change its structure and governing rules in such a way that the incentives all align with, and contribute to, the company’s social and environmental performance. This is very important: often, businesses complain that they would like to serve a broader mandate than just profit, but that their governing structure and founding provisions don’t allow it. B Corp certification creates a legal, third party mechanism to allow a business to align its operational incentives with its values.
B Corp Certification
In order to become a B Corp business, companies have to follow three steps.
Meet the performance requirements:
The B Corp assessment rates a company on a wide variety of factors, ranging from energy efficiency to corporate transparency. Based on its practices, a business will receive a score out of 200. If the business scores more than 80, it is considered to meet the performance requirements. If you are unsure if your company complies with performance requirements, or you are simply looking for free guidance as to best practices for social and environmental responsibility, you can always use B Lab’s free and confidential impact assessment tool.
Meet the legal requirements:
The B Corp certification process requires compliance with a few basic legal requirements that are related to the business’s structure and governance rules. These requirements ensure that:
1.Directors and officers are given legal protection to consider the interests of all stakeholders and not only shareholders.
2.There are additional rights for shareholders to hold directors and officers accountable to consider these broader social and environmental interests
To ensure legal compliance, a business will have to determine whether governing documents need be amended. This will depend on your company structure as well as the jurisdiction within which you are incorporated. If needed, governing documents and company structure might have to be adjusted.
Sign the B Corps declaration of interdependence and term sheet:
Upon completing this step, your company is a certified B Corp! Certification is valid for two years, upon which the company has to submit to reassessment. The term sheet requires your business to confirm that you meet the performance and legal requirements and that you assent to a site visit if selected (about 10% of certified B Corps are selected for site visits per year)
Annual fees for B Corp certification depends on your business’s annual sales and is determined on a sliding scale.
Legal expertise at your fingertips
B Corps are an interesting change in business that many companies are interested to learn more about. LawTrades can connect you with a seasoned business attorney that can help you understand the finer details of B Corps and whether or not this is a viable solution for you. Contact us today to learn more.