A growing number of socially
committed entrepreneurs and small business owners are seeking to not only do well
in the world of business and produce profits, but to make their world a better
place. The tool they are looking at to do this? The B Corp or benefits corporation.
Hundreds have opted to become benefits corporations, a new business model now recognized in 31 states. Benefits corporations are for profit companies that view business as a force for good and believe in higher standards of accountability and transparency. Some benefit corporations, but not all, also have opted to become certified B Corps through the New York City-based B Lab, a not for profit organization that sets standards for B Corps and monitors their compliance.
The directors of benefit corporations and certified B Corps are required to consider the impact of their actions not just on the financial bottom line, but on all stakeholders. A benefit corporation pays state filing fees of $70 to $200, while B-Lab certification costs between $500 and $50,000 annually, based on revenues. Companies choosing B Lab certification subject themselves to higher standards, and greater accountability and oversight. The B Lab offers online assessments and monitors workplace policies and environment and company governance.
“As a benefit corporation, you’re able to say in your corporate charter that you not only care about maximizing profits for shareholders, but things like on-site child care, comprehensive employee benefits, even employee stock ownership plans (ESOPs) allowing employees to participate in the company’s financial success,” he said. “B Corps leave small carbon footprints by using paperless communications and renewable energy. And if you sell your company, the new owners have to honor what’s in your charter.”
The B Corps movement dates back to 2007 and three former Stanford University roommates, Andrew Kassoy, Bart Houlahan and Jay Coen Gilbert. After college Houlahan and Gilbert launched an apparel firm, while Kassoy worked after college in corporate real estate in New York City. After the two roommates sold their apparel firm, the new owners dismantled all of their progressive practices.
“They watched all their business morals and corporate ideals slip away,” White said.
Working with Kassoy, they created a new business entity to prevent that from happening to future firms and began lobbying states to pass legislation allowing benefit corporations. The first class of B Corps were certified by the B Lab in 2008 and 2009.