To B or not to be? What is a B Corp?

2 minute read

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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.