A Look At B-Corporations

I’ve been meaning to write this post for some time now, however the launch of Transparency Solutions has been quite time consuming. So with no further ado, per the request of a reader: A look at B-Corporations!

I was first introduced to B-Corporation (B standing for benefit, and B-Corp for short) a few months ago at the Global Engagement Summit by Alex Michel of HubSF. Part of what Transparency Solutions seeks to do is certification of businesses and organizations in the developing world that comply with certain standards of accountability and transparency. Alex had suggested I take a look at B-Corp as an example/model of an organization acting as a certifying agent.

Being a “B-Corporation” is not a legal status of incorporation (yet), but more a symbolic recognition that a business meets and applies, “comprehensive and transparent social and environmental standards,” set forth by B-Lab (the non-profit organization that runs this whole thing). Beyond the “symbolic recognition” – designed to support consumer-driven change, B-Lab is working on pooling exclusive resources and investment opportunities for registered businesses.

What Makes a B-Corporation?

To become a certified B-Corporation, a business must first complete a survey measuring its procedures and protocol against standards of social responsibility set by B-Lab. Certified B-Corporations must submit documentation validating approximately 20% of the questions on the survey. Additionally, 10% of B-Corporations are audited every year – creating a one in five chance of being audited within the corporation’s two-year term.

After the survey is complete, B-Lab asks for an incorporation of its “Legal Framework” into the company’s governing documents. This Legal Framework calls for the consideration of both short-term and long-term prospects and interests of employees, suppliers, customers, and the community in which the company or any of its subsidiaries work.

Businesses then sign a “Term Sheet” – an agreement with B-Lab that certifies their relationship. Additionally, the organizations signs a “Declaration of Interdependence” – which reads:

We envision a new sector of the economy which harnesses the power of private enterprise to create public benefit. This sector is comprised of a new type of corporation – the B Corporation – which is purpose-driven and creates benefit for all stakeholders, not just shareholders.

As members of this emerging sector and as entrepreneurs and investors in B Corporations,

We hold these truths to be self-evident:

That we must be the change we seek in the world;

That all business ought to be conducted as if people and place mattered;

That, through their products, practices, and profits, businesses should aspire to do no harm and benefit all.

To do so, requires that we act with the understanding that we are each dependent upon another and thus responsible for each other and future generations.

Benefits of Being a B-Corporation

Certified B-Corporations are able to be recognized for their corporate values and focus on social responsibility. It gives support to the growing number of social enterprises out there, who have substituted maximizing profit and short-term returns to shareholders as their driving motivation, for effecting social change through business and maximizing general long-term and sustainable welfare.

Those values are incorporated in the company’s governing documents, and transparently accessible through the B-Corp Community website.

This third-party voice allows organizations to show that they fully embody these values, not just market themselves as socially responsible.

It also allows companies to join a community of change-driven entrepreneurs, consumers, and investors.

The Future of B-Corp

B-Lab hopes to see B Corporations become legally recognized by states, given tax preference by the IRS, and be given increased recognition and preference by consumers. The more companies that sign-up, the closer this vision can come to achieving reality.

I’m looking forward to seeing where this goes!

B-Corporation Video

Given my affinity to posting videos, this post would be incomplete without: