B Corps vs Benefit Corporations

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company declares to have a purpose that goes beyond the maximization of the profit of the shareholders. This will also generate trust with citizens, their customers, workers and new investors.

B Corps combine profitability with the solution of social and environmental problems, committing to change and seeking to be not only the best in the world, but also the best for the world. Unlike the traditional company, whose mission is to obtain short-term profits for its shareholders, B Corps redefine their purpose, creating a new business model, considering consumers, workers, community, investors and the environment in their decisions.

The triple impact is an alternative business philosophy that certain companies adopt and consists of how to measure their results and goals in economic, environmental and social terms.

The triple objective includes:

1. Purpose: Create positive impact in the social and environmental field.

2. Responsibility: Take into account as a primary purpose the interests of workers, the community and the environment.

3. Transparency: Publish an annual report on the social and environmental impact certified by an external and independent body that guarantees accuracy of the data.

5.7.1. B Corps vs Benefit Corporations

It is clearly possible that the companies of the first sector voluntarily adopt to obtain financial and social benefits at the same time as their main objectives, incorporating them in their structure and operation. If within a country's legislation, traditional companies can legally adopt these characteristics with the approval of their shareholders or owners and possibly their creditors, then in that case, all present and future shareholders will know that these are rules of

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governance and the company will not come into real or potential conflict with some shareholders who prefer exclusive attention to financial benefits.

This, in fact, is the basic concept of “Benefit Corporations”, which are companies that are constituted or transformed explicitly as such according to specific legislation. They will also have other obligations conferred by the corresponding law, for example, including participatory corporate governance, transparency in the report, fair salaries, environmental responsibility, community service and use of part or all of the benefits for the common good. Some may argue that this is precisely a company with social responsibility, however in this case, the responsibility is not optional as the company voluntarily adopts the legal commitment. [22]

There is usually confusion between Benefit Corporations and Certified B Corps., but the difference is very simple. “Certified B Corps” are companies that were certified as B Corps through a process determined by B Lab; whereas a “Benefit Corporation” can be certified by B Lab as a B Corp, but a B Corp wouldn’t be a “Benefit Corporation” unless it has been legally constituted as such in a state or country where the legislation exists.

Certified B Corps are not a legal entity but rather voluntary members of B Lab. They are bound by a contractual agreement to consider the interests of a variety of stakeholders and meet a number of standards [23]. On the other hand, a “Benefit Corporation” is a legal entity bound by statutes in a country that where most likely also proposed by B Lab to the state.

Both Certified B Corps and Benefit corporations, seek to better meet the needs of entrepreneurs, investors, consumers and responsible politicians interested in using the power of companies to solve social and environmental problems. These offer clear differentiation in the market, broad legal protection for directors and officers, broader shareholders' rights and greater access to

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capital than other new corporate forms.

As stated on the B Corps’ official website, put into B Lab’s own words: [24]

“Certified B Corps and benefit corporations are often confused. They share much in common and are complementary but have a few important differences.

Certified B Corps and benefit corporations are both leaders of a global movement to use business as a force for good. Both meet higher standards of accountability and transparency.

Both create the opportunity to unlock our full human potential and creativity to use the power of business for the higher purpose of solving society's most challenging problems.

Some companies are both incorporated as benefit corporations and certified as B Corps, others are just one or the other. Refer to the chart below to learn the key differences”

Table 7: Difference between B Corps and Benefit Corporations [24]

WHAT'S THE DIFFERENCE?

Issue Certified B Corps Benefit Corporations

Accountability - Directors required to consider

impact on all stakeholders Same

Transparency

- Must publish public report of overall social and environmental performance assessed against a third party standard

Same

Performance

- Must achieve minimum verified score on B Impact Assessment - Recertification required every

two years against evolving standard

Self-reported

Availability

- Available to every business regardless of corporate structure, state, or country of incorporation

- Available only where legislation is

available.

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- B Lab certification fees from

$500 to $50,000/year, based on revenues

- Filing fees according to legislation

Role of B Lab

- Certifying body.

- Offering access to Certified B Corp logo, portfolio of services - Vibrant community of practice

among B Corps.

- Developing of Model Legislation, works for its passage and use.

- Offers free reporting tool to meet

transparency requirements

- No role in oversight

Source: https://www.bcorporation.net/what-are-B Corps/certified-B Corps-and-benefit-corporations

As shown, Benefit Corporations and Certified B Corps are not exactly the same thing, even if they are often complementary. The Benefit Corporations is a legal form of enterprise which has been introduced in several states and some countries, often thanks to the initiative of B Lab.

The Certified B Corps are organizations that have received a certification by B Lab.

The main difference is that Benefit Corporations don’t get their CSR performance controlled by B Lab every two years, like Certified B Corps do. Adding to that, where legislation hasn’t passed yet, companies can still seek the certification, but of course they cannot become Benefit Corporations.

These two different conditions don’t always correspond; company can decide to become a Benefit Corporation even without obtaining B Lab’s certification, and in the same way, Certified B Corps don’t have to be Benefit Corporations.