These days, we are witnessing businesses that focus on more than just the money. They are on a mission to benefit the planet and the people who live on it. This type of corporation is quite attractive to many. This includes consumers who want and expect honesty and responsibility from the brands they’re buying from, shareholders who want to see increased value, and investors who know that like-minded consumers will pay premium prices for sustainability and social awareness.
What Is a Benefit Corporation?
Entrepreneur.com defines Benefit Corporations as “for-profit companies that meet rigorous standards of social and environmental performance, accountability and transparency.”
In addition to driving shareholder value, a Benefit Corporation is designed to benefit the public at large and have a positive impact on society or the environment. We learn from Forbes.com that this accountability is then measured by a third-party standard, and the Benefit Corporation’s directors and officers are held accountable to that same public benefit.
Compared with traditional corporations, Cooleygo.com shares some key differentiators of Benefit Corporations.
- Mission: Benefit Corporations must commit to producing a public benefit for society and/or the environment.
- Governance: Directors must consider the interests of non-shareholders that are affected by the company’s conduct (e.g. employees, local community).
- Transparency: The company has an obligation to report to shareholders on its overall social and environmental performance.
- Accountability: Shareholders can bring lawsuits to enforce the company’s public benefit mission.
Is a Benefit Corporation and a Certified B Corp One and the Same?
Many people confuse a Benefit Corporation with a certified B Corporation, which is understandable. They have similar goals, however, a Benefit Corporation is created under corporate law and a certified B Corp label means a company has been certified by the non-profit organization, B Lab.
The Benefit Corporation was born from the B Corp movement. The reason for its birth, as Consiouscompanymedia.com explains, is “many entrepreneurs felt that the B Corp certification could not provide the kind of legal protection that a government recognized legal form could provide.”
It’s not uncommon to see the term “B Corp” used to refer to both Benefit Corporations and Certified B Corps, even though they’re two different animals. Companies who may start out as certified B Corps are required by B Lab to become benefit corporations when they enter the public capital markets, typically via an IPO and when their state of incorporation allows for such a form of legal entity.
Once converted to a Benefit Corporation, companies can still maintain their B Corp status and will continue to receive various levels of assessments that are required by B Lab. Benefit Corporation status was formed to build the B Corp mission into the DNA of the corporation, hence the strong relationship between the two.
Unlike B Corp companies, those wishing to obtain Benefit Corporation status do not need a B Lab certification first.
In an article written for Glossy.com, we’re presented with the following statistics for companies with B Corp status.
- There are presently over 3,000 B Corps around the world.
- B Lab states that between 2014 and 2019, there was a 347% increase in the total number of B Corps.
- B Lab also states that between those dates, there was a 66% increase in beauty, wellness, and personal care B Corps.
Benefitcorp.net tells us there are currently close to 5,000 registered Benefit Corporations, including nearly 700 in Delaware and 200 in California, which passed benefit corporation legislation in 2012. There are currently 37 laws passed with 4 states working on it, one of which is Georgia.
Examples of B Corps and Benefit Corporations
To further describe the differences, examples of companies that have a B Corp certification include Natura & Co. and CBD brand, Prima. Etsy used to have B Corp status, however, due to the conversion requirements, they decided to drop their status and maintain a C Corporation instead of proceeding with a Benefit Corporation.
In 2012, Patagonia changed their B Corps status to a benefit corporation, its founder, Yvon Chouinard explained that “Benefit Corporation legislation creates the legal framework to enable mission-driven companies like Patagonia to stay mission-driven through succession, capital raises, and even changes in ownership, by institutionalizing the values, culture, processes, and high standards put in place by founding entrepreneurs.” Patagonia still maintains its B Corp status as well.
Our Benefit Corporation, Greenfield Groves Inc., is also one to model after. Founder and CEO, entrepreneur, influencer, and #womensupporting women advocate Lindsay Giguiere and her team of experts, promise to provide clean, transparent, whole-life wellness solutions through their robust tele-health technologies, intuitive user collection, and premier quality consumer product brands.
Greenfield Groves’ status as a Benefit Corporation is a unique commitment to its business model. The company brings together a coordinated focus not just to satisfy shareholder value but includes and prioritizes the enterprise value to its customers, employees, partners, community, and environment at large. As the company grows and shows its successful delivery on their commitments, shareholders will certainly benefit.
Why Is Being a Benefit Corporation Important?
There are various benefits to being a Benefit Corporation, aside from helping the world become a better place. Below are just a few.
A Benefit Corporation status allows businesses to publicly announce their focus is on more than just profits. This appeals to a larger audience, including eco-minded consumers.
As a Benefit Corporation, a company becomes part of a special club of leaders who are well-respected and emulated.
A Benefit corporation status helps to attract investment opportunities in the marketplace. Investing in a Benefit Corporation provides investors the “assurance they need that they will be able to hold a company accountable to its mission in the future.”
Interviewed by Sustainablebrands.com, corporate sustainability expert and co-founder and managing director of Pure, Tim Greiner stated earlier in the year that “2020 will launch the decade of Benefit Corporations.” Why? “Those who have purpose integrated into their business” will flourish over the years to come because they “understand the importance of maintaining a balance between profitability and positive impact on the planet.” That pretty much sums it all up.
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