What’s a benefit corporation? Is that that same as a B Corp?
These are questions I’m asked often, by employees, customers, and partners. The two terms are admittedly alike and confusing, but hopefully I can shed some light on the differences.
Let’s start with Certified B Corporations or B Corps. These terms are used to describe companies that are certified by the nonprofit B Lab to meet rigorous standards of social and environmental performance, accountability, and transparency. B Corp is to business what Fair Trade certification is to coffee or USDA Organic certification is to milk. These companies complete a demanding, holistic assessment of their business practices, looking at customers, community, workers, governance, and environment. Today, there is a growing community of more than 1,400 B Corps in 42 countries.
This is related to, but different than benefit corporations. A benefit corporation is a new legal tool that commits a corporation to higher standards of purpose, accountability, and transparency. This provision allows companies to pursue financial profit alongside social and environmental goals. In contrast, in a traditional corporation, other goals are secondary to profit. Currently, benefit corporation legislation is available in 31 U.S. jurisdictions, including Minnesota (though legislation does vary by state). Nationally, there are over 3,000 benefit corporations.
Companies may become either a Certified B Corp or a benefit corporation, neither, or they may elect to become both, like Sunrise Banks.