The Rise of the B-Corporation in Modern Business
Business has the ability to impact more than just its shareholders, it can (and should) take responsibility for its surrounding environment. B-Corporations are the best example of a company that has taken on this social and environmental responsibility through a unique business model. Considered publicly transparent, B-Corporations are a trending movement in the economic realm. While spreading the movement of utilizing business for the greater good of mankind, the hope is that one day all corporations will operate in a manner that looks at long term profitability rather than maximizing profits this year for its shareholders.
In order to take the long view of profitability, it is necessary not only to provide a service of value; how the company provides that service matters too. The long term profitability of a company is rooted in developing brand and customer loyalty, and today’s customer wants to know how and from where you sourced your product. The consumer cares that when she parts with her money, some of it is going to help sustain small businesses in the developing world. Charity is not the goal; instead creating an environment in which business owners throughout a company’s supply chain can grow and flourish, lifting countless people out of poverty by providing dignity and rewarding work is the aim.
What Separates a B-Corp From Others?
The difference in corporations that give to charities and certified B-Corporations is the show of proof, everyday, that they (B-Corps) are operating their business in a way that aligns with their values and mission of choice. B-Corp stands for benefit corporation which is a type of for-profit company that impacts the environment, society, and community around the business and within the business itself. They are companies that must meet high standards, and meet tests that hold high benchmarks for environmental impact, accountability for their charity model, and transparency of business operations. These test marks are known as the B-Impact assessment.
BCorporation.net describes the B-Corp certification as such; “B Corp is to business what Fair Trade certification is to coffee or USDA Organic certification is to milk”. Today, more than 1,600 Certified B Corps exist in over 42 countries and 120 industries. But all of them are looking to redefine what success means in business.
Benefits of Being a B-Corp
Being a B-Corp is not only beneficial to the world and environment surrounding the company, but it has benefits for the company itself. Every year, more and more of investors are looking to put their money in socially responsible companies. Large investment firms will invest in companies that align with their morals, values, and mission. Another reason behind supporting B-Corps is that a certified B-Corp must continually review their standings which will keep them regularly thinking about their practices, and holds them accountable.
Other benefits that B-Corps hold are socially related. There’s no denying that becoming a certified B-Corporation assists in generating attention. B-Corps get a lot of press from major news stations. Between 2011 and 2012 there was a jump in press hits from 265 to 465, literally doubling in news coverage. Younger talent also seems to be very much on board with the business structure of these companies which helps tremendously in attracting and retaining innovative talent.
How Do You Become a B-Corp?
Now knowing the benefits that B-Corporations reap and also understanding the positive impact that they have in the world, you may be wondering how a company becomes one? Previously we went over that B-Corporations go through regular testing to become and stay certified, so how does the process occur?
There are really three parts to getting an actual certification to be labeled as such. Breaking down the process for authentication:
Step 1: Complete the B Impact Assessment and earn a minimum score of 80 out of 200 points.
Step 2: Determine the path for your corporate structure and state of incorporation.
Step 3: Sign the B Corp Declaration of Interdependence and Term Sheet.
What is impressive about the B-Corp Certification process is that 10% of the existing companies that are certified are randomly selected each year for a certification evaluation. This part of the process is what makes certification so authentic to maintain. In addition to a random evaluation, a company must update their assessment at least every two years. By doing so, it ensures that companies will continue to engage at a high level of impact during the growth process.