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Beware the B Corps … or Join Them

“Good companies” now have their own advertising program. However, for most companies to be able to participate, they would have to revisit and rewrite their corporate governance materials and business strategy.

The ad campaign is focused on reaching approximately 17 million “values-driven consumers” through advertising in sustainable living magazines such as Mother Earth News, Natural Home, Utne Reader, and Care2.com, "the largest online community for healthy and green living, human rights and animal welfare." The ads are also posted online.

The “Better Companies Make Better Products, B Corps are Better Companies” campaign is being organized by B Lab, a nonprofit corporation “dedicated to using the power of business to solve social and environmental problems.” B Lab is working to build a community of Certified B corporations to “make it easier for all of us to tell the difference between ‘good companies’ and just good marketing.” Until recently, the organization has had a relatively low profile.

Currently, 364 corporations with $1.79 billion in revenues have achieved B certification (the B stands for Benefit). Most of the certified companies so far are small organizations – sustainability consulting firms, IT consultants, other service providers, local restaurants, nonprofits, etc. The best-known brands among B Corps are Method Products, Seventh Generation, Numi Organic Tea and New Leaf Paper.

The organization recently conducted research and found that more than 90 percent of values-driven consumers (which, of course, is not the same as all consumers) preferred to buy from a company with a third-party seal of approval, and B Lab aims to be the third party that consumers look for. B Lab hopes the campaign “makes it easier for Americans to find companies worthy of their support.”

According to the organization, to earn certification, B Corporations must achieve a minimum score on the B Impact Rating System, which assesses a company's impact on its work force, suppliers, consumers, community, and the environment, and are legally required to consider the interests of these stakeholders, not just shareholders, when making decisions.

The bold and italics above have been added by me for emphasis. Legally required? Yes, to retain their B Corp status, B Corps must demonstrate ongoing compliance with the B Impact Rating System. The legal framework for B Corps is evolving, and it certainly won’t be attainable for all organizations. Consider B Lab’s Step-by-Step guide for complying with B Corp requirements:

  • Amend your governing documents (e.g., Articles of Incorporation, Membership Agreement, Partnership Agreement) to redefine the best interests of the corporation to include the consideration of employees, consumers, the community and the environment
  • Obtain board/governing body approval of your amended governing documents
  • Obtain shareholder/member/partner approval, requiring a majority/super-majority vote, depending on your state of incorporation/operating agreement
  • File your amended articles with the Secretary of State (only for C or S Corporations; unnecessary for LLCs and LLPs)

Some activists and government officials are looking to the B Corp program for guidance on how all companies should behave. Maryland and Vermont already have B Corp laws, and California is among several other states considering legislation that would require corporations to name at least one social or environmental purpose for which they exist and to which they are willing to be held accountable through greater transparency. The B Corp discussion is just beginning and it could become intense.

Do B Corps have an advantage? Could we all learn something from them? Should we all aspire to be like them?

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