To B or not to B: This is the Question

What are the differences between a Benefit Corporation and a Certified B Corporation? Many use the terms interchangeably thinking they are the same. They do have certain similarities, but also have important differences too.

A Benefit Corporation is a legal incorporation similar to a C or S corporation or a Limited Liability Company (LLC). However, when making business or organizational decisions, the Benefit Corporation is mandated to consider the interests of multiple stakeholders including society, the community, company workers, the environment along with company shareholders. They are taxed as for-profit companies that rely on earned income to create public benefits.

A Certified B Corporation (B Corp) is a designation for any for-profit entity that is certified by the nonprofit B Lab. Their certification process assesses the companies based on social, community, governance, and environmental criteria. This third party review brings increased credibility to companies who want to be transparent in the eyes of their stakeholders.

B Lab created an Impact Assessment, which analyzes the operations of the organization such as the quality of its product and services, if and how it supports the community, and its treatment of workers and the environment. The Impact Assessment uses a scoring system that seeks to test the ways in which the company performs in these categories.

B Lab Certified companies must  pay an annual membership fee based on revenue. Membership comes with significant benefits including being a part of a worldwide community of companies dedicated to doing good in addition to earning a profit.

The chart below was created by B-Lab.

Many companies choose to both while others select a single path. Both paths mean the company has chosen to join the global movement to  leverage business as a force for social good. Each have standards for accountability and transparency. Most importantly, they help create opportunities to use the power of business to solve many of society’s problems.

The Coherence Collaborative is a founding B Lab certified B Corp and a founding NYS Benefit Corporation. Let our leadership and strategic wisdom help you through this important process. 

By Myriam Bouchard