Before jumping into the “corporate governance” section of my benefit corporation posts, I want to make clear something that most of the readers probably already know, but that some in the popular media consistently fail to articulate. There is a difference between “certified B corporations” and “benefit corporations,” even though both are sometimes referred to as “B Corps.”
Certified B corporations are certified by the nonprofit organization B Lab. B Lab likens its certification of companies to the certification of coffee as “Fair Trade” or the certification of buildings as “LEED certified." A company can take the initial B Impact Assessment for free. Becoming a certified B corporation, however, is not free (though I have heard anecdotally that the benefits of being part of the certified B corporation community can exceed the cost of the certification fees because B Lab has negotiated significant discounts with various vendors). Interested readers can find details about the process of becoming a certified B corporation here.
Benefit corporations are formed under the state law of one of the seven states that have passed benefit corporation statutes (California, Hawaii, Maryland, New Jersey, New York, Vermont and my state of residence - Virginia.) (See my chart comparing the benefit corporation state statutes here.) Benefit corporations must be measured against a “third party standard” but the standard does not have to be B Lab’s standard.
A company can be both a certified B corporation and a benefit corporation, but there are plenty of examples of companies that are one but not the other. Currently, there are 521 certified B corporations with total revenue of about $2.9 billion. I am trying to track down the exact number of benefit corporations, but everyone’s best estimate seems to between 50 and 100 total benefit corporations. Remember, however, that all of the statutes are relatively new and that both the California and New York statutes just became effective a few months ago.
Unless otherwise noted, my posts will focus on "benefit corporations."
Bonus tip: It is "B Lab" not "B Labs"
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