Key Takeaways
- Benefit corporations are legal entities designed to produce both a public benefit and shareholder value.
- B Corporations are companies that have been certified by B Lab and demonstrate high social and environmental performance.
Full Text
Benefit corporations and certified B Corporations are sometimes confused with each other due to their similar names. The sections below break down their key characteristics and differences.
Benefit corporations are a type of legal entity designed to produce a public benefit and drive shareholder value. Their framework creates a foundation conducive to long-term mission alignment through capital raises and leadership changes and allows for flexibility regarding sale and liquidity options. These benefit corporations have several obligations. They must commit to creating public benefit and value in addition to generating profit. They must consider their impact on society and the environment to create long term sustainable value. They must report to shareholders, and often the wider public, on social end environmental performances. There are different versions of benefit corporations adopted in thirty states. The Delaware Public Benefit Corporation is considered a gold standard, though.
B Lab, a non-profit, grants B Corporation Certifications to companies that meet their standards regarding social and environmental performance, transparency, and accountability. B Lab uses their B Impact Assessment, a public tool, to score companies. The information on the assessment is self-reported, with 10% randomly reviewed in person and on-site. Companies must score an 80/200 on the assessment to receive the certification. They are assessed on workers, community, environment, and customers. Once such standards are met, companies register with B lab and pay certification fees and annual fees. They then are able to use the distinctive B circle mark logo.
To conclude, benefit corporations are a legal entity designed to consider the public good while generating shareholder value while B Corporation Certifications are given out to companies who meet various environmental, social, and governance standards.
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