You’ve heard of green companies – companies which give back to the environment, or at least, endeavor not to destroy it – but what about companies which give back not only to the environment, but to society as a whole? There’s a new kind of classification for these companies and it’s taking the business world by storm. Benefit corporation, or b-corp for short, is a fairly new business designation, but one that has quickly taken off and become immensely popular. First used in 2010, the b-corp designation is for businesses that aim not only to make a profit, but to benefit the environment and society.
How Does it Work?
B-Corp legislation is state-based, and as of June 2013, twelve states had legislation in place with many more in-progress. Delaware is one of the most-watched states in the process of adopting the legislation, since nearly a million US companies, including 2/3 of all Fortune 500 companies, call the state their legal home. New York was the seventh state to adopt b-corp legislation in early 2012, and already has 83 b-corps and counting.B Lab, a non-profit founded in 2006, is “the non-profit behind b-corps” and pushes for states to adopt benefit corporation legislation while also independently certifying companies which meet their rigorous standards of social and environmental performance, accountability, and transparency.
What do B-Corps Do?
The b-corp designation is not confined to any one type of business. New York b-corps range from the well-known eyewear company Warby Parker, to e-commerce website Etsy. Being a b-corp does not mean that these companies are charities or that they don’t make a profit, it simply means that making a profit is not their only concern.Benefit corporations are held accountable not just for how their actions affect shareholders but also for how their actions affect the environment and society. B-corps have what is called a “triple bottom line,” which means that they endeavor to create profit socially, environmentally and economically. Each b-corp achieves this in different ways. For instance Warby Parker donates a pair of eyewear for every pair sold (social impact) while also operating as a carbon neutral company (environmental impact). Better World Books, based in Georgia, does it by donating books and funding literacy programs around the world (social impact), and offsetting their carbon emissions while running their business in a green manner (environmental impact).
Should You Become a B-Corp?
So B-Corps seem to be a booming trend at the moment, but what does this mean for your business? Should you consider being a b-corp rather than simply a corporation? It is certainly worth noting that with the increasingly obvious effects of climate change, more and more companies are likely to head in an environmentally friendly direction. B Lab claims that “b-corp certification is to sustainable business what fair trade certification is to coffee or USDA organic certification is to milk.”In addition to the positive feeling of helping others while doing good business, there are financial perks offered by b-corps to other b-corps. B Lab touts that “through access to over 80 service partnerships, b-corps have enjoyed more than $5 Million in savings and accessed technology, talent, and expertise for their businesses.”While there are not yet tax benefits across the board for b-corps, there are some companies and cities which are offering financial incentives to become a b-corp. For instance, Philadelphia has announced that it will offer tax credits to 25 local b-corps for the tax years 2012-2017. We can only hope that New York soon steps up and follows in Philadelphia’s footsteps in this matter to encourage businesses to become more socially and environmentally accountable.