What is a benefit corporation? Well…

When I talk to friends about my fun new t-shirt or the new beer I just discovered, I start to get excited, telling them about the B Corp that makes them. I am always surprised how few people have heard of Benefit Corporations (B Corp for short) or what they are. This led me to decide that if they don’t know about B Corps, there must be lots of others out there who don’t know they exist or what they are either.

So, I am making it my mission here to bring more attention to these businesses so those interested could track a few down.

But first, let’s take a moment to look at why acting ethically in business offers economic and marketing advantages.

Business EthicsThe advantages of acting ethically in business

If everything else is equal, there should be an added appeal to the fact that a company demonstrates a commitment to ethical behaviour in the marketplace, don’t you think? Consumers like you and I are impressed by these kinds of impressions.

Numerous studies make this very point.

For instance, a study published by Procurious in the United Kingdom in January of  2022:

(F)ound that 9 in 10 (88%) of global consumers surveyed would choose to buy from companies with ethical sourcing structures in place over ones that did not.

The same research also concluded that the impact of the COVID-19 pandemic has accelerated consumer consciousness around the topic.

How Much Do Consumers and Companies Care about Ethical Sourcing?

And in a detailed description of the business and societal benefits of acting ethically, the Esade business program at Ramon Llull Univesity in Spain lists its assessment of the 5 major benefits of ethical brands.

Note: Just to place this in context, for two years running, the Financial Times has ranked Eade 3rd in the world for its open programs and 4th in the world for its executive programs.

These five benefits Esade describes are:

  1. Commitment toward the brand:

“Customers have a greater affective commitment and emotional attachment to those brands they see as being more ‘ethical’ than others… (and) are less sensitive to price differences.”

  1. Customer perceived quality

“A company embracing ethical behaviour transmits trust to customers… When customers recognize a company as ethical, they perceive the brand’s service excellence as superior compared to its competitors.”

  1. Empathy and satisfaction

‘Customers value being treated in a helpful manner by a company’s employees. Brands with staffers who show empathy elicit greater positive emotions from customers.”

  1. Customer loyalty

“(E)thical brands benefit from higher levels of loyalty and customers’ strong commitment to repurchase a company’s products or services.

The emotional commitment that people develop toward a service provider boosts customer retention and loyalty.”

  1. Positive word-of-mouth

Brands that behave ethically make customers more loyal… When customers are loyal to a brand, they are more likely to share their positive feelings with others

And as the byline on the Esade website suggests: Do Good. Do Better

While all of this might be true, what does that have to do with Certified B Corporations? Well, let’s go take a look.

How a benefit corporation is different

Certified Benefit Corporations (B Corps for short) set out to act differently right from the beginning. A B corp sets out to do more than make money – it sets out to make a difference. I like to think of it as a company that has corporate social responsibility (CSR) baked into its genes. More formally, according to the Benefit Corporation website: “A benefit corporation is a traditional corporation with modified obligations, committing it to higher standards of purpose, accountability and transparency.

Becoming a B Corp Certainly doesn’t make setting up a successful business any easier. After all:

According to the latest data, up to 90% of startups fail. Across almost all industries, the average failure rate for year one is 10% However, in years two through five, a staggering 70% of new businesses will fail.

Startup Failure Rate Statistics (2023)

Despite that fact, over 6,000 companies in more than 150 countries have successfully joined the B Corp movement. This idea started over 15 years ago in 2006, and the first class of 82 certified B Corp companies “graduated” the following year.

There is a detailed application and certification process that I will discuss later. And there are detailed directories of B Corps that you can patronize and support if you want. 


Join the B Corp MovementForming a benefit organization: Things to know

The first thing to know is that the challenge of achieving certification as a B Corp is not easy. It takes significant time and genuine commitment. This helps to ensure that the companies that attain this goal are worthy of it – and worthy of our support.

Pending B Corp status – Where it all starts

As you might guess from the name itself: “(t)he Pending B Corp status is designed to give start-ups and smaller companies time to prepare for the rigorous process of full B Corp Certification.”

This status is intended to demonstrate a commitment to moving towards status as a Certified B Corporation within a timeframe determined by the regional B Lab or Sistema B organization.

Certified B Corporation – Moving forward

Pending B Corp LogoThe B Corp team will be able to help a pending company achieve full status. 

One of the first steps would be to determine what category your company fits into. Booklets offer guidance for meeting each category’s specific requirements and needs. 

These categories are:

  • Small Enterprise – Fewer than 50 employees and less than $5M USD in revenue
  • Small-Medium Enterprise – Between 50 and 250 employees and between $5M USD and $100M USD 
  • Medium Enterprise – More than 250 employees and greater than $100M USD in revenue
  • Large Enterprise – Either more than $100M USD in revenue and at least ten subsidiaries or more than $1B USD in revenue
  • B Movement Builders – This final category includes companies with more than $5B USD in revenue. Six corporations are currently listed in this category.

Each of these guides describes the steps you go through to become certified and stay certified as a B Corp. The guides make it clear that it is not an easy process but that other companies like yours have gone through it. It even suggests that you reach out to other companies in your industry for advice. Companies that have become Certified B Corporations are generally its strongest proponents.

There are two types of B Corps defined on the website – that’s important 

But before I close, there is one more thing to point out. In 34 states in the U.S., a company can register itself as a benefit corporation. There are now over 3,000 benefit corporations in the United States. The local United States & Canada chapter responsible for assessing and assigning Certified B Corp status believes that while they are different, benefit corporations can play an important role in the creation of a more equitable economy.

What’s the difference?https://www.bcorporation.net/en-us/find-a-b-corp/

Benefit corporations and Certified B Corporations are often confused. They share much in common and are complementary, but have a few important differences. Benefit corporations and Certified B Corporations are both leaders of a global movement to use business as a force for good. Both meet high standards of accountability and transparency. Both create the opportunity to unlock our full human potential and creativity to use the power of business for the higher purpose of solving society’s most challenging problems.

So even if you aren’t able to enrol your company as a Certified B Corp, you can patronize ones that have achieved that status and feel better about doing business with them.