Last month, I happened to hear about something called a “B Corporation” on the NPR program Marketplace. I’d never heard of it before. LLCs, S corps, and C corps, yes, but never a “B” corp. What in the world was this?
It turns out B (B = “Beneficial”) corporations are a relatively new community created by a non-profit group called B Lab, a community comprised of businesses who commit to using their business to “solve social and environmental problems”.
To join, businesses have to amend their laws of incorporation to reflect their commitment to be socially responsible as well as pay B Lab a fee based on a percentage of their revenues. In return, businesses that sign on get certified as “B corporations” and in theory reap the benefits of the certification as its credibility grows. Numi tea, Uncommon Goods, King Arthur Flour are some of the more famous founding companies on B Labs’ website that you may recognize.
It’s not just marketing mumbo-jumbo though. A few states such as Michigan, Vermont, Wyoming, and Utah actually recognize a type of business entity called the L3C, or “low-profit limited liability company”, which combine the benefits of being a LLC with those of being a non-profit org. Other states are in the process of making a class of socially/environmentally responsible businesses into reality.
I’m curious to see how both B corps and L3Cs play out. In my experience, it’s hard to force a business (or any group) to be socially or environmentally responsible because for this type of commitment and vision to ring true, it really has to come from within its leadership ranks and be sincere. As with many other intangible or hard-to-define qualities, unless concrete measurements can be created and agreed upon as to what “socially responsible” means, this concept will be difficult to enforce. That doesn’t mean it’s not worth trying, though, and if B Lab can get people thinking differently, that itself is probably a worthy enough goal.
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pennystocks
I’ve never heard of them either. interesting.
Mrs. Money
I hadn’t heard of a B corp. I had heard of S and C. This is interesting! I work in a bank and sometimes do business loans (very rarely) so great info!
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Lillie
This is very interesting. I am a non-profit organization employee and I have heard of the other corporations, but nothing about B. I am definitely going to monitor their progress and the development of the B certified companies.