For-profit companies have long been categorized as either C Corps, S Corps, or LLCs. But look out, there’s a new show in town.
Over the past few years, the Benefit Corporation or “B Corp” has been gaining ground.
B Corps are social enterprises; businesses working for social and environmental good as well as profit. They’re an important addition to the marketplace, so I wanted to get down to the main points of what it actually means to be a B Corp.
Filling a Need
Working with non-profit organizations, I was often frustrated by their lack of scalability. NGOs and charities spend a lot of time and resources fundraising and so aren’t able to maximize their impact. When my business partner and I decided to found Modavanti.com, an ethical fashion retail site, we wanted create a for-profit business aimed at changing consumer behavior and reforming the garment industry. We felt there was big potential there.
That’s exactly the purpose of the B Corp.
Certified “Good” Business
B Corps are distinct from regular corporations in that their success is measured in part by their social and environmental value. The third-party NGO B Lab certifies that B Corps meet higher standards of transparency, accountability, and social/environmental performance. In their mission statements and articles of incorporation, these companies proclaim their purposes, whether they be building infrastructure, protecting the environment, labor reform, or any number of others.
So far, B Lab has certified 600 companies across 60 industries as B Corps, a list that includes prominent retailers like Patagonia and Seventh Generation.
There’s a legal element for Benefit Corporations as well.
Since its founding in 2006, B Lab has led the charge to get B Corp legislation passed in all 50 states. In April off 2010, Maryland became the first state to take the plunge. As of early 2013, 12 states have enacted laws certifying B Corps and 14 others are hot on their heals. Support for the laws has been overwhelmingly bi-partisan to boot – and how often does that happen?
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