Benefit corporations are business entities with a dual purpose: making a profit and positively impacting their employees, the community, society, and the environment. On the other hand, B Corps are legal structures that allow for-profit companies to maximize profits while pursuing environmental and social goals.
Even though benefit corporations and B Corps are related concepts, they are not the same. Below, we discuss the main difference between benefit corporations and B Corps.
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The Main Difference Between Benefit Corporations and B Corps
1: Benefit Corporations
The main difference between benefit corporations and B Corps is that the former are business entities whose legally defined goals are to benefit shareholders by maximizing profits and producing a public benefit, which can include positively impacting their employees, society, and the environment.
Benefit corporations are required by law to consider how their actions impact these groups. In some states, benefit corporations are required to release benefit reports explaining their environmental and social impacts.
Let us look at this scenario: if a farm that wants to use a promising but potentially dangerous fertilizer to achieve food security becomes a benefit corporation, that firm is required by law to consider how the fertilizer will impact the community’s groundwater and how much profit it stands to make from its use.
In the farm’s benefit report, it must explain how the use of the fertilizer benefits the farm and impacts the public.
2: B Corps
On the other hand, a B Corp is a certification system that incentivizes businesses to be more conscious of how their actions affect their employees, the environment, and society.
B Lab, a non-profit social impact organization, awards certificates to businesses that meet high standards of environmental and social accountability, performance, and transparency. These businesses must recertify after every three years and, in some cases, release annual impact reports detailing their social and environmental impacts.
Since 2007, B Lab has awarded certificates to over 4,500 companies in more than 70 countries. A B Corp symbol is one of the most effective branding tools for companies looking to capture the attention of ethical investors.
Today, more and more people prefer supporting companies that uphold practices geared toward the greater good instead of exclusively profit-driven companies. This shift in preferences has encouraged businesses to pursue B Corp certification as it helps them win over conscious consumers and attract investors with shared values.
Start A Benefit Corporations or B Corp Today
Benefit corporations are companies that, in addition to making a profit, seek to create a positive impact on the environment and society. This is in line with their view to preserve the earth or make it better for this and future generations.
B Corps are companies that have been certified by B Lab as meeting certain performance standards related to how it impacts its employees, the environment, and society.
If you are a socially conscious company, becoming a benefit corporation or certified B Corp is the best route to take as it shows investors that profit is not the end goal for you and that you seek to promote environmental and social good.
