A new class of corporation
Benefit Corporations (B Corps) are a new type of corporation which uses the power of business to solve social and environmental problems. B Corps are unlike traditional businesses because they:
- Meet comprehensive and transparent social and environmental performance standards
- Meet higher legal accountability standards
- Build business constituency for good business
How are companies Certified and Audited as B Corporations?
1) To become a B Corp, each company must complete a Survey Review with a B Lab staff member to make sure that all answers accurately reflect the intention of the B Ratings System.
2) Adopt the B Corporation Legal Framework to bake the mission of the company into its legal DNA.
3) Sign a Term Sheet that makes your certification official.
4) When a company becomes certified, they must submit documentation for approximately 20% of their answers to the B Survey.
5) 10% of B Corporations are audited every year – So in their two-year term, all B Corporations have a one in five chance of being audited. In an audit, B Corporations are asked to validate and prove each of their answers on the B Ratings System and their compliance with the B Corp Legal Framework. Typically, the audit results in a score adjustment. If the score falls below the passing grade of 80, B Lab auditors provide a 90 day cure period to cure with as well as improvement recommendations. If the audit reveals that a company has filled out the B Survey has intentionally misrepresented aspects of their business, the company’s B Corporation Certification is publicly revoked.
6) Lastly, all B Corporations are required to submit a copy of their company’s governing documents amended with the B Corp Legal Framework.
Are there any tax incentives?
There is currently only one tax incentive available. The City of Philadelphia allows certified B Corporations to qualify for a $4,000 tax break as a way to reward companies engaging in sustainable business practices. Under current rules only 25 companies will be able to receive the tax credit, although the city may expand the program in the future. Look for the trend of tax incentives to increase as B Corporations become more popular.
The following states have already passed B Corporation Legislation: Hawaii, Virginia, Maryland, Vermont & New Jersey. And, the following have B Corporation Legislation in the works: Colorado, New York, North Carolina, Pennsylvania, California & Michigan