Benefit Corp vs.

Certified B Corp
Benefit corporations and Certified B Corporations are often, and understandably, confused. Both are
sometimes called B Corps by mistake or as shorthand. They share much in common and have a few
important differences.
Quick snapshot:
Certified B Corporation is a certification conferred by the nonprofit B Lab.
Benefit corporation is a legal status administered by the state.
Benefit corporations do NOT need to be certified.
Certified B Corporations have been certified as having met a high standard of overall social and
environmental performance, and as a result have access to a portfolio of services and support that
benefit corporations do not.
What are the commonalities between benefit corporations and Certified B Corporations?
Accountability: Directors of both are required to consider the effect of decisions not only on
shareholders, but also on other stakeholders, such as workers, community, and the environment.
Transparency: Both are required to publish publically a report assessing their overall social and
environmental performance against a third party standard.
B Lab: B Lab is the nonprofit organization that helped to develop the benefit corporation Model
Legislation and works with the community of Certified B Corporations and others to marshal support
for its passage. B Lab is also the nonprofit organization that certifies and supports Certified B
Corporations.
What are the differences between benefit corporations and Certified B Corporations?
Performance: Each Certified B Corporation has achieved a verified minimum score on the B Impact
Asessment (80 points out 200 needed). While benefit corporations are required to publish an
annual report assessing their overall social and environmental performance against a third party
standard, that report is not required to be verified, certified, or audited by a third party standard
organization.
Support: Certified B Corporations have access to a portfolio of services and support from B Lab to
help them with marketing, sales, raising money, saving money, learning from and doing
business within the community of Certified B Corps.
Availability: Benefit corporation is a corporate status legally recognized by 26 states and the District
of Columbia. Certified B Corporation is a certification available to businesses in all 50 states and
around the world. As of 1/1/14 there are over 1050 Certified B Corps in 60 different industires.
A benefit corporation is the term used when a company is created under corporate law and should not
be confused with a B Corp, which refers to a company that is certified by B Lab to meet specific
standards for social and environmental performance.

What Are the Benefits of Being a Benefit Corporation?

Incorporating as a benefit corporation legally protects an entrepreneurs social goals by mandating
considerations other than just profit. By giving directors the secured legal protection necessary to
consider the interest of all stakeholders, rather than just the shareholders who elected them, benefit
corporations can help meet the needs of those interested in having their business help solve social and
environmental challenges.
Additionally, the demand for corporate accountability is at an all-time high, with many consumers
already aligning their purchases with their values. The benefit corporation status is a great way to
differentiate your company from the competition and capitalize on these customers.
What Are the Drawbacks of Being a Benefit Corporation?
One of the major drawbacks is expanded reporting requirements. This is to provide shareholders with
adequate information to determine if your business is achieving its stated purpose. Each year a benefit
corporation must give each shareholder an annual report.
Key to this report is the requirement of a third party standard for assessing overall performance, and
the process for selecting this third party standard must be explained within the report. The report must
also indicate the efforts made to achieve a general public benefit or the circumstances that hindered that
achievement. Finally, if the benefit corporation has a website, it must post this annual report on its site.
Another potential drawback is uncertainty. Benefit corporations are fairly new legal entities. It is
unclear how courts will interpret their mandates to not only seek profits, but also to consider potential
benefits to society. Furthermore, the impact on raising capital and how angel investors and venture
capitalists will react remains uncertain.
Conclusion
For entrepreneurs, business owners, workers and consumers, the introduction of the benefit corporation
is an exciting development. Community and environmentally minded business owners can preserve
their social goals without sacrificing the ability to make a profit.