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Considering Being a Benefit Corporation? A New Site Clears the Path

| Monday January 16th, 2012 | 3 Comments

Over the past year, the reputation of corporations has been dragged through the mud, with the global Occupy movement casting a skeptical, antagonistic view of such entities, and rightly so, in many cases. But quietly, a new, broader world-benefitting form of corporation has been emerging during the past several years – the B Corp, and more recently, Benefit Corporation status.

With last week’s headline-capturing news that Patagonia’s founder, Yvonne Chouinard, was literally the first in line to file for Benefit Corporation status in California, many other companies are likely now giving greater attention to this status. However, if you mix up Benefit Corporation and B Corp status, which are not the same, you are in good company.

Up until recently, there hasn’t been a single resource available to get yourself up to speed on what it all means, how they differ, what other options are out there and answer questions. With the creation of the Benefit Corporations Information Center, the path is cleared for many more companies to confidently pursue the route that works best for them. A creation of B Labs, the site is exceptionally thorough, easily scannable, and well laid out so as to make exploring alternatives to C Corp status as painless as possible.

Whether you are a business that wants to look into your options, an attorney who wants to better understand the legal structure or even become listed as a Benefit Corporation Attorney, a director of a corporation who wants to be educated on  potential duties, this site gives users a solid start, with additional resources and contacts to find more information.

However, B Labs isn’t doing this site purely as a community service. This page detailing the difference between B Corp and Benefit Corporation status notes that Benefit Corporations’ social and environmental actions that qualify them for such status are not verified by a third party, and that B Lab members get a number of benefits that Benefit Corporations do not. It goes on to say that B Corp status is available in all 50 states and around the world, while Benefit Corporation status is currently only an option in seven U.S. states.

So, this could be seen as a defensive move to maintain B Lab’s viability and profitability, while they continue to play their role in helping more states enact Benefit Corporation legislation.

Interestingly, though Benefit Corporations are required to publish an annual benefit report, the site says, “Government has no role in determining whether a selected third party standard is acceptable or whether the benefit corporation has met its benefit corporation purpose to create a material positive impact.” This makes me question the heft and legitimacy of Benefit Corporation status.

Will Benefit Corporation status come to be abused, as have food and green certifications, counting on people’s ignorance and higher view of said certification than is the reality? Or will companies take the opportunity to (re)create their company in the mold this site describes, “Benefit Corporations are a new class of corporation that are required to create a material positive impact on society and the environment and to meet higher standard of accountability and transparency.” Only time, and scrutiny by the public, will tell.

Readers: What are your thoughts on B Corps, Benefit Corporations and other alternatives?

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Paul Smith is a sustainable business innovator, the founder of GreenSmith Consulting, and has an MBA in Sustainable Management from Presidio Graduate School in San Francisco. He creates interest in, conversations about, and business for green (and greening) companies, via social media marketing.


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  • WW

    Seems that perhaps “sustainability” reports so popular in the news and with shareholders are a snow job meant to provide reassurance that the company will remain profitable (profitable = sustainable).  It has everything to do with being lean, mean, and SEEN, and very little to do with rights of labor or being green.

  • http://www.batshite.com Scott Bartlett

    I agree with WW. It’s embedded in corporate DNA: corporations only pursue activities that increase short-term profits. Shareholders will not authorize an activity that is likely to cost more money than it makes. It doesn’t matter if the activity constitutes a long-term benefit to society–hell, it doesn’t even matter if it would benefit the corporation long-term.

    Corporations will likely lobby to make Benefit Corporation status an extremely expensive process, making it all but impossible to achieve for small businesses. Then they will proceed to be Benefit Coporations in name, but likely not in practice.

  • Todd MacDonald

    I can’t completely agree Scott. While I accept that the traditional (and overwhelmingly dominant) Corp stance is purpose powered profit, I am witnessing 1st hand a slight but real shift towards profit powered purpose. “In the…DNA” implies it is permanent…there are examples in the business community that negate this position. The beauty of the model is it allows all forms to thrive.