Benefit corporations are for-profit entities dedicated to sustainable growth and contributing to the public good. To qualify, the business must have an explicit social or environmental mission, as well as a legally binding fiduciary responsibility to consider the interests of its employees, the community, and the environment in addition to its shareholders. Well-known benefit corporations include Patagonia, Kickstarter, and King Arthur Flour Company.
How Are B Corps Special?
Benefit corporations have the same structure as traditional for-profit corporations. However, where traditional corporations answer to invested stakeholders and aim to maximize profits, benefit corporations consider a broader range of stakeholders, such as the environment and society as a whole. This model requires corporations to focus on sustainability, accountability, and transparency, but still allows for profit and shareholders (unlike a non-profit entity). This structure lets companies integrate their missions and values with profits and growth.
Forming a B Corp
Traditional Filing Through The State
First and foremost, a benefit corporation must have a general benefit purpose, clearly stated in its articles of incorporation. When these articles are filed with the state, the corporation is born. Benefit corporations must file annual reports, like traditional corporations. However, a benefit corporation’s annual report must prove that it is upholding its stated purpose.
B Lab Certification
B Lab is a non-profit organization dedicated to forming B Corps, and getting their certification is another way to demonstrate focus on the public good. The business must evaluate how it interacts with its workers, customers, community, and the environment. If the company meets B Lab’s standards, the business’ representatives may meet with B Lab’s staff to discuss certification and submit documentation to support the assessment.
Forming a benefit corporation is a great way to stand out to potential investors and your customer base. It shows that you are willing to forgo profits for the greater good, and people are increasingly seeking companies attentive to environmental and social issues.
Thinking of starting a benefit corporation? Want more information on how to proceed? G&G Law, LLC can help! Contact us!