B Corp vs Benefit Corporation: What’s the Difference?
What do more than 2,000 companies around the world, across various industries and countries, have in common? They’re in business to benefit others and aligning their business practices with the greater good. While you may think that profit is king, consider these stats:
- In a recent Nielsen survey, 81% of people think companies have a responsibility to improve the environment
- In 2014, brands with sustainable marketing made up 65% of global sales
- In a recent Millennial Survey, respondents view of companies turned negative as 75% of respondents (up from 50% the prior year) think businesses focus on their own agenda and not society as a whole
Some people mistakenly use the terms B Corp and benefit corporation interchangeably. While it’s wonderful that companies are interested in aligning their business practices with the greater good, it’s important to get the terminology right.
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What Is a B Corp?
As a B Corp, companies commit to using their profits to positively impact their employees, communities and environment. It’s a way to confirm to employees and other stakeholders that the company’s mission is embedded in everything it does.
Any company in the world can be considered a B Corp if it has achieved the B Corp Certification, which measures a company’s social and environmental performance. For certification, these companies must meet the minimum B Impact assessment score of 80.
EcoInnovate, a Philly-based company which helps companies become more eco-friendly, has been B Corp certified since 2015. It currently has a B Impact assessment score of 108.8.
What is a Benefit Corporation?
A benefit corporation is a legal structure that a company can choose when incorporating. Similar to B Corps, benefit corporations aim to help solve society’s challenges through their missions and business practices.
The first benefit corporation law was passed in 2010 and so far, the structure is only available in limited U.S. states. To measure its progress on its stated goals, benefit corporations must release a public benefit report every year using a third-party standard.
What Are the Main Differences of a B Corp and Benefit Coproation?
Under both designations, companies commit to higher standards of transparency and accountability in their pursuit of helping the world. However, there are some key differences.
- Structure: The main difference between the two is that a benefit corporation is a legal structure for a company whereas B Corp is a certification that a company can pursue. You CAN be both a B Corp and benefit corporation.
- Cost: B Corps have to pay certification fees every year based on revenues. These fees can range from $500 to $50,000. Benefit corporations only have to pay their state filing fees, which range from $70 to $200.
- Availability: For benefit corporations, the legal structure is only available in 30 U.S. states and Washington D.C. B Corp certification is open to any company in any country.
- Performance Reporting: To maintain its certification, a B Corp must meet the minimum B Impact score and get recertified every two years. Benefit corporations self-report their annual benefit report in order to maintain their legal status.
Which is Best for Your Company?
Deciding to pursue a B Corps certification or file as a benefit corporation, or both, requires careful consideration of your mission, goals, resources and business practices. No matter what decision you make, know you’ll be in great company as you work to make the world a better place.