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If you own a for-profit business, you’ve probably heard of things like LLCs, sole proprietorships, and C corps. But have you heard of B Corp certification? Since 2006, the designation has been privately awarded by B Lab, a nonprofit dedicated to promoting business as a force for good. (The B stands for “benefit.”) Companies earning certification demonstrate a deep commitment to public positive impact, whether that be via sustainability initiatives, equitable economic practices, or community outreach, to name a few criteria.
Unlike some other certifications, which may be more narrow in focus, B Corp takes a holistic approach that is agnostic to product or service type. Travel companies can be B Corp; so can rug makers or IT consultants. (So can interior designers.) Globally, more than 3,500 companies are certified B Corps, from utilitarian mainstays like Patagonia and Method Products to design brands like House of Hackney and Armadillo & Co. And more apply each day.
That said, the process is no small undertaking, and has hard and soft costs to consider. Are you curious about whether or not a B Corp is right for you? Find out everything you need to know here.
A 20th-century kilim rug from ZZ Driggs, a Brooklyn-based furniture company currently seeking B Corp certification.
B Corp Benefits
Though there are no tax benefits for B Corp certified companies, the status does often improve a company’s perceived value. It can also attract potential customers, if the company includes the designation in its marketing. But B Corp certification can impact more than sales, also serving as a lure for prospective hires and a point of pride for existing ones.
“Our B Corp status attracted many of our current employees, and it was a great initial screening tool on both sides to see if there is a value match,” says Jon Blumenauer, CEO of furniture company The Joinery in Portland, Oregon, which became a certified B Corp in 2010. “Our continued certification is meaningful for our team and to prove to them that we continue to invest in strong practices, so it helps with retention.”
Once inducted into the club, a business then joins a network of like-minded companies and is listed in the B Corp directory. “The certification connects members with resources and other certified brands to help ensure we’re always improving best practices around our commitment to social and environmental responsibility,” Decker says.
The B Corp Process
A company initiates the B Corp certification process by completing the B Impact Assessment (BIA), an extremely thorough multiple-choice questionnaire about the company’s practices and goals.
“We were just stunned by how much the B Corp certification process is truly a roadmap for companies to level up their governance, their environmental stewardship, and their community outreach,” says Whitney Frances Falk, founder and CEO of Brooklyn-based furniture startup ZZ Driggs, which is in the midst of the application process.
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For home company Avocado Green Mattress, which earned its B Corp certification in 2020, filling out the BIA was the perfect chance to better its practices and solidify its goals internally before moving forward with the rest of the application.
“When Avocado started pursuing the certification, we were in the scrappy startup phase, and the process helped us put policies in place to formalize our inclusive work environment,” says Bri Decker, the company’s director of sustainability and social impact. “We went through and did an initial evaluation and looked for areas of opportunity to increase our impact, then we set about implementing those ideas, including legally amending our operating language to consider our impact on people and the environment.”
If a company’s BIA passes muster, B Lab then moves onto verification, asking several rounds of open-ended questions to which the company must provide verbal and/or written responses. Falk calls this section “essay writing.” “I think it’s a really unifying thing for a team,” she says, noting that each member of the ZZ Driggs staff had a different research task, from determining the carbon footprint of the warehouse to investigating healthcare benefits for employees. “It just commenced a deep conversation for the whole team about our company’s goals.”
The Harper shelf by ZZ Driggs.
Finally, B Lab awards a number of points to the applicants based on their responses: Companies must reach at least 80 points to be awarded the B Corp certification. That score is listed publicly in the B Corp directory, along with the company’s transparency assessment. All in, the process can take anywhere from a few months to over a year, depending on how much time a company can dedicate to the application while simultaneously running the business. Plus, there’s a bit of a backlog of applicants at the moment, according to B Lab’s website, creating some delays.
The Bottom Line
It does cost money to apply for and maintain B Corp certification; the one-time submission fee is $150, while annual fees are proportionate to a company’s revenue (for example, companies with less than $150,000 in annual sales are charged $1,000, while companies with $750 million to $999.9 million in annual sales are charged $50,000). Every three years, B Corps must recertify to ensure they’re maintaining B Lab’s high standards. (Citing the resources required for benefit corporation filing, the fashion brand Reformation dropped their B Corp status in 2017.)
That considered, is the B-Corp designation all it’s cracked up to be? Avocado and The Joinery both say yes. “We pursued B Corp certification because we wanted to support a system that encourages businesses to invest in environmental and social performance,” Blumenauer says. “Externally, it sends a signal to our customers and other stakeholders that we are serious about investing in these practices. Internally, it provides a benchmark for us to track continuous improvement.”
Still, business owners have options. One parallel route to consider is becoming a public benefit corporation (PBC), a legal structural designation available in 30 states plus Washington, D.C. This status is akin to a standard C corporation, just with higher standards of accountability regarding positive impact, from environmental to social concerns. It is, however, generally more affordable than B Corp certification—depending on the state, incorporating as a PBC can cost less than $100. Or you can go all out and apply for both!
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