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B Corps and a Benefit Corps: What’s the difference?

It’s not uncommon for the terms B Corp and Benefit Corp to be mistakenly interchangeable with each other. While they do share plenty of similarities, there are some differences between the two. While the assumption that both use business as a tool to achieve social and environmental reform is correct, how they differ from each other is not always understood. 

 

So what exactly are the differences? In this article, we’re going to tell you. But first, we’re going to look at the purpose of each organization and what they have in common. 

 

What are B Corps and Benefit Corps

 

Both B Corps and Benefit Corps are unified in their ethos that business should be compelled to treat each segment of its business operation as a benefit rather than a hindrance to its welfare. For instance, employees deserve to feel that they are gaining a purpose from being at the organization, rather than just another cog in the machine. 


B Corps face a B Impact Assessment which rates the business in a number of ways, such as its impact on the community and the environment. For leading activewear brand Patagonia, which is a famous B Corp, the review helped “conduct a comprehensive assessment of our current social and environmental programs.”


Employee welfare is one of the criteria that have to be met, and this is something that Benfit Corporations conduct on a self-report basis. This allows both organizations to ensure the treatment of every area of their business is of exceptional standing.

 

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Did you know, ethical companies have more productive employees? Everyone wants to work hard when the impact can improve the world!
 

Ecologically, both B and Benefit Corps think that companies should invest back into the environment to outweigh any damage that has been caused through their operations.The way this is achieved is by acting a little differently from traditional companies. A normal corporation has to cater to the interests of shareholders first, and by extension becoming a profit-first company.

 

This means that the pursuit of profit overcomes any ethical dilemmas it may face. Worker rights may be quashed to make way for a higher dividend. It doesn’t matter the environmental damage the carbon emissions are causing if this is a cheaper method than the alternative. B Corps and Benefit Corps feel that businesses could and should take firmer measures to support the community they are a part of. 


B and Benefit Corps think a little differently. What they do is consider the impact their business is having on every stakeholder. It’s not just those who have a financial interest stake in the company that are heard. From the fair treatment of suppliers to the community they operate in, the business has to take into account every consideration before a decision is made. 

 

There are obvious advantages to this. One of the most notable is that this often means that these organizations have a more democratized workforce than traditional companies. As a result of this, visible improvements can be seen with employee motivation and their longevity at the company. Employees can also contribute to decision making which can actually help the business prosper.

 

B Corps and Benefit Corps both consider transparency in reporting their social and environmental performance as an essential part of running an ethical business. These reports are held against a third party standard, and the results of which must be made publicly available for each type of organization. There’s no hiding place for shoddy dealings or abhorrent uses of fossil fuels!

 

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No cheating! We believe every company should have to report how their business is effecting those they impact

These are just a few of the ways these two organizations operate and the positive impact they can have on the wider world as well as each division of their business. The power of the B Corp deserves its own dedicated article, so to find out more about how they can transform the world of business, click here.

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Taking care of the planet is why B Corps and Benefit Corps are so important

     

So, what are the differences?

 

Now that we’ve looked at the similarities between B Corps and Benefit Corps, let’s see how these two are organized in slightly different ways. In most instances, B Corps have to follow more procedures in order to achieve its B Corp status. The reason for this is while Benefit Corporations follow a similar structure to B Corps, they are not certified, so there is no legal responsibility to meet targets. While this does allow for greater leniency, there are advantages to becoming certified. Usually, it increases media exposure as “media outlets [are] interested in covering leaders in the trend to pursue purpose before profit.” Another key reason is trust and loyalty. Consumers know the legitimacy of a company’s obligations if they have been certified. Once certified, the seriousness of a B Corp’s responsibilities can never be in doubt. Of course, this is just a brief introduction as to the reasons why a Benefit Corp may decide to become a B Corp. To find out more, we recommend this article which goes into more depth. 

 

For now, let’s stick with the differences. With the certification, there comes more responsibility. While a Benefit Corp’s performance is self-reported, and thus only has to meet its own specific criteria, a B Corp must achieve the minimum verified score on the B Impact Assessment we mentioned earlier. This assessment is constantly evolving to ensure businesses stay modern and innovative as they seek to meet the latest standards. 

 

While achieving the B Corp status can be challenging due to having to meet the assessment’s grade, they can be more accessible for a greater number of companies. It’s only possible to become a Benefit Corporation in thirty U.S. states, while achieving B Corp status is an option for pretty much any business, so long as they make the grade! B Corps isn’t just for US companies, in fact, at the moment of writing they can be found in 77 countries and 153 industries. 

 

The last crucial difference is how B Labs’ role is distinct between the two. B Lab is an independent organization that assesses how companies can overcome the social and environmental challenges of the day. For Benefit Corps, it offers a free reporting tool to help them independently judge the effectiveness of their ethos. 

 

A B Corp, on the other hand, is granted the B Lab assessment we mentioned earlier. Once the company has passed the test, they are granted permission to use the Certified B Corporation logo, portfolio of services, and vibrant community of practice among B Corps. However, while the fees involved for state filing fees for a B Corp can be up to $50,000, for a Benefit Corp it can be anything from $70 to $200, making this a more affordable option for some businesses.

B Corp Image of Company for Boxed Reusable Water
Companies are starting to realize the power of sustainability, whether they are B Corps or not. Boxed Water is Better is a great example of this movement

To Conclude

 

The most important thing about both B Corps and Benefit Corps is that their primary purpose is to redefine the purpose of a business into becoming a force for good. With that being said, there are some key differences between the two and the best option for a business depends on a number of factors. Budget, location, and the aspirations of the company can all be important reasons as to which organization should be considered.

 

While getting the B Corp certification can have a positive impact on how a socially conscious business operates, this isn’t crucial to ensuring the sustainability of both the business and the wider community. The most important thing is to keep consistent reports on the standing of a business in all the main areas: community, workforce, environment and employees. If every business can pass these tests, we can all look forward to a brighter future. 

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