B Corporation

Why a Certified B Corporation is the Secret to a Sustainable Business

In 2019, the Business Roundtable issued an open letter called “Statement on the Purpose of a Corporation,” in which 181 CEOs signed the letter, stating that they pledged to lead their companies to the benefit of all stakeholders. Who makes up all stakeholders? This group compromises more than just a corporation’s shareholders; it also includes customers, employees, suppliers and communities.

It’s critically important to return to this letter in 2020 and reflect on its message. Amid COVID-19, more and more companies are choosing to focus on sustainability. However, many businesses have already discovered there is a way they can balance purpose with profit. They may pivot into becoming a Certified B Corporation.


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What is a Certified B Corporation?

Certified B Corporations focus on a triple bottom line: people, profit and planet.

As a hybrid between a standard corporation and nonprofit, B Corporations (often abbreviated as B Corps) do earn a profit. However, this entity must also complete a certification process. This certification holds the entity accountable to higher social and environmental performance standards. In turn, it elevates the entity to B Corp status and allows the business to prioritize the triple bottom line.

Now that you understand what a Certified B Corporation is, it’s important to understand if your business has the ability to pivot into B Corp status. You should be prepared to adopt higher standards of purpose and accountability. Your company’s offerings should also be able to benefit all individuals and do no harm. Additionally, if your business has a board of directors or investors, you will need to discuss plans to shift to a Certified B Corporation prior to certification. This ensures that all individuals understand why adopting these legal changes is useful for business and allows for a vote, as needed, to decide if the business should become a B Corp.

If you find that this is not possible for your business, you may not be able to form a Certified B Corp. For businesses where this behavior is possible, keep reading.

How do I get certified?

Becoming a Certified B Corporation is not quite the same process as it would be to form a different entity formation, like a limited liability company. If you were incorporating as an LLC, for instance, you would fill out an application, pay a filing fee, and wait for the Secretary of State to approve your documents. An LLC may decide to become a Certified B Corp, but the entity will need to reincorporate under a new status.

More about that in a bit. First, let’s walk you through the B Corporation certification process.


Related: Which Entity Should You Incorporate Your E-Commerce Business As?

Three steps to B Corporation certification

The road to B Corp certification begins with the help of nonprofit group, B Lab.

Take and pass the B Impact Assessment test

Businesses seriously committed to B Corp Certification will first need to take the B Impact Assessment test.

The B Impact Assessment, commonly referred to as the BIA, is a tool that allows businesses to measure its impact on workers, community, environment and customers. The test is available in two different lengths: 30 minutes for a quick snapshot of how you’re working to build a better business, or two to three hours for a full-impact report.

Taking the lengthy test will be necessary in order to move forward with your B Corp certification. Once you have the full impact report, you may examine where your business excels and where it may need improvements. If you need significant improvements, BIA offers the ability to create a customized improvement plan. Additional tools, including free best practice guides, are also available to help implement these changes.

Did you pass the B Impact Assessment test, earning a score of more than 80 points out of a possible 200 points? Then you’re all set to move on to the next step in B Corporation certification!


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Schedule a virtual assessment review

If you passed the BIA, a member of the B Lab staff will reach out to you. They will then schedule a virtual assessment review together.

What happens during a virtual assessment review? You will meet with a member of the B Lab staff and review further details as to how your business plans to commit to the public benefit. Additional documents may be requested as proof of how your business plans to behave as a B Corp. Make sure you have the necessary documents ready prior to your review.

If the review is successful, your business will need to focus on ways it can meet legal requirements as a Certified B Corp. As mentioned earlier, some entity formations may need to reincorporate and adopt a benefit corporation status. In the case of reincorporation, current governing documents including articles of incorporation must be amended to reflect Certified B Corporation language.

Sign the B Corp Declaration of Interdependence

The last item to check off the Certified B Corp box is signing the B Corp Declaration of Interdependence. Remember to pay your annual certification fees, too.

Congratulations to your newly Certified B Corporation! You just joined the ranks of more than 3,000 companies across 150 industries that commit to using business as a force for good each and every day.

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