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What is a B-Corp?

Oct 26, 2021
Vanderbilt faculty and Turner Family Center Director unpack the certification, its structure, and the benefits

By Mackenzie Burckbuchler

Over 4,000 companies across the world, including Patagonia, Allbirds, Bombas, and Ben & Jerry’s, are Certified B Corporations, informally known as “B-corps.” Business professionals interested in social impact may have heard of the designation before, but what exactly is a B-corp, and what impact does it have on society? We spoke with Kendall Park (BA’11), Assistant Professor of Organization Studies, and Mario Avila (MBA’12), Director of the Turner Family Center for Social Ventures, to find out more. 

What is a B-corp?

As Park notes, “The word ‘B-corp’ has 2 meanings. One: it refers to the specific certification and logo that companies can display on their website and packaging. Two: those companies that are certified are called B-corps. It is the certification itself and a way of referring to companies that have been certified.”

Kendall Park describes what a b-corp is

Kendall Park

A B-corp is a company that demonstrates a commitment to environmental and social initiatives in several ways (see below). B Corps leverage a for-profit structure to achieve a positive impact for their employees, communities, and the environment. B-corps exist in nearly every industry. 

How does a company become a B-corp?

The nonprofit B-lab issues B-corp certifications to companies who successfully complete an audit and pass a B impact assessment. The assessment scores a company based on their positive impact across 5 different dimensions: workers, community, customers, governance, and environment. Companies must receive at least 80/200 points on the assessment to obtain their certification. Certified B Corporations also pay an annual certification fee, further showing their commitment to these social and environmental initiatives. B-corps must retake the assessment every 2 years to retain their certification.

Importantly, there are no one-size-fits-all requirements for a company to earn certification. “B-lab tailors the assessment to the size of your company, your location, and your industry. If you are a large manufacturing company, you will take a different test than a small law firm,” explains Park. 

Do all B-corps pursue the same environmental and social goals?

As B-Lab states on its website, B-corps balance purpose and profit. B-corps must include a social mission within their articles of incorporation, requiring their boards of directors to achieve that balance. A qualified purpose can take different forms for different companies. Some B-corps might heavily focus their social missions on reducing their emissions and pursuing sustainability initiatives, while others may focus on providing superior benefits to workers and still others work to have a positive impact on their community. Their structures vary as well – they may operate publicly or privately, organize as benefit corporations, or operate as sole proprietorships or partnerships. 

What are the benefits of operating as a Certified B Corporation? 

Being part of the B-corp community offers tangible benefits, including resources, opportunities to network and collaborate with peers, and exclusive discounts for companies and their employees. B Lab offers seemingly countless ways to engage on mission-driven issues with like-minded companies and leaders. 

The structure of the certification also serves as a motivator to fulfill their stated mission.  “An interesting thing about B-corps is that when companies become certified, research suggests that they start to become a little bit competitive about their social impact,” says Park. “They receive this quantifiable score, so they know how they stack up against their peers and other certified companies. Just the process of quantifying social impact makes the decision makers in corporations interested in becoming more socially responsible.”

Mario Avila, MBA'12

Mario Avila

As a CEO of a Certified B-corp, Mario Avila (MBA’12) saw many important benefits in the marketplace. “I quickly understood the advantages when competing in a challenging B2B sales environment,” he says. “The certification signals to customers that you are transparent and meet the highest standards of environmental and social performance that have been vetted by B Lab. It is no longer enough to say that you care about your community and social impact; companies need to be able to show that they do so.” 

“More and more employees are looking for a company that aligns with their personal values and prefer to work for a socially responsible company,” he adds. “According to the 2018 Deloitte Human Capital Trends Report, not only do employees (67%) prefer to work for these types of companies, 55% of consumers are willing to pay extra for products sold by them as well. We are seeing these trends increase over the last 18 months as more employees are working from home and engaging more in their communities.”

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