Certified B Corp vs Benefit Corporation
What's the difference?
In late 2016, we became a Certified B Corp and shortly after we adopted the Benefit Corporation legal status. That means we are not only third-party certified by the nonprofit B Lab, as a company that has met rigorous environmental and social standards, but we are also legally required to conduct our business in this way.
“Benefit Corp” and “Certified B Corp” are terms that often get confused since they sound so similar, but they are indeed two distinct processes and statuses. Here’s a breakdown:
Benefit Corporation, or Benefit Corp:
A type of legal incorporation status. Requirements vary between states, and not all states offer Benefit Corp incorporation. In California, where Mangrove is headquartered, we are required to generate benefits for public use, adhere to a third-party standard in our annual benefit report, and make the benefit report publicly available. We file taxes and are legally recognized as an S-Corp in the eyes of the IRS, since Benefit Corps are not standard across the entire US.
Certified B Corp:
A company that is third-party certified to have rigorous social and environmental business practices. A score of 80 or above on the B Impact Assessment (certification tool) is necessary to gain B Corp certification. Re-certification is required every two years and a membership fee is charged to support B Lab’s mission. All B Corps must become a legal Benefit Corp within 2 years of certification if Benefit Corps are recognized in their state.
The Facts
As of early June 2017, 32 states have passed legislation to allow companies to incorporate as a Benefit Corporations. Being a Benefit Corp means we are legally required to make business decisions that pursue a benefit to the public, and in our bylaws we must consider non financial interests when making business decisions.
Certified B Corps must incorporate as a Benefit Corporation if the state where the company is incorporated allows companies to do so. This gives “legal teeth” to certification and legally binds a company to create public benefit with their business.
Find the most up to date information on the status of legislation in your state, go to:
http://benefitcorp.net/policymakers/state-by-state-status
A side by side comparison from http://benefitcorp.net/businesses/benefit-corporations-and-certified-b-corps
About B Lab
B Lab is the kickass nonprofit that’s dedicated to getting companies to use their businesses as a force for good. They support legislation that helps companies incorporate as Benefit Corporations in the US and beyond. B Lab also supports the B Corp community of 2,000-plus businesses by managing certification through the B Impact Assessment and helping companies improve their impact using their B Analytics tool.
Resources:
http://jeremychenlaw.com/what-is-a-california-benefit-corporation/
https://consciouscompanymedia.com/sustainable-business/whats-the-difference-between-a-b-corp-and-a-benefit-corporation/
https://bloomerang.co/blog/benefit-corporation-vs-certified-b-corp-in-plain-english/
https://www.fastcompany.com/3069192/should-my-company-be-a-benefit-corporation-a-b-corp-or-what
http://benefitcorp.net/businesses/benefit-corporations-and-certified-b-corps
https://www.irs.gov/businesses/small-businesses-self-employed/s-corporations
Still want to learn more? Send questions our way.
A Certified B Corp, Mangrove is a woman-owned website design and development company with a diverse, talented team distributed around the globe. We’ve been building websites since 2009 that amplify the work of change-making organizations and increase the competitive power of businesses owned by historically marginalized people.
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