The U.S. Small Business Administration defines a B corp as a for-profit corporation that is driven by both mission and profit. In this legal structure, which is recognized by the majority of U.S. states, shareholders hold the company accountable to produce a financial profit as well as some sort of public benefit.
Becoming a B corp allows companies to hold on to their social mission while helping them to scale the business through revenue and profit-driving activities. Here’s what you need to know about B corps and how to become one.
What is a certified B corp and how does a business become one?
If you started or are going to start a company with the intention of public good, registering as a benefit corporation is the best way to ensure you’ll be held to ethical standards. You can continue your mission, attract top talent, and still be able to grow the company.
“It’s a great opportunity and set of goals to rally around,” said Stacy Pearl Dauber, Vice President of Wealth Management at Bailard. “The B Corp certification process energizes improvement and company culture, and is a wonderful opportunity across the board.”
Businesses in operation for longer than one year can obtain B corp certification. The process takes about 12 months and involves completing the following steps:
- Implement a B corp legal framework. Interested companies must understand the requirements for becoming a B corp and integrate those values into a framework that aligns those standards. The framework will vary depending on your company’s location, size, and status.
- Begin the B Impact Assessment. The online assessment survey evaluates your business practices to determine their effects on various stakeholders, including employees, customers, and the community. It focuses on five categories: customers, community, workers, governance, and environment.
- Submit your completed assessment. If you’ve scored at least 80 points out of 200, you can submit your B Impact Assessment for review by a B Lab staff member for verification. You’ll need to pay a $150 application fee and pass a risk review.
- Sign a term sheet. You’ll sign a B corp agreement and submit your B Impact Report to the B Corp Directory if verified as a certified B corp.
[Read more: 9 Sustainable Business Terms: What They Mean And How to Use Them]
What is B Lab?
The process of becoming a certified B corp is overseen by a nonprofit network called B Lab.
Since 2006, B Lab has promoted collective economic change by certifying B corporations to meet rigorous social and environmental standards. To date, B Lab has certified over 9,000 companies across 102 countries, collectively representing over 848,000 workers, all united by a shared mission.
“B Corp Certification means that a company has met B Lab’s rigorous standards for social and environmental impact, made a legal commitment to stakeholder governance, and is demonstrating accountability and transparency by disclosing this record of performance in a public B Corp profile,” explained Jane Abernethy, Chief Sustainability Officer at Humanscale, a certified B corp.
“The benefit of [this] independent, third-party validated certification … is breaking through misleading claims about sustainability and creating transparency, which we believe is essential to achieve real progress,” Abernethy added.
Advantages of a B corp
A few of the top advantages to starting a B corp are:
- Encouraging social responsibility: When your company is a B corp, it holds you and your practices accountable for social and environmental responsibility. Consumers are increasingly interested in sustainable companies and want to be convinced of their social efforts. By adhering to B corp standards that are made transparent, customers can see how the companies they support are making a difference.
- Attracting like-minded employees: Knowing your business is actively trying to make a positive social change will attract top talent looking to find meaning in their careers. B corp certification validates a company’s employee-centric culture, which means you’ll be able to retain top talent as well. Emily McGarvey, Director of Sustainability for B corp furniture retailer Room & Board, noted that, in a 2024 staff survey, “more than 90% of staff members shared they are proud to work at Room & Board and believe our organization will be successful in the future.”
- Cost savings: Registering as a B corp can save your company money in the long run. You’ll have access to B corp community data, which provides you access to learn the most cost-effective means to be sustainable. Plus, the certification process helps companies identify needless and wasteful spending.
Before you take the first steps to become a B corp, first check to make sure certification is available in your state.
David Shove-Brown, Co-Founder and Partner at architecture and design firm //3877, said that pursuing B corp certification has allowed the company to define not only its ethos, but how to stand behind it.
“Certification has been a great process for revisiting our goals, evaluating where we weren’t getting as many points as we would like to in one area or another, and opening up the discussion of how to evolve,” Shove-Brown added.
[Read more: A Guide to Business Certifications for Small Business Owners]
Will I need to recertify my business as a B corp?
B corps are required to recertify every three years to continually assess and improve their business practices and ensure compliance with B Lab’s standards. This process, which must be started six months before a business’s recertification date, requires companies to update their B Impact Assessment and validate their new B Impact score.
Businesses must also recertify when the company changes ownership or following an initial public offering.
Well-known B corp businesses
Businesses with philanthropic missions come in all sizes, from small startups to large corporations. Here are a few B corps you might recognize:
- Ben & Jerry’s: Ben & Jerry’s is one of the first companies to value its social mission as highly as its financial goals. The company achieved B corp certification in 2012 and is committed to sustainable product sourcing, advocacy, and promoting shared success.
- TOMS: A B corp since 2018, TOMS is committed to improving lives through sales by dedicating a third of its profits to charitable causes. In 2023 alone, the company allocated $1.7+ million to mental health support, gun violence advocacy, and increased access to opportunities.
- Uncommon Goods: Uncommon Goods, certified as a B corp since 2007, supports nonprofits like American Forests and the International Rescue Committee through its Better to Give program. The company donates at least $1 from each purchase to the program, contributing over $3 million in support for nonprofits.
[Read more: 5 Small Businesses Keeping Feet Warm and Paying It Forward With Socks]
Is a B corp right for your business?
Before you take the first steps to become a B corp, first check to make sure certification is available in your state. Over 40 states have either passed or proposed benefit corporation legislation.
Then, consider your motivation and goals for obtaining a B corp certification and whether you can meet and sustain the requirements. While B corp status can certainly be a competitive advantage, it isn’t the right move for every business.
“Certification is not a series of checkboxes, something you can knock out in one day,” Shove-Brown said. “There is extensive work and due diligence involved in meaningfully engaging throughout the process, identifying where you are as well as where you want to go.”
Sean Peek contributed to this article.
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