B Lab Pushes For Legal Recognition Of Socially Responsible Corporations
Today, there are few safeguards in place for investors and consumers to distinguish the socially responsible business apart from the company that simply markets itself in a better light than it actually deserves. That’s why B Lab, a Pennsylvania nonprofit, is pushing for legislation across the nation that would officially recognize a new type of corporate entity, known as the Benefit Corporation.
B Lab was established in 2006 by Bart Houlahan (pictured), Jay Coen Gilbert, and Andrew Kassoy as the groundwork to encourage the recognition of B Corporations, which are companies that achieve heightened and transparent social, environmental, and legal accountability standards which benefit all of a business’s stakeholders, including its employees, investors, and community.
“Our long term objective has always been to create a new corporate form,” Houlahan says. “Right now, what we have today, is a community of mission-aligned companies that have been certified by a nonprofit, but we want those companies to be legally recognized as a different type of business; literally a different type of corporation.”
In seeking legal recognition by states where B Corporation legislation has been brought forth, B Lab’s efforts have been overwhelmingly embraced by both political parties.
“It (legislation) has passed in Maryland and Vermont,” Houlahan says. “It should pass shortly in New Jersey and Virginia, and it has been introduced in another eight states, with another 20 states currently in an incremental queue.”
To become a Certified B Corporation, companies must first complete the B Impact Ratings System, supply supporting documents, and adopt the B Corporation Legal Framework, which essentially ensures that a company’s mission will withstand new investors, management, and ownership. To validate a Certified B Corporation, B Lab representatives review the company’s impact ratings, documentation, and perform an audit of 20 percent of the companies every two years.
Although tax incentives for B Corporations have not yet been established in every state, there are other benefits for becoming certified, including valuable discounts and free promotions from B Corporation service partners. Intuit, for one, donates its accounting software, Quickbooks, to all certified members.
Currently, there are almost 400 Certified B Corporations, and they are beginning to pop up all over the map.
“The folks that are showing up to become Certified B Corporations come from over 60 different industries, 40 different states, Canada, and Western Europe, and we’re about to expand internationally,” Houlahan says. “There is a tremendous diversity among industry, geography, and company size.”
While mainstream media tends to showcase companies that give the word “corporation” a bad name, it’s good to know that B Lab is working hard to recognize and reward the companies that look beyond profits and are proving that the “good guys” are out there among us.