B corp certification: what is it and what are its benefits?

The B Corp movement is a phenomenon that originated in the United States in 2006, now has 150 sectors and more than 70 countries involved, and is made up of more than 2,500 thousand companies working together to achieve a single goal: to spread a more advanced business model globally, ensuring that the environmental and social performance of companies is measured as robustly as their economic performance.

B Corporations hold a special certification issued by a nonprofit organization, B Lab, which was established with the mission of creating viable alternatives to an economic system that still fails to solve global problems such as wealth disparity, climate change and social unrest. In pursuit of this goal, it uses a network of international partners and related initiatives, identifying leaders within the business community, creating supportive infrastructure and incentives for other companies to follow suit. B Corp Certification serves to identify companies that, in addition to having profit goals, meet the highest standards of social and environmental performance, transparency and accountability. 

There are at least six good reasons for a company to become a B Corp: to differentiate itself in the marketplace, to measure and improve its performance, to attract and retain talent, to save money and improve financial performance to inspire investors, to be part of a global movement of like-minded leaders, and finally to drive change. 

How to become a B corp

To become a B Corp you must first measure the value your company brings to society through the B Impact Assessment (BIA) measurement standard, a free, online tool currently adopted by more than 100,000 companies in 71 countries that looks at the company's impact by considering five variables: governance, workers, community, environment and customers. By obtaining at least 80 points out of 200, you can proceed with validation of your score by B Lab. Once the B Corp Declaration of Interdependence is signed, the company commits to a series of actions and behaviors, such as making public a report on its impact and performance. Great emphasis is placed on welfare: the company must ensure that it takes measures to improve the work environment in terms of safety, compensation, organizational climate and flexibility. Actions to be put in place include, for example, smart working and open leadership.

Italian B corporations

Legally recognized as of 2016, to date there are more than 100 certified B Corp companies on the Italian territory (24 Bottles, Alessi, Danone Italia, Fratelli Carli and many others) in at least 30-40 different sectors: from food to services, from finance to fashion and insurance. Thus, the adoption of advanced business models in our country turns out to be quite transversal, showing that a sustainability perspective is not only typical of a certain industry, but applicable across the board. In addition, Italian companies, especially family-owned ones, are used to thinking in accordance with a medium- to long-term and intergenerational vision. This causes the incorporation of a sustainable model and the transition to B Corp status to be received quickly and positively.

Link between B corp and benefit corporation: what they are 

Introduced in Italy in January 2016 on the model of Benefit Corporations existing in the U.S. since 2010, the legal status of benefit corporations has been adopted by more than 500 Italian companies, thanks to a law (L. 28-12-2015 n. 208, Commi 376-384) that made our country the second sovereign state in the world to have wanted and allowed companies with a dual purpose: profit and common benefit. 

In contrast to traditional corporations, whose sole purpose is to distribute dividends to shareholders, benefit corporations additionally aim to integrate a positive impact on society and the biosphere into their corporate purpose, allowing them to stand out in the marketplace from all other corporate forms. Benefit societies do not resort to external fundraising or donations and do not enjoy economic or tax incentives, thus representing value to society without causing aggravation for taxpayers.

Since 2016, hundreds of organizations have adopted this legal form, and today benefit societies on our territory are the most numerous and dynamic in Europe.

The legal status of benefit corporations is complementary to the B Corp model in that it makes explicit the responsibility of management and shareholders to pursue positive impact goals. Yet, these terms actually indicate two quite distinct concepts: 'benefit corporation' refers to a type of legally recognized legal form that can be adopted by a company, while 'B Corp' is an official certification issued by B Lab through the measurement of certain performance. As a result, one can be a benefit company despite not having obtained certification or one can be recognized by B Lab without having the legal form of a benefit company, although in Italy certified B Corp's are required to transform into a benefit company within two years of certification, committing to the highest standards of purpose (given by the union of profit and positive impact); accountability (given by the benefits brought to stakeholders); and transparency (guaranteed by obligations). In order to verify that the company is not using the 'benefit' designation to engage in misleading advertising or committing other violations of the Consumer Code, it is mandatory that it prepare an annual report to demonstrate both the actions it has taken and its commitments for the future, the impact of which is then assessed through the use of the B Impact Assessment or another international standard that has a structure in line with that of the BIA. Finally, this report, filed with the financial statements according to statutory deadlines, must be accessible to all from the company's website.

Advantages of benefit corporations

Adopting the legal status of a benefit corporation nowadays implies not only an awareness on the part of a company's founders, but it means bringing a number of benefits in terms of reputation management, brand value creation, talent attraction, and cost reduction, addressing all its stakeholders: from shareholders to managers, from talent to customers, and from suppliers. 

First, becoming a benefit company means being part of a community of leaders with solid reputations, who share the same values and are recognized for the benefits they create for society. This will inevitably lead to the strengthening of one's brand, increasing its credibility and trust, and also to the improvement of one's performance through constant comparison with other business activities. 

In addition, the benefit corporation form involves future talent, shareholders and investors, assuring them of commitment from a legal standpoint in pursuing their mission of positive impact well into the future. This can therefore prove to be an important source of attracting impact investment capital.

As for the redefinition of managerial responsibilities, this legal form of business offers legal protection to balance financial and non-financial interests in the light of any decision, whether it be a sale or a stock market listing.

Finally, the benefit corporation protects the corporate mission when new investors enter, leadership changes, and generational transitions occur. 

Benefit corporations, nonprofits and sustainable businesses

While Benefit Corporations are in effect for-profit companies, which carry out their business activities by operating responsibly, sustainably, and transparently based on certain standards, nonprofit corporations are organizations (voluntary associations, foundations, cooperatives, NGOs, and nonprofit organizations) that are established to pursue social benefit purposes only: their purpose is to have a positive impact on people and the environment, but they do not have a profit motive. Thus, the substantial difference lies in the social objective of their activities, and this is the reason why a nonprofit corporation cannot become a benefit corporation or B Corp. 

It is now a fact that companies that become B Corp tend to perform better than other companies because they have virtuous relationships with the ecosystems of which they are a part, with suppliers and with customers. Despite the rapid growth of this phenomenon, it is not a sufficient condition for B Corporations to be fully considered sustainable companies. Indeed, 'sustainable development' refers to a set of actions that can ensure that currently available resources are managed without compromising the ability of future generations to meet their needs. This implies, for example, doing in-depth analyses of environmental impacts and setting climate goals; studies that are outside the scope of the B Corp concept, which continues, however, to be a very important signal to the entire community.