Many socially responsible companies even offer programs designed to help the world. However, there are also some specific certifications companies can use to showcase their commitment to people and the planet. These certifications include B Corps and Public Benefit Corporations (PBCs).
B Corps are certified by the nonprofit B Lab, while PBCs are required by law to meet specific standards regarding their social mission and impact on the community.
Continue reading to learn more about these two types of socially responsible corporations and how they impact society.
What Are Corporations?
Corporations are legal entities created when a group of people (shareholders) decide to invest in a company. The shareholders elect a board of directors, who hires the officers to run the company daily. Shareholders have limited liability for the corporation’s debts, meaning they only lose what they have invested in the company. They also share in whatever profits it makes.
What are Public Benefit Corporations?
Public benefit corporations are a new type of corporation legally required to create a material positive impact on society and the environment. These corporations must meet three standards:
- Having a public benefit purpose
- Creating value for all stakeholders
- Acting as an ethical role model
Certified PBCs take this idea further by pledging to be responsible, pursue a general public benefit purpose, and maximize shareholder value under traditional corporate law.
What Are B Corps?
B Corps are for-profit companies that meet the rigorous standards of social accountability, environmental sustainability, and transparency set by the nonprofit B Lab. With over 2,000 Certified B Corps worldwide, these certified businesses prove it’s possible to do good while doing well.
Certified B Corps are distinguished by their positive impact on society, workers, and local communities. As Certified B Corps grow, they must continually meet social and environmental performance standards to maintain certification. Accountability through these standards helps to ensure that these companies are prioritizing sustainability over profit. The result is better business practices with improved economic, social, and environmental outcomes.
B Corp status also offers competitive advantages because socially conscious consumers prefer buying from companies that share their values.
Rapid Growth of Publicly Traded PBCs and PBCs, B Corps
Public benefit corporations and B corps are a hybrid between a traditional for-profit company that aims to maximize profits and an LLC that seeks to maximize social benefits. There has been rapid growth in these two types of socially conscious corporations in recent years.
A primary concern with these organizations is how their social missions may impact profitability.
On the one hand, they can increase corporate value because they help attract customers and employees through their positive impacts on society. On the other hand, nonprofits have had difficulty raising capital from investors because investors only care about profit margins. However, many high-profile examples of public benefit corporations succeed in this environment.
Ultimately, knowing what you are buying from a corporation is essential. Is this a product that aligns with your values? What does the company do to give back? These are all questions worth considering. If you can’t find any information about the company, it might not be socially responsible enough for you, and you might need to seek out other companies that share your beliefs.