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B Corp, B Corp Certification, Purpose-driven

Everything you want to know about the case for B Corps, in 8 paragraphs

By Mark Odegard

There is strong consumer demand for products produced by companies they deem to be responsible and focused on social and environmental sustainability. In many cases, consumers will pay more for those products. Employees are also highly interested in working for companies that have a clearly-defined purpose.

B Corp Certification is widely viewed as the most complete assessment of sustainable practices currently available, and that it serves as a clear signal to consumers that a company has a clearly-defined set of values. Obtaining and displaying the B Corp logo removes the guess work and simplifies a consumer’s evaluation of the impact their purchasing decisions may have.

There is a minority of critics who say that the B Corp assessment does not go far enough, that the lack of point deductions obscures bad practices, and that it is another form of greenwashing. The most compelling argument is that the “mission lock” aspect is not required because current legal trends tend to narrowly interpret the notion of shareholder primacy and favor the principle of business judgement when determining whether a company can selectively decide which bidder they will sell their company to. And because of that, critics contend that the Mission Lock or Benefit Corporation structure creates unnecessary burdens.

Despite these criticisms, the overwhelming consensus is that B Corp certification is the best way to communicate a company’s values and the credibility of their sustainability efforts. And for those companies who wish to preserve their mission following a sale, the B Corp certification and Benefit Corporation legal structure provide the best path to accomplishing that objective.

Obtaining the certification, and in general managing with purpose, provides companies access to a consumer-segment and markets that continue to expand. This presents significant opportunities to build brand recognition and increase revenue.

Purpose-driven companies typically see increases in employee engagement, productivity gains, and cost reductions. Combined with increasing revenue streams, this focus on sustainability serves to increase overall profitability and improve financial resilience.

Becoming a B Corp does create additional accountabilities and demands on internal resources. While those could be viewed as additional burdens, they also are what drive the expense reductions noted above.

The preponderance of sources included in our research suggest that B Corp certification is an effective path for small-, medium-, and large-size businesses to pursue, and that it provides far more benefits than drawbacks.

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