Clean Tech Law: Pros and Cons of the B Corp
According to B Corporation:
“B Corporations are a new type of corporation which usesthe power of business to solve social and environmental problems. BCorporations are unlike traditional responsible businesses because they:
· Meet comprehensive and transparent social and environmental performance standards.
· Institutionalize stakeholder interests.
· Build collective voice through the power of a unifying brand.”
In order to be a B Corporation, a business must take social andenvironmental issues into consideration when making business decisions.This includes changing corporate governance language to require thatthese bottom lines are implemented.
What are the pros of B Corp?
1. If the mission and values of your business include anenvironmental and social bottom line, this certification allows you tocement those values into the culture of your business by changing yourcorporate governance documents in accordance with the legal language Bcorp has developed. Which means if there is a change of the guard atyour business, the new soldiers will be required to keep towing thatparty line. This also may prevent shareholder lawsuits in the eventthat a business decision is made that is better for the environment orsociety than shareholder bank accounts. Shareholders will know what thecompany stands for before they buy.
2. Great marketing tool. The B Corp logo has caught on withconsumers in the LOHAS industry and is continuing to expand its reachand influence. The organization provides you with digital logos,flyers, and poster boards with which to advertise your B Corp status.Your company will also be listed on their website as a member. Thisgives your business credibility, which let’s face it, in green, issorely needed. With all the bogus certifications out there, consumersknow that B corp can be trusted and that a B corp certified businesshas been thoroughly vetted.
3. Access to B-corp member resources and a growing community of business owners with the same priorities as yourself.
4. Charitable giving opportunities. You can either pay the B Corpyearly fee, or join 1% for the Planet. Tax deductions and more greatmarketing points. Why wouldn’t you?
5. Accountability. This is probably the largest benefit.Entrepreneurs and business owners know that as much as we love ourcompanies, hard decisions must be made and stress wears us down. B Corpgives us build in requirements and standards, along with random auditslighting a fire under our bums, in order to keep us on the straight andnarrow.
What are the cons of B Corp?
1. Application process is a bit daunting. Even the application for asmall 0 to 10 person shop asks many questions surrounding policies,benefits, and pay that aren’t necessarily feasible for a small/growingcompany. Now there are many small businesses that are certified BCorps, so there must be discretion built into the application processthat allows for start-ups. You may, however, be forced to developpolicies that you aren’t “big” enough for, in order to meet theirminimum requirements.
2. There is a fee.
3. Potential Marketing Disaster. As mentioned before, there arerandom audits of all member companies to ensure that they are stayingtrue to the certification. This means, if you are not, you will loseyour B Corp standing. If customers and affiliates have come toassociate your company with the certification through the genius ofyour marketing efforts, its loss will be noticed and questioned.
4. Accountability. Both a pro and a con in my book. This is allowingan unvested third party organization to play some role in theoperations of your business. What happens when your choice is betweenhealth benefits for your employees or more product development? How doyou weigh these factors and how do you know if you are jeopardizingyour B Corp status. In the end, you have to make the best decision forthe longevity of the company and will you be too afraid of losing yourstatus to make the right one? Could you also be setting yourself up forshareholder lawsuits, if your shareholders don’t think you gave enoughconsideration to environmental and social factors?
Of course to everything there is a laundry list of questions andconcerns. In the end, you have to make the decision that benefits youand your business most. I am psyched about the B Corp certification (Iam sure you couldn’t tell I have a bias). This certification providesmanageable guidelines and requirements with teeth that give themcredibility. Yes there is more administration and more to think about,but if you are running a company that is sustainable on all threebottom lines, it shouldn’t be a hindrance, more a stepping stool.
So go forth and B Corp.
This post comes from our newest industry insider, JessicaManganello, who will be giving us a great legal perspective of theclean tech and green industry. You can find here at New Leaf Legal, or on twitter @mangojess
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