Business Brains

Prove it. If you run a socially responsible business, you can protect it

Posting in Sustainability

Becoming a B Corporation could help protect your company's sustainability mission when you take on investors.

As any entrepreneur who has made the leap from private to public ownership of their company can tell you, the way you run your business after someone else takes a financial stake could change dramatically.

That's why more and more companies that were founded with environmental and social missions as part of their core ethos are becoming B Corporations. The organization seeks to recognize businesses that have risen about greenwashing marketing tactics to create a truly impactful social business.

The B Corporation label doesn't replace your existing corporate legal model (whether that's as a C Corporation or LLC or whatever). It layers on top of it and builds on top of things you are already doing.  There are about 250 B companies today across the United States, but the organization hopes to represent between 5 percent and 7 percent of the U.S. gross domestic product within a generation. Right now, the community represents slighly more than $1 billion in revenue, across 54 different industries.

The first step in becoming a B Corporation is taking a survey that gauges your company's ability to meet certain standards for environmental and social performance. If your survey score is high enough, you can proceed with the certification process. This may require certain changes to your corporate bylaws to ensure that being a B Corporation is sort of baked into your corporate DNA (as the organization's Web site puts it). Heck, you can take the survey just to test out your company's core values. There IS a fee associated with becoming a B business, one that is based on your revenue. The annual fees start at $500 for businesses less than $2 million in annual revenue, up to $25,000 for companies pulling down more than $100 million in sales every year.

That bylaw change could help ensure that entrepreneurs don't have to sell out their sustainability values for the sake of an investment.

Gary Gerber, president and founder of Sun Light & Power, a solar technology integration company in Berkeley, California, says the B Corporation certification also helps put potential customers on notice that your company operates in certain ways. "Any socially responsible business should become a B business just because of the fact that this is a statement they can commit to," he says.

His company, which has about 60 employees, became a B business about six months ago. Gerber says it took a bit of homework to complete the survey, which can be an "instructive" exercise for testing the true green credos of your company.

Gerber didn't mention it in our interview, but there are other benefits to become a B corporation. For one thing, there are certain service discounts your business can receive, such as discounts for software from Salesforce.com and NetSuite. It has also identified service partners for financial services, technology integration, staffing and so on. And, if you happen to be a Yale alumnus and you work for a B corporation, you may qualify for funds under its School of Management Loan Forgiveness program.

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Heather Clancy

Section Editor

Heather Clancy has written for United Press International, ZDNet, Entrepreneur, Fortune Small Business, the International Herald Tribune and the New York Times. She holds a degree from McGill University. She is based in New Jersey. Follow her on Twitter. Disclosure