February 18th, 2010

Clean Tech Law: Pros and Cons of the B Corp – For Serious Triple-Bottom-Line Business

BOSTON -

This post comes from our newest industry insider, Jessica Manganello, who will be giving us a great legal perspective of the clean tech and green industry. You can find here at New Leaf Legal, or on twitter @mangojess

For those of you who are unfamiliar with B Corporations (B Corp), B Corp is a certification designed by B Lab, a non-profit third party auditor.

According to B Corporation:

“B Corporations are a new type of corporation which uses the power of business to solve social and environmental problems. B Corporations 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 and environmental issues into consideration when making business decisions. This includes changing corporate governance language to require that these bottom lines are implemented.

What are the pros of B Corp?

1. If the mission and values of your business include an environmental and social bottom line, this certification allows you to cement those values into the culture of your business by changing your corporate governance documents in accordance with the legal language B corp has developed. Which means if there is a change of the guard at your business, the new soldiers will be required to keep towing that party line. This also may prevent shareholder lawsuits in the event that a business decision is made that is better for the environment or society than shareholder bank accounts. Shareholders will know what the company stands for before they buy.

2. Great marketing tool. The B Corp logo has caught on with consumers in the LOHAS industry and is continuing to expand its reach and 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. This gives your business credibility, which let’s face it, in green, is sorely needed. With all the bogus certifications out there, consumers know that B corp can be trusted and that a B corp certified business has 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 Corp yearly fee, or join 1% for the Planet. Tax deductions and more great marketing points. Why wouldn’t you?

5. Accountability. This is probably the largest benefit. Entrepreneurs and business owners know that as much as we love our companies, hard decisions must be made and stress wears us down. B Corp gives us build in requirements and standards, along with random audits lighting a fire under our bums, in order to keep us on the straight and narrow.

What are the cons of B Corp?

1. Application process is a bit daunting. Even the application for a small 0 to 10 person shop asks many questions surrounding policies, benefits, and pay that aren’t necessarily feasible for a small/growing company. Now there are many small businesses that are certified B Corps, so there must be discretion built into the application process that allows for start-ups. You may, however, be forced to develop policies that you aren’t “big” enough for, in order to meet their minimum requirements.

2. There is a fee.

3. Potential Marketing Disaster. As mentioned before, there are random audits of all member companies to ensure that they are staying true to the certification. This means, if you are not, you will lose your B Corp standing. If customers and affiliates have come to associate your company with the certification through the genius of your marketing efforts, its loss will be noticed and questioned.

4. Accountability. Both a pro and a con in my book. This is allowing an unvested third party organization to play some role in the operations of your business. What happens when your choice is between health benefits for your employees or more product development? How do you weigh these factors and how do you know if you are jeopardizing your B Corp status. In the end, you have to make the best decision for the longevity of the company and will you be too afraid of losing your status to make the right one? Could you also be setting yourself up for shareholder lawsuits, if your shareholders don’t think you gave enough consideration to environmental and social factors?

Of course to everything there is a laundry list of questions and concerns. In the end, you have to make the decision that benefits you and your business most. I am psyched about the B Corp certification (I am sure you couldn’t tell I have a bias). This certification provides manageable guidelines and requirements with teeth that give them credibility. Yes there is more administration and more to think about, but if you are running a company that is sustainable on all three bottom lines, it shouldn’t be a hindrance, more a stepping stool.

So go forth and B Corp.

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Jessica Manganello

About Jessica Manganello

Jessisca R. Manganello is an attorney with and founder of New Leaf Legal, LLC . She works with sustainable and emerging businesses in the Boston area on their corporate and intellectual property needs. Passions include everything green, concept cars, food, movies, heavy metal music, body art, and kitty cats. To learn more check out New Leaf Legal and follow her @mangojess .

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  • http://www.ineverylanguage.com/ Terena Bell

    In Every Language is proud to be a B. Also,we're a small business and I did not find the app daunting. I think if you're having to “bring yourself up” to minimum standards, that you probably shouldn't be a B–or at least aren't one at heart. We got a very high score just being ourselves!

  • http://www.ineverylanguage.com/ Terena Bell

    In Every Language is proud to be a B. Also,we're a small business and I did not find the app daunting. I think if you're having to “bring yourself up” to minimum standards, that you probably shouldn't be a B–or at least aren't one at heart. We got a very high score just being ourselves!

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