Early in my legal career, the senior partner in the firm at which I was working identified the firm commitment: “To do good and do well”. Those goals are not always compatible for any business entity, but the recent development of benefit corporation status and B Corp certification provide and avenue for achieving both of these goals simultaneously. Given the high level of social and environmental conciseness that exists in Door County, these concepts seem well suited to our community.
On November 27, 2017, Governor Walker signed into effect Wisconsin Act 77, which created a new category of Wisconsin corporation, the “benefit corporation.” A benefit corporation is basically the same as a general business corporation with one main difference: Wis. Stat. Chapter 204, which regulates the operation of benefit corporations, requires that one of the benefit corporation’s identified purposes must be to create a “general public benefit.” (For a general discussion of what a “benefit corporation” is, see Benefit Corporations and B Corps: Socially Responsible For-Profit Companies). Chapter 204 defines “general public benefit” as one that has a “material positive impact on society and the environment by the operations of the benefit corporation taken as a whole, through activities that promote some combination of specific public benefits.” The statute goes on to define a specific public benefit as any of the following:
- Providing low income or underserved individuals or communities with beneficial products;
- Promoting economic opportunity for individuals or communities beyond the creation of jobs in the normal course of business;
- Preserving the environment;
- Improving human health;
- Promoting the arts, sciences, or advancement of knowledge;
- Increasing the flow of capital to entities with a public benefit purpose; or
- Accomplishment of any other particular benefit for society or the environment.
Chapter 204 also sets forth the standard of conduct for Wisconsin benefit corporations and requires that directors and officers consider the effects of corporate actions on not only the shareholders, but on employees, customers, the environment and other community stakeholders as well. The statue also requires that a benefit corporation provide an annual benefit statement to shareholders within thirty days of its fiscal year end, assessing the corporation’s efforts at achieving its stated public interest benefit purposes.
Current trends suggest that consumers, investors and prospective employees are all aware of and taking into consideration a corporation’s commitment to “doing good”. Incorporating as a benefit corporation may assist corporations in raising capital, expanding its customer base, and attracting, new, young employees by appealing to the socially and environmentally conscious investors, customers and prospective employees.
While a benefit corporation is a business entity created by statute, a B Corp is a for-profit business, including corporations, limited liability companies, partnerships, and cooperatives, that is certified as a B Corp by a non-profit organization called B Lab. B Corp certification is to business what Fair Trade certification is to coffee or chocolate, or USDA organic certification is to dairy or produce. Inc. magazine calls the B Lab certification “the highest standard in socially responsible business.”
B Lab has established three steps to obtaining certification as a B Corp:
- Completing an online assessment evaluating how your company is better for your workers, community, customers, and the environment. Achieving a minimum score is required. The opportunity to compare your company with other entities and suggested methods for making changes to your company goals and practices and thereby improving your score are also provided.
- Making sure that your corporate documents are in compliance with all State of Wisconsin and Department of Financial Institutions requirements. While obtaining benefit corporation status is not required for B Corp certification, if benefit corporation status is desired, you will need to determine whether the organizational documents need to be amended. This will include getting all requisite approvals, amending your articles of corporation, and filing your amended articles with the Wisconsin Department of Financial Institutions;
- Signing the B Corp “declaration of interdependence and term sheet”. Some of the items that the company must agree to in the term sheet include: meeting the certification performance requirements, meeting all legal requirements for the State the company is chartered in, and participating in a randomly selected onsite review.
B Corp certification also requires payment of an annual certification fee which is based on the company’s annual sale. The certification has a term of two years. After the two year term, the company needs to recertify.
The benefits of B Corp certification for a small business are similar to the advantages of benefit corporation status for a larger company. First and most importantly, the B Corp certification allows owners to publically affirm their own social and environmental values. B Corp certification permits owners to express themselves and to be empowered by their business.
As with benefit corporation status, B Corp certification can separate a company from its competitors. B Corp certification may be a good way of authenticating a company as socially responsible and appealing to the consumer who is looking for sustainable products or services.
Finally, B Corp certification may help attract new and committed employees. Recent surveys show that a majority of millennials are looking for a job where they can make a difference and that such an opportunity often outweighs salary considerations. By incorporating ethics and social responsibility into their company culture, B Corps may be better able to attract younger and more socially conscious new workers.
Given the prevalence of social and environmental consciousness in Door County, the proliferation of entrepreneurs and new, small businesses, and the perpetual need to attract a young and vibrant workforce, benefit corporation status and B Corp certification appear to be good matches for the Door County business community, and offer local businesses the unique opportunity to “do good and do well.”