A B Corp is a for-profit company certified by the nonprofit B Lab after completing the B Impact Assessment and meeting a minimum score, with legal commitment to consider stakeholders beyond shareholders.

How it works

The company completes B Lab’s questionnaire covering governance, workers, community, environment, and customers. Scores above the threshold lead to certification, annual fees, and recertification every three years. Many certified B Corps also amend corporate charters to become benefit corporations where state law allows, embedding purpose into fiduciary duties.

Certification does not replace normal venture financing mechanics — preferred stock, liquidation preferences, and standard board duties still apply unless charter language explicitly expands stakeholder obligations. Some impact funds prefer B Corp or benefit corp status; traditional funds may ask whether certification constrains future sale options or dividend policy.

Consumer brands use B Corp status in marketing; B2B startups may certify to meet procurement or ESG vendor requirements from enterprise customers. Recertification every three years forces operational proof, not one-time marketing copy.

Why it matters

• Founders: Budget time for assessment and documentation. Align certification with authentic operations, not greenwashing that fails recertification.
• Investors: Diligence whether stakeholder provisions create conflicts in an exit where maximizing shareholder value is the default goal.
• Operators: HR, supply chain, and environmental policies need evidence trails for auditors during recertification.

Common mistake

Assuming “B Corp” and “benefit corporation” are the same. Benefit corporation is a legal entity type; B Corp is a certification any corporate form can pursue if it qualifies.

Related ideas

Benefit corporation, ESG, impact investing, and stakeholder governance.