Making Social and Environmental Impact Easy: An Entrepreneur’s Guide to Going ‘B’

Yale’s Center for Business and the Environment and Patagonia jointly released a guide for entrepreneurs that offers a roadmap for the emerging world of Certified B Corporations and Benefit Corporations.

These designations offer a legal framework and certification scheme for companies that wish to fold social and environmental impact into their bottom lines.

Certified B Corporations and Benefit Corporations signal a company’s commitment to being a socially and environ­mentally responsible business—commitments that are of increasing value to entrepreneurs building new companies.

Entitled “An Entrepreneur’s Guide to Certified B Corporations and Benefit Corporations,” this freely available guide helps startups navigate these designations and decide which, if either, is right for them.

The guide comes at an opportune moment. As Deloitte noted in a recent report, “social impact has evolved from a pure PR play to an important part of corporate strategy to protect and create value.” JP Morgan has pegged the market for socially responsible investing somewhere between $400 billion and $1 trillion dollars.

“There is a clear trend among business, and particularly among start-ups, to incorporate social values and employee well-being into their bottom line,” said the report’s author, Abigail Barnes, an entrepreneur with a law degree from Vermont Law School and a master’s degree from Yale University. “An increasing number of business leaders are realizing that the doctrine of shareholder primacy is dying: it’s bad for business, bad for our economy, and bad for the environment. In short, economist Milton Friedman was wrong. The rise of Benefit Corporations and Certified B Corporations is largely a response to that realization.”

By analyzing the differences, benefits, costs, and legal implications of each designation, the guidebook helps entrepreneurs navigate the question of whether to become a Certified B Corporation and/or a Benefit Corporation. For those interested in pursuing one or the other (or both), the guidebook offers a pared down, step-by-step guide on the process and an overview of the emerging legal landscape.

The guidebook also offers insight into some of the less obvious perks of becoming either a Benefit Corporation or B certified. For instance, many CEOs who have gone this route note that one of the greatest advantages is the network and strategic business partnerships available within the B “corporate tribe”—Patagonia, Etsy, and Warby Parker, to name a few. (To date, there are nearly 4,000 Benefit Corporations and 2,000 Certified B-Corporations in existence.) For those who decide to join the tribe, the guidebook also helps entrepreneurs save on legal costs by providing detailed information on how to certify and incorporate, thereby minimizing the need for an attorney.

“It is no longer enough for business to simply make incremental improvements and use resources more efficiently,” says Vincent Stanley, Director of Philosophy at Patagonia. “In these times, every business should actively benefit its employees, cus­tomers, and communities—and work effectively to minimize its adverse impact on nature.”

While the guidebook targets entrepreneurs, the publication is also a useful primer for business incubators, lawyers, investors, and educational institutions that support entrepreneurship.