What Is a Benefit Corporation

Benefit corporations are a relatively new legal structure that has gained popularity since 2010. These corporations prioritize their social or environmental goals over maximizing profits for shareholders. They are required to publicly disclose their performance in relation to a third-party standard to demonstrate their commitment to their mission. Unlike regular for-profit businesses, benefit corporations are legally obligated to consider the general public benefit in their decision-making processes. This structure provides legal protection for companies to maintain their values even through changes in ownership. Benefit corporations can also obtain B corp certification, which is a process administered by B Lab to demonstrate a business’s social and environmental focus. Being a benefit corporation and obtaining B corp certification are not mutually exclusive. The certification process involves filing an impact assessment, fulfilling legal requirements, and signing a declaration and term sheet. Benefit corporations are seen as a sign of corporate responsibility.

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