B Corps and Benefit Corporations: Understanding the implications for companies and investors

George Serafeim, Bronagh Ward, and Sophie Lawrence 

In recent years, we have seen the advance of a business movement towards greater transparency and commitment to pursuing social and environmental objectives in addition to profits.

A number of listed companies, and many more unlisted ones, have chosen to become certified B Corporations, or ‘B Corps’. This is essentially an explicit recognition of the need to create a positive impact for all stakeholders of a business, not just shareholders, and to verify this impact by meeting certain standards of performance. New corporate forms have also emerged, for example with the passing of Benefit Corporation legislation. This allows a company to incorporate as a for-profit entity which is legally required to identify and pursue one or more social and environmental objectives.

These developments – a company-wide certification and new corporate forms - mark a fundamental change to the traditional business model. With the number and visibility of B Corps rising around the world, and as more countries pass Benefit Corporation legislation, there is a need for investors to understand the opportunities and challenges presented by the changing business and legal landscape.

Inside the report: 

1. Motivations, benefits and costs of the B Corp certification and Benefit Corporation
2. Barriers & solutions for publicly-listed companies
3. Non-US forms of incorporation

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