Public Benefit Corp Vs. B Corp: Understanding The Difference

For the last decade, individuals have become more conscious of the social benefits and adverse effects of the companies they support. They have seen people, societies, and the environment suffering because businesses neglect social costs for the love of money. This phenomenon makes consumers and capitalists support companies that maximize profits and social impacts.

Benefit Corporations are companies that enhance both social impacts and interests. There are two different methods for a business to become a Benefit Corporation. The first method is getting certification from a non-profit B Lab, and the other is registering with a State government.

Benefit Corporations verified by B Lab are named B Corps. B Corps registered by state governments have numerous names depending on the state law, but in this article, we will call them Public Benefit Corps. Understand the difference between the two here.

Public Benefit Corp Vs. B Corp

What Is A B Corp?

The B Corporation Certification aims to motivate companies to be mindful of how their actions impact people and the ecosystem around them. B Lab is a non-profit social impact organization that awards certificates to profit companies that meet social and environmental sustainability needs.

B Lab has certified more than 4500 companies in more than 70 countries. This is not a surprise because the B Corp symbol is an efficient branding tool for businesses marketing to consumers and investors.

What Is A Public Benefit Corp?

Public Benefit Corporations are companies with legally defined goals that produce a public benefit, including a positive impact on society, the community, workers, and the environment. The law requires PBCs to consider their impact on these groups and release detailed benefit reports about their social and ecological effects using credible and transparent standards.

For example, suppose a farm that uses promising but dangerous fertilizers can become a Public Benefit Corp. In that case, it’s legally required to be mindful of the effects of the fertilizer on the community’s underground water and the number of profits it will generate from its use. In the benefit report, the farm has to illustrate how its activities will benefit the public.

B Corps Vs. PBCs: What’s The Difference?

The primary distinction between B corps and PBCs is that the hindmost confers legal status while the first does not. However, this difference does little to reduce the stiffness of the B Corp accreditation procedure.

Prospective B Corps should score high on B Lab’s Impact Assessment as they integrate ESG principles into their laws. After three years, they have to renew the certificate and publish yearly impact reports to update investors.

On the contrary, the public benefit corp structure is seen as an advancement of the B Corp certification process, and it’s essential to understand that this B Corp certification is a pioneer of ethical investing. B Corps provide an avenue for investors, customers, workers, and stakeholders to reflect numerous success metrics beyond pure interests.

Conclusion

Since most companies neglect social costs, investors have become more conscious of supporting businesses that meet social and environmental sustainability needs. B Corp is certified by B Lab and must be mindful of its actions toward the people and environment around them. A Public Benefit Corp is registered by the state government, aiming to positively impact society, the environment, workers, and stakeholders.