When it comes to Benefit Corporations, one of the questions we’re always getting asked is simply: How do you become one?
Benefit Corporations represent a new business model that combines the financial side of things –the pursuit of profit – with a commitment to ensuring a positive social and environmental impact, with both of these elements seen as crucial to sustainable development.
However, turning your company into a Benefit Corporation is not an exercise that should be underestimated.
To obtain Benefit Corporation certification, it’s not enough to simply express your support for the mission shared by the member companies, who stand at the forefront of social innovation. Instead, companies must ensure compliance with specific entry requirements, declare their commitment to the sustainability of their business and measure their impact over time using an internationally recognized system of metrics.
Let’s take a look at the certification criteria.
As we’ve seen, companies need to hit certain criteria to achieve Benefit Corporation certification.
First of all, companies need to obtain a minimum score of 80 points in the B Impact Assessment (BIA). This online self-assessment tool is provided by B Lab, the Benefit Corporation certification body, and allows companies to analyse their sustainability footprint for free.
Completion of the BIA is the first step along the way to becoming more sustainable and measuring the impact of your company across five specific areas: governance, people, community, environment and clients.
If a score of 80 points or above is obtained in the BIA, the company can then request official certification. This process involves the company agreeing to have the content of the BIA verified by a third-party auditing firm.
During the audit, which for Italian companies is done online from the Dutch headquarters of B Lab, the certification body verifies the responses to the questionnaire and requests objective evidence and/or supporting documentation for some of these.
It is a stringent process which usually lasts for several months – between six and ten months for bigger companies. It involves a systematic analysis of all areas of the business, including a large amount of data and information, and requires companies to adapt and apply the requirements to their own geographical, cultural and corporate situation – a crucial factor in measuring something which cannot be expressed solely in financial or economic terms.
Once the audit phase has been completed (this in itself has a waiting list of between five and seven months), companies are then asked to sign the Declaration of Interdependence in order to obtain the certification. This document is the resource by which the company sets out its expectations and commitment to building the network it now forms part of, having joined the global Benefit Corporation movement.
Once they are certified, companies must modify their statute within two years in order to become Benefit Corporations. This means that the company purpose must reflect the pursuit of collective benefit, which is at the heart of the Benefit Corporation mission. By doing this, the company makes a binding commitment to pursue this aim.
Companies can also invert the previous two steps as they join the world of Benefit Corporations. It’s possible to start the process by becoming a Benefit Corporation, which is a form of company that has been set out in Italian law since 2016, or simply start out as one in the case of a proposed new company, before applying for formal Benefit Corporation certification at a later date.
Young start-ups that have been set up as Benefit Corporations and that meet the requirements of the BIA can also acquire Pending Benefit Corporation status while the audit procedure is ongoing.
Once the certification has been obtained, companies must pay B Lab (which is a non-profit) an annual fee based on their company revenue. They must also undergo a recertification audit every three years.
Clearly, becoming a Benefit Corporation is a demanding undertaking. So why bother?
Why become a Benefit Corporation?
Many companies who decide to become Benefit Corporations do so for ethical reasons and based on their sense of civil conscience, according to the belief that a fundamental part of doing business in the modern world is generating shared value. Some companies see the regenerative potential of this revolutionary, socially innovative business model, while others take the step in order to guarantee their stakeholders – and most importantly, their clients – a product or service that meets their sustainability expectations.
Generally speaking, there are four reasons why it’s worth becoming a Benefit Corporation and pursuing a more sustainable business model.
Let’s take a look at them together.
- Self-assessment. At its heart, being a Benefit Corporation is all about being aware of the impact your activities are having. From this perspective, the BIA is an invaluable resource. It generates an impact profile for the company – a type of graphic which depicts the sustainability impact of the company on each of the areas analysed. This enables companies to gain an instant overview of their strengths and areas for improvement.
- Financial growth. Armed with this greater understanding of their own impact, underpinned by the strategic development dashboard provided to all Benefit Corporations, companies can adopt strategies that increase the positive impact of the areas identified by the BIA and improve the efficiency and effectiveness of the entire production cycle. Integrating sustainability into your business model is a way of ensuring healthier, more solid financial growth over the long term.
- Stakeholder engagement. Sustainability is an increasingly fundamental issue for more and more people, as evidenced by the behaviours of two key categories of company stakeholders: clients and investors. When it comes to choosing a service or product to buy or a company to invest in, sustainability has become a decisive factor. Becoming a Benefit Corporation is about helping to consolidate this paradigm shift by incorporating sustainability into your company culture, thus meeting the needs and expectations of your stakeholders.
- Contribution to sustainable development. One of the biggest reasons why companies embark on the long and complex process of gaining Benefit Corporation certification is that they want to contribute to the historic changes currently underway. Joining the Benefit Corporation movement shows that a company is aware that their actions have consequences for the people, communities and environment around them. As such, it’s a way of taking responsibility, generating positive impacts for all stakeholders and contributing to the greater good.
Way2Global was set up as Benefit Corporation and then successfully negotiated all the steps set out above to obtain certification. Why did we decide to adopt this business model from the moment we were founded? The answers can be found in the story of how we were reborn in the name of sustainability and of how our founder and CEO Laura Gori become a champion of this innovative business philosophy – which is now shared by the whole team at Way2Global.
Want to know more about our journey? Visit the Benefit Corporation page of our website!