Mythbusters: B Corp Certification versus Public Benefit Corporation (PBC)

Myth #1 – B Corp and Public Benefit Corporation (PBCs) are the same thing.

Wrong. A B Corp is a certification provided to eligible companies by the nonprofit, BLabs. A Public Benefit Corporation is an actual legal entity that bakes into its Certificate of Incorporation a “public benefit”. Both strategies put the public and potential investors on notice that the company is not purely driven by profit, but also by creating a social impact. For example, Etsy is a public benefit corporation with a B Corp certification.

What are the main differences?

Certified B Corp
  • Accountability: Directors are required to consider impact on all stakeholders.
  • Transparency: The company must publish public reports of overall social and environmental performance. The report is assessed against a third party standard.
  • Performance: The company must achieve a minimum verified score on the B Impact Assessment; and recertification is required every two years against the evolving standard.
  • Availability: B Corps are available to every business regardless of corporate structure, state, or county of incorporation.
    • Exception: after two years of being a certified B Corp, you must transition your corporate structure to a PBC (or benefit corporation by state designation).
  • Cost: B Lab certification fees range from $500 to $50,000/year, and are based on revenues.
  • Purpose: BLabs is a certifying body and supporting 501(c)(3), offering access to Certified B Corporation logo, portfolio of services, and vibrant community of practice among B Corps.
Public Benefit Corporation
  • Accountability: Directors are required to consider impact on all stakeholders.
  • Transparency: The company must publish public reports of overall social and environmental performance. The report is assessed against a third party standard.
    • Exception: Delaware PBCs are not required to report publicly or against a third party standard.
  • Performance: The company reports self-reported metrics and evaluations to shareholders.
  • Availability: PBCs are available legal entity choices in 30 U.S. states and D.C.
  • Cost: PBC state filing fees range from $70-$200.
  • Purpose: PBCs were developed model legislation to provide corporations the option of having both for-profit and social impact purposes/interests.

Myth #2 – Only PBCs can receive the certified BLabs B Corp stamp of approval.

Wrong, again. Any for-profit company is eligible for the BLabs certification. That of course means, nonprofits are not eligible. However, if your company is a C-Corporation or LLC, you are required to change a couple things, including:

Corporation? Upon receiving the BLabs stamp of approval, in order to retain the certification, BLabs requires companies elect benefit corporation status within four years of the first effective date of the legislation or two years of initial certification, whichever is later.

LLC? To retain the certification, an LLC must amend its governance documents to incorporate these specified terms, within 90 days of receiving the certification.


Myth #3 – Becoming a public benefit corporation will hurt your control.

Most likely not. Becoming a public benefit corporation won’t hurt your control. It just means you have to weigh your social/environmental objectives alongside maximizing value for your shareholders. For a typical corporation, your duties, for the most part, include creating value (aka profit) for your shareholders.

On the flip side, BLabs requires certified companies to adhere to specific governance requirements, assessments, and reporting. These specific requirements won’t necessarily affect your control of the company, but may influence the Board to make decisions that will help the company retain the BLabs certification status.

Overall, if you plan to have a social or environmental focus, in addition to being a for-profit company, you might consider structuring your company as a PBC and applying for the B Corp certification. Or, if you plan to keep the company relatively small, you might consider structuring your company as an LLC (“baking” in the social/environmental purpose into your operating agreement) and applying for a B Corp certification. Of course, it depends on your vision for the company. We recommend you consult with a legal professional regarding the legal entity structure that best fits your startup’s needs. That’s all, folks! If you’re interested in learning more about corporate governance structure, read our blog post: Corporations v. LLCs.
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