A benefit corporation is a corporation whose practices are designed to impact the environment and society positively.
Like a traditional corporation, a benefit corporation pursues profit for the benefit of its shareholders; however, it must report on how its practices create a positive environmental and social impact.
Below, we examine what benefit corporations are and discuss how they affect investors.
Examining What Benefit Corporations Are
A benefit corporation (also known as a B corporation or B Corp) is a corporation that, in addition to pursuing profit, is committed to operating responsibly and sustainably and generating public and social good.
Specifically, a benefit corporation has targets in five categories of responsible operating practices: employees, customers, community, environment, and governance. In setting targets and making progress in these five categories, a benefit corporation grows to treat its employees equitably, contribute to its community, care for the planet, and create social good.
How Do Benefit Corporations Affect Investors?
1. They Win Conscious Consumers Over
Younger generations are at the forefront of carving the path to a greener future, and their dedication to environmental issues has shaped their buying decisions. For example, Gen Z customers (whose spending power is over $360 billion in disposable income) prefer buying sustainable brands and are willing to pay up to 10 per cent more for sustainable products.
Benefit corporations can tap into burgeoning markets as consumer interest in sustainable products reaches new heights and wins over conscious consumers.
Your B Corp certification reassures eco-conscious consumers that you are a sustainable business. As such, they can rest easy knowing that their money is going towards a company that pursues positive social and environmental impacts.
2. They Build Credibility and Retain Customers
Compared to traditional corporations, benefit corporations have an easier timbuilding credibility. B Corp certification shows consumers that your company meets the highest verified environmental and social performance standards, legal accountability, and public transparency.
It can also help you retain customers since they will be less likely to switch to a competitor if you uphold strong ethical and moral values.
3. They Attract Like-Minded Investors
B Corp certification makes it easier for the public to understand your business values. As such, you are more likely to attract investors with the same values.
As a benefit corporation, you also get to publicize your achievements, evidencing your successes in:
- Reducing your carbon footprint;
- Implementing practices that help protect the environment;
- Participating in charitable events in your local community;
Not only will this benefit you financially, it will also help you attract like-minded investors who will add value to your business.
4. They Enable Collaboration with Other Benefit Corporations
As a benefit corporation, you can collaborate with other benefit corporations. You can work together as you pursue sustainability, sharing resources, expertise, and advice to help both businesses.
Such partnerships usually work out well and last longer because both corporations align through shared values and similar missions.
Start a Benefit Corporation Today
Suppose you want to start a new business with social investing as its main purpose or would like to expand your current business efforts within the social investing arena. In that case, the benefit corporation structure is the perfect place to start. With such a structure, your business can profit and promote corporate social responsibility. Start a benefit corporation today and be the change you wish to see in the world.