Maine passed Benefit Corporation legislation in September 2019, authorizing the legal entity formation of businesses as benefit corporations.  Not to be confused with a “B-Corp” which is a certification obtained through a rigorous process with B Lab (discussed in more detail below), a benefit corporation creates a new type of legal entity (instead of a business corporation or LLC).  Since then, many entrepreneurs and c-suite leaders around the state have been weighing the pros and cons of setting up a business as a benefit corporation. Benefit Corporations ensure that a company’s board of directors considers not only the interest of the corporation’s shareholders, but all stakeholders, including employees, the environment, and the community in which the company operates when making decisions. 

In the past couple of decades, consumer trends have shifted toward companies whose values are clear – prioritizing the planet and people, along with profits. As millennials and Gen Z become increasingly influential in the market and begin leading companies of their own, the interest in benefit corporations is consistently rising. 

“Millenials and Gen Z don’t want to check their values at the door,” says Fiona Wilson, director of the Sustainability Institute at the University of New Hampshire and chief sustainability officer. “They understand the climate crisis, they understand racial injustice, they understand wealth inequities, and, overall, they are a socially and environmentally conscious generation.”

Beyond just setting up a company as a benefit organization legally, companies can also pursue becoming a “Certified B-Corp” by B Lab, which sets an even higher bar for criteria that companies must meet. B Lab is a private, nonprofit organization that developed and awards Certified B Corporation designation. The certification is one way that consumers can identify a company whose values truly align with their own, not merely through their marketing. 

Certified B-Corps have recently hit a milestone, with more than 5,000 companies and nonprofits earning B Lab certification worldwide. In Maine, companies including Tom’s of Maine, Allagash Brewing, Bristol Seafood and Coffee By Design have helped bring the B-Corp movement and B Lab certification into the public eye. With many entrepreneurs and executives exploring whether certification is right for them, questions arise about the process and value of becoming a B-Corp.

What Does it Take to Become a Certified B-Corp?

To become a Certified B-Corp by B Lab, a company must work through a comprehensive 300-question assessment focused on environmental practices, human resources, supply chain, how the company is governed, and the nature of the products or services. Certification requirements also include releasing an annual impact report and adopting legal restrictions in governance documents (including, in some cases, the conversion to a benefit corporation) to consider the impact of activity on workers, customers, suppliers, community, the environment and other stakeholders. 

The B Lab Certification process can help early-stage entrepreneurs evaluate how they can become a Certified B-Corp, or simply how they can make better, values-aligned decisions. “You can use the B Impact assessment as a way to think about founding practices and the systems you’re setting up, so you don’t have to go back and retrofit them later. It’s free, it’s open-source and anyone can use it,” shares Wilson. 

Helen Sterling Coburn, a securities attorney at Bernstein Shur in Portland and MVF board member, works with early-stage companies and investors, and has helped several companies navigate the legal requirements of becoming a Benefit Corporation under state law and B-Corp Certified.

“If you’re considering going through B-Corp Certification and you’re an LLC, you don’t necessarily need to convert your legal status from a LLC to a Benefit Corporation,” says Sterling Coburn. “You could modify your LLC agreement to include the legal requirements that B Lab requires for certification. If you’re a corporation though, and you are organized in a state that has a Benefit Corporation Act, which Maine now does, then you must convert to a Benefit Corporation under the applicable state law in order to obtain B Lab’s B Corp certification.”

What are the Benefits of Becoming A B-Corp?

For decades, the Milton Friedman doctrine has shaped how most businesses operate, creating what Wilson calls a false dichotomy that companies couldn’t be both impact-driven and profitable. However, companies like Stonyfield Farm and Ben & Jerry’s have proven that values-led strategies can, in fact, be profitable, and may very well be the way of the future. 

As outlined in this Harvard Business review editorial, becoming a B-Corp can have multiple positive impacts on a company. First and foremost, the B-Lab’s Certified B-Corp logo is an indication of differentiated practices, and consumers are willing to pay a premium for value-aligned brands. Additionally, as companies go through the certification process, they have to assess the impact of their operations, and may find ways to be more efficient with resources and costs. 

And lastly, and perhaps most importantly in this current environment, being clear and intentional about your mission and values allows companies to better attract and retain talent. Younger generations are looking for values aligned careers, and B-Corp practices help reinforce an employee-centric culture. 

“There’s never a better time to think about it than at inception,” adds Wilson. “One of the best ways to align these things and be self-reinforcing is to embed them into your core business model, not to tack them on as an afterthought.”

“Whether or not companies actually take the step of going through B-Corp Certification, I’ve seen more and more companies giving thought to what you could broadly refer to as ‘conscious business principles,” adds Sterling Coburn.