B Corp vs. Benefit Corporation

B Corp: A Private Certification

Certified B Corporation status is awarded by B Lab, a nonprofit organization, to companies that complete and pass its assessment of social and environmental performance, accountability, and transparency. Any type of business entity, a C corporation, an S corporation, or an LLC, can pursue B Corp certification; it doesn't require changing your state-law business structure at all. Certification isn't permanent: it requires recertifying periodically to confirm the company still meets the standard.

Benefit Corporation: A Legal Corporate Structure

A benefit corporation, by contrast, is a specific legal entity type created by state statute. Delaware calls its version a public benefit corporation; per 8 Del. C. § 362, it's defined as a for-profit corporation "intended to produce a public benefit or public benefits and to operate in a responsible and sustainable manner," and it must identify the specific public benefit or benefits it's pursuing directly in its certificate of incorporation. Most states now offer some form of benefit corporation statute, though the exact requirements and terminology vary.

How a Company Becomes a Benefit Corporation

A new company can incorporate directly as a public benefit corporation by including the required language in its certificate of incorporation at formation. An existing corporation can generally convert to benefit corporation status through a certificate amendment, which in Delaware and many other states requires a supermajority shareholder vote, commonly two-thirds, since it changes the fundamental obligations the board owes shareholders.

Director Duties Change Under Benefit Corporation Status

In an ordinary corporation, directors generally owe their fiduciary duty to maximize shareholder value. Per 8 Del. C. § 365, a Delaware public benefit corporation's board instead has to manage the business in a way that balances the stockholders' financial interests, the best interests of those materially affected by the corporation's conduct, and the specific public benefit named in the certificate of incorporation. This gives directors legal cover to weigh the public benefit against pure profit maximization, something an ordinary corporation's directors don't have the same explicit authority to do.

Reporting Requirements

Per 8 Del. C. § 366, a Delaware public benefit corporation must give its stockholders a statement, at least every two years, on its progress promoting the identified public benefit, including the board's objectives, the standards used to measure performance, factual data on progress, and an assessment of how well the company is serving the public benefit and stakeholder interests. A stockholder challenging the board's balancing duty under § 365 needs to meet an ownership threshold to bring a derivative suit: per 8 Del. C. § 367, the plaintiff or plaintiffs must own at least 2% of outstanding shares, or, for a company listed on a national exchange, the lesser of that percentage or $2,000,000 in market value.

Can a Company Be Both?

Yes. A Delaware public benefit corporation can also apply for and hold B Corp certification, and many well-known benefit corporations do both: the legal structure locks in the board's authority and duty to balance purpose and profit, while the certification provides independent, periodic verification of actual performance against a third-party standard. Neither one requires the other.

Which One Matters for Which Purpose

If you want legal protection for directors who weigh mission alongside profit, and a durable commitment that outlasts any particular management team, the benefit corporation legal structure is the relevant tool. If you want external, periodically verified recognition of your company's social and environmental performance, for marketing, recruiting, or investor purposes, B Corp certification is the relevant tool. Many mission-driven companies pursue both for these complementary reasons.

Certification Lapses if Not Renewed

B Corp certification isn't a one-time achievement; it requires recertifying on B Lab's schedule to confirm continued compliance. A company that stops meeting the standard, or stops the recertification process, loses the right to call itself a Certified B Corporation.

Changing to Benefit Corporation Status Is a Real Legal Filing

Converting an existing corporation to benefit corporation status generally requires amending the certificate of incorporation and a supermajority shareholder vote in most states, not just a policy decision by management. Treat it as a formal legal change with real governance consequences, not a label you can adopt informally.

Confirm Your Specific State's Benefit Corporation Statute

Benefit corporation requirements, including the voting threshold to adopt or exit the status, director duties, and reporting rules, vary by state. Delaware's rules, described here, don't automatically apply if you're incorporated elsewhere.

This Isn't Legal Advice

Whether benefit corporation status or B Corp certification, or both, fits your company depends on your specific goals and state law. Talk to a business attorney before converting to benefit corporation status, and review B Lab's current certification requirements directly before pursuing certification.