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Understanding B Corps: The Canadian Perspective

A few months ago, Froese Law issued out a newsletter that discussed the purchasing behaviour of Gen Z.  The stats were loud and clear: corporate social responsibility is a driving force for consumer behaviour and is likely to become more pronouced as the younger generations age.  Whereas traditionally, corporate social responsibility edicts were declared on a company’s marketing materials, it is now possible to obtain a corporate certification attesting to the company’s corporate social responsibility standing.  We have increasingly noticed that more of our clients and community are interested in obtaining this type of status.  So, ever eager to share our knowledge, this article is dedicated to understanding B Corps from a Canadian perspective.

What is a B Corp?
A B Corp is not a legal entity.  It is a certification granted to for profit corporations that attests to the company’s social sustainability and environmental performance standards.  The company is critiqued and valued based on its POSITIVE impact in areas of governance, workforce, community, the environment and the products/services the company provides.  A B Corp purposefully balances profit with impact.  

In order to qualify to be a B Corp, the company must:

(1) pass the assessment for social and environmental performance,
(2) satisfactorily incorporate the B Corp commitments into the company’s governing documents, and
(3) pay an annual fee. 

The B Corp certification is re-certified every 3 years.

Who Grants a B Corp?
B Lab is a non-profit organization that grants B Corp certifications.  It has offices in the USA, Canada, Europe, Australia and New Zealand.  

Where Does the Law Come Into Play?
Although the B Corp certification is not a legal entity, it does include a legal component.  One of the requirements is that the company’s corporate social responsibility commitments must be integrated into their stakeholder commitments in the company’s governing documents.  This includes:

(1) establishing clear stakeholder interests verbiage in the company’s articles and incorporations and/or company by-laws;
(2) defining the stakeholders as employees, the community, environment, suppliers, customers and shareholders;
(3) allow for the company’s values to exist under new management, investor and/or ownership. 

Practically speaking, this can be achieved by amending the articles of incorporation through a special resolution issued by the shareholders.