Social Enterprises, B Corps & Benefit Companies
If you're working toward B Corp certification or simply aligning your company with social and environmental values, our legal services are designed to support your mission-driven business. Below, we explain what these terms mean and what legal support our lawyers offer in relation to each.
What are Social Enterprises?
Innovation, Science and Economic Development Canada (ISED) defines a social enterprise as “a revenue-generating organization whose objective is to have a social impact.” According to ISED, it can be a for-profit business, a non-profit organization, or a charity. There is no uniform definition in Canada, and no specific legal form social enterprises must take. Accordingly, a social enterprise is a somewhat nebulous concept.
As there are no legal requirements for an organization to qualify as a social enterprise, Green Economy Law does not assist businesses or organizations in becoming social enterprises, but the firm can assist social enterprises in ensuring their constituting documents (i.e., articles, bylaws), policies, contracts, and operations properly reflect their social and/or environmental priorities (more about this below in the section on B Corps).
What are B Corps?
B Corps are for-profit businesses certified by the non-profit organization B Lab (or one of their international affiliates) as meeting “the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose.”
To get certified, businesses must:
exist for one (1) year and report annual revenue;
score 80/200 points in a rigorous B Corp assessment;
include the B Corp legal element in their articles or certificate of incorporation (if they’re incorporated);
sign the B Corp declaration of interdependence; and
pay an annual fee that varies based on revenue.
Green Economy Law has two flat fee packages for business interested in B Corp certification:
The Social Starter Package: This package is for new business looking to incorporate with a view to future B Corp certification
The ‘We Got This’ Package: This package is for established companies ready to complete the B Corp certification process with experienced legal support.
What are Benefit Companies?
These are companies incorporated in a distinct legal form called a benefit company or similar (e.g., in Delaware they’re called Public Benefit Corporations).
Benefit companies are similar to B Corps, and B Lab was involved in helping US states initially establish the legal form. The main difference, however, between B Corps and benefit companies is that B Corps are certified by the private non-profit B Lab, whereas benefit companies are legal entities recognized by the government.
Where benefit company incorporation is permitted under the laws of the jurisdiction, B Corps must typically adopt the legal form - sometimes within a certain time frame - to maintain B Corp certification.
Though most US states now allow benefit company incorporation, in Canada, benefit company incorporation is only available under the laws of British Columbia (we explain why this is the case here).
One key difference though, is that to maintain B Corp status, a company must always meet B Lab’s verification standards, whereas benefit companies must fulfil reporting obligations (with reference to a third-party standard), but they are typically not subject to any external review regarding actual social and environmental performance.
That means it’s actually a lot easier to be a benefit corporation as compared to a B Corp.