People have argued for centuries about how to fix capitalism. One of the latest and most practical contributions to the debate is the concept of the B Corporation. B Corporations are described as “a new type of corporation which uses the power of business to solve social and environmental problems”.

There are two types of B Corps:

  • A legal status, distinct from incorporating as a not-for-profit corporation or a business corporation, and is only available in certain jurisdictions (“benefit corporations”);
  • A voluntary designation that any corporation can apply to obtain (“B Corps”).
  • The change in legal status that benefit corporations offer helps to overcome one of the problems with modern capitalism, which is the conventional interpretation of the articles of incorporation of the corporation. Corporations are legally required to first and foremost pursue the interests of the corporation (popularly construed as growth or shareholder profit), even at the expense of sustainability objectives. And even though the law in Canada would like to see companies act as “good corporate citizens” (in the words of the Supreme Court), in practice it is hard for a businessperson to say what this requires! The B Corp eliminates this problem by changing the articles of incorporation to empower the corporation to act in the interests of a broader group of stakeholders – and passing an application process to show that the corporation is actually living up to its potential to create benefits.

    There are currently 47 corporations in Canada that have obtained the B Corps status, operating in a variety of sectors. They include well-know companies such as Bullfrog Power, but most are smaller, young companies. Examples include aroundsquare (a toy company), Green Living Enterprises (a full-service media, marketing, custom content provider and events company) and tyze (a personal support network). Most are service-based businesses, which tend to have a lower environmental footprint. Many are self-identified social enterprises, working directly in the sustainability space.

    B Corps are a great idea, but remain a niche for the moment. The big question is how to scale up the model. The bar for obtaining B Corp status is pretty high, purposely designed to ensure that it is meaningful and not just “greenwashing”. But could a mining company become a B Corp? Could a large multi-national become a B Corp? Can a public company become a B Corp? None have so far, but it may not be impossible. But the strength of the B Corp concept is that it gets people thinking about an alternative type of corporation, that can still make money, but not at the expense of people and the planet. The B Corps are all real examples of the evolution of capitalism.

    Related Materials:

  • Issue Summary: Beneficial Corporations