B Corps Could Become Newest Business Designation in NC
ASHEVILLE, N.C. – Benefit Corporations - commonly known as B Corps - are growing in popularity in North Carolina and beyond. Certified by the non-profit, B Lab, the designation indicates that a company has met rigorous standards of social and environmental performance, accountability and transparency.
While increasingly recognized as a viable business model, B Corps aren't yet recognized by the state as a business designation.
Rep. Chuck McGrady of Henderson County is sponsoring a bill that would change that.
"It functions a lot like a regular corporation, but it just allows people to designate a public purpose, sort of add a dimension to what they're doing in their business," he says. "It can be very attractive to investors. It is very attractive to this new class of entrepreneurs."
At least 30 states already have a legal designation for B Corps. Under other corporation models, a business' obligation is only to increase shareholder value.
The bill is on the House calendar next week and would protect companies who have multiple shareholders from their investors demanding that all the earnings go to the bottom line, instead of meeting the B Corps commitment for social good.
Peter Krull's company, Earth Equity Advisors in Asheville, is ranked in the top 10 percent in the world of B Corps by B Labs. He says the legal classification is needed for B Corps to grow with the same protections afforded to other business models.
"We all know because we've been doing responsible business for over a decade that it actually pays to be invested in your community because you grow a better business that's built for the long term," he explains.
McGrady says recognizing B Corps signifies the state is ready for the kind of innovative businesses that often seek out that designation.
"There's certainly an emerging class of entrepreneurs who are very interested in B Corps and the concepts surrounding B Corps," McGrady adds. "It is designed to make the corporate environment in North Carolina more attractive, and you wouldn't want to lose someone who wanted to incorporate in North Carolina because you didn't offer the type of structure they wanted."
There are at least 37 B Corps in North Carolina. There are more than 2,100 B Corps worldwide in more than 50 countries, representing 130 industries.