Corporations that uphold the highest standards for verified performance, accountability, and transparency in respect of employee benefits, charitable giving, supply chain practices, or input materials can drive change and have a competitive advantage in today’s socially conscious market. These corporations can have this competitive advantage because practicing sustainable and socially responsible business can attract like-minded consumers, employees, and investors.
Corporations can demonstrate their commitment to uphold such high standards by obtaining a designation called a “B Corp certification”. B Labs, an American organization, gives B Corp certifications to benefit corporations around the globe that meet their standards for socially responsible and sustainable business.
How to Obtain a B Corp Certification
Generally, the B Corp certification process will depend on the size and complexity of a corporation. However, every corporation must complete the following steps: the B Impact Assessment and amend their articles of incorporation to add a benefit statement.
Step 1: The B Impact Assessment
The B Impact Assessment measures a corporation’s positive impact by evaluating their approach to governance, workers, community, environment, and consumers. Corporations must obtain at least 80 points out of 200 on the B Impact Assessment to obtain a B Corp certification.
This assessment also provides corporations with the opportunity to improve and compare their social and environmental performance against other corporations.
Step 2: Articles of Amendment
Once a corporation scores at least 80 points on the B Impact Assessment, the corporation should amend their articles to add a benefit statement including a statement announcing their commitment to a general or specific social mission and an express commitment to all stakeholders.
Amending a corporation’s articles under the Business Corporations Act (Ontario) and the Canada Business Corporations Act requires a special resolution of the corporation’s shareholders and the filing of the articles of amendment.
Maintaining a B Corp Certification
B Corp certified corporations must recertify themselves and verify their B Impact Assessment score every three years or after a change in control.
B Corp Certification Status in Ontario and Canada
Currently, Ontario legislation does not expressly provide the process for existing corporations to adopt the characteristics of benefit corporations.
However, Canadian case law supports the idea that a corporation’s directors may consider broader stakeholders including shareholders, employees, creditors, consumers, governments and the environment in exercising their duty to act in the best interests of a corporation.
If you are interested in obtaining a B Corp certification or want to understand the legal considerations for such certification, please contact the business lawyers at Mills & Mills LLP at 416-863-0125 or via email to assist you.