Illinois to Join Ranks of States Recognizing B Corporations

August 5, 2012; Source: Chicago Tribune

Gov. Pat Quinn (D-Ill.) recently signed a bill creating the incorporation status of a benefit corporation (also known as B corporations or B-corps) in the state. B corporations have been voluntarily certified by a Pennsylvania nonprofit, B Lab, and NPQ has kept tabs on their rise to recognition in eight other states. Illinois has been playing with the legal standards that separate nonprofits and business for a few years, having allowed the LC3 status for low profit (or social enterprise) organizations in 2009.

In contrast to the LC3 bill, with this new legislation, nonprofit certifiers will be the arbitrators of benefit, not the state. This represents another level of legitimization of the nonprofit certification of business. Businesses often utilize nonprofit certification in their marketing in order to garner the attention of consumers, but now corporations are not only branding their products with the certifier label, but they are able to say that they are recognized as a different type of corporation, at least in a handful of states.

A whole sub-sector of nonprofit organizations that certify corporations currently exists with varying standards and monitoring practices. Dating back to the early 90s, Rainforest Alliance led the way, establishing some of the first certifications for timber and then bananas. Their green frog has become synonymous with the environmental certification of cash crops. Fair Trade certification, granted by Fair Trade USA, which was established by Paul Rice, has become a household brand. In contrast, B Lab certification is likely still less known to the general public, but it crosses various types of activities, including environmental stewardship, community engagement, public accountability, and employee treatment. Certification takes approximately six to nine months for a business that employs more than 100 people. –Michelle Shumate