Conscious consumerism -- the practice of making purchasing decisions that one believes will have a positive social, economic, or environmental impact -- has become one of the most significant market forces of the 21st century. Consumers, particularly young consumers, are increasingly considering a company’s environmental and social impact when making purchasing decisions, and are even willing to pay more for sustainable products from companies that share their values.

Unsurprisingly, companies are catching up, and are utilizing strategies and messaging intended to communicate, in ways that both benefit and harm consumers, a commitment to sustainable practices and corporate responsibility. While more than 90% of S&P 500 companies now publish annual sustainability reports, “greenwashing” – marketing designed to make consumers believe a brand or product is more sustainable than it truly is – is also on the rise. For that reason, consumers and companies alike need reliable tools to help distinguish companies that claim to operate sustainably from those that actually do.

One-way businesses can demonstrate that they actually practice what they preach is by becoming certified as a B Corp. B Corp certification is administered by a nonprofit organization, B Labs, which requires companies to undertake an extensive evaluation process that ensures they meet verified standards of social and environmental impact, commit to transparency requirements, and agree to being legally accountable to all of their stakeholders. Certified businesses can then display the “Certified B Corporation” logo, giving them a reliable and easily identifiable tool for communicating to the public that they are serious about corporate sustainability and responsibility.

But a company can also become a benefit corporation -- a legal structure conceived by B Labs that requires a company to take corporate responsibility seriously through specific statutory obligations. In contrast to B Corp certification, a benefit corporation is not a third-party accreditation, but rather a specific type of legal entity that is recognized in most states. While the laws of each state vary, benefit corporations are generally required to include specific provisions in their corporate charter, and are subject to specific statutory requirements that ensure that they consider the impact of their actions on various stakeholders and that they are accountable to those stakeholders, including through publishing an annual “benefit report” that assesses the benefit corporation’s social and environmental performance against a recognized third-party standard.

Becoming a benefit corporation requires a permanent change to a company’s legal structure, while B Corp certification is voluntary and can be dropped at any time, even if a company’s commitment to sustainability and responsibility has not changed if, for example, it no longer desires to pay the required annual fees. However, these two approaches are not mutually exclusive and generally work in tandem. In fact, corporations in states that have benefit corporation statutes are required to become one in order to fulfill the legal accountability requirement of B Corp certification. Similarly, B Corp certification provides benefit corporations with a third-party standard that it can utilize to meet the requirements of the statutorily mandated “benefit report.”

Socially conscious businesses owe it to themselves, their employees, their customers, and their other stakeholders to ensure that their commitment to sustainability and social impact are built into their DNA and signaled to the world. To learn more about benefit corporations and whether they might be right for your business, be sure to look out for the May Lane Report which will dive deeper into requirements, advantages, and disadvantages of the benefit corporation structure.

Jeremy Kritt is an Associate Attorney with The Law Offices of Marc J. Lane., P.C.