BCORP Business Model and Legal Structure Flashcards

What is 'mission lock' and why is it important for B Corps?

Answer: A legal mechanism that protects a company's social and environmental mission from being diluted during ownership changes or acquisitions

Mission lock, often achieved through Benefit Corporation status or charter amendments, ensures that a company's purpose cannot be easily abandoned even if ownership or leadership changes.

What is the primary reason some B Corps choose to embed their mission in their articles of incorporation?

Answer: To create a legal obligation that survives ownership changes, mergers, or IPOs

Embedding the mission in the articles of incorporation makes it a legally binding commitment that cannot be removed without shareholder approval, protecting the mission through any corporate event.

How does B Corp certification influence a company's supply chain decisions?

Answer: B Corps are encouraged to assess and improve the social and environmental performance of their suppliers as part of their overall impact strategy

While not mandating exclusive B Corp suppliers, the certification framework encourages companies to extend their impact values into their supply chain through supplier assessments and responsible sourcing.

Which of the following scenarios best illustrates a 'workerowned' business model recognized favorably by the B Corp framework?

Answer: An employee stock ownership plan (ESOP) where workers hold a significant equity stake in the company

ESOPs and employee ownership structures are recognized in the B Corp framework as models that align worker interests with company success and distribute wealth more equitably.

What distinguishes a 'certified B Corp' from a company that simply scores well on ESG (Environmental, Social, and Governance) ratings?

Answer: B Corp certification requires verified performance on the B Impact Assessment, a legal accountability commitment, and transparent public disclosure — ESG ratings may lack these requirements

B Corp certification involves third-party verification, a legal commitment to stakeholder governance, and public transparency — components that many ESG rating frameworks do not require.

What happens to a company's B Corp certification if it is acquired by a larger non-B Corp company?

Answer: The certification does not automatically transfer — the acquiring entity must independently meet B Corp standards or the certification may lapse

Acquisitions trigger a review process with B Lab — the certification is tied to the specific legal entity and its practices, so a change of ownership requires fresh evaluation.