Benefit Corporation Reporting Requirements
To meet the transparency provisions of benefit corporation legislation, all benefit corporations are required to create a benefit report. (Note that in Delaware it does not need to be released to the public or to use a third party standard as an assessment tool, however it is considered best practice to do both). These transparency provisions serve not only to inform the public about the overall social and environmental performance of the benefit corporation, but also to inform directors so they are better able to meet their duties and shareholders so they are better able to exercise their rights. In a benefit enforcement proceeding, judges may also look to a benefit report, or series of annual benefit reports, to determine if the benefit corporation has met its statutory requirement to meet its general, and any named specific, public benefit purpose.
The specific logistical and content requirements for benefit reports differ slightly from state to state. The information on this page does not constitute legal advice and is provided solely as a reference.
What are the reporting requirements in my state?
Reporting requirements differ from state to state. Answers to logistical questions for your state regarding when a report is due, filing fees or website posting or specific content requirements can be found here. Please refer to the specific statutes in each state for actual definitions, citations and full statement of the law.
Benefit Report Best Practice
B Lab believes that there is a best practice for benefit reporting, which is reflected in the model legislation. Below is the foundation for a best practice report. However, please double check with your state's specific requirements for additional content and logistics, which can be found here.
A narrative description of:
- The ways in which the benefit corporation pursued general public benefit during the year and the extent to which general public benefit was created.
- The ways in which the benefit corporation pursued a specific public benefit that the articles state it is the purpose of the benefit corporation to create.
- Any circumstances that have hindered the creation by the benefit corporation of general public benefit or specific public benefit.
- The process and rationale for selecting or changing the third-party standard used to prepare the benefit report. If applicable, a statement of any connection between the organization that established the third-party standard, or its directors, officers or material owners, and the benefit corporation or its directors, officers or material shareholders, including any financial or governance relationship which might materially affect the credibility of the use of the third-party standard. More information about the free third party standard created by B Lab called the B Impact Assessment and the free Benefit Report tool can be found here.
An assessment of the overall social and environmental performance of the benefit corporation against a third-party standard. More information about third party standards is available here
- Applied consistently with any application of that standard in prior benefit reports; or
- Accompanied by an explanation of the reasons for any inconsistent application.
- The name of the benefit director and the benefit officer, if any, and the address to which correspondence to each of them may be directed.
- The compensation paid by the benefit corporation during the year to each director in their capacity as a director.
- A statement from the benefit director as to whether the benefit corporation acted in accordance with its general, and any named specific, public benefit purpose, and whether directors complied with their duty to consider the impact of decisions on stakeholders, and if in the opinion of the benefit director they did not, a description of the ways in which they did not comply.
- The name of each person that owns 5% or more of the outstanding shares of the benefit corporation either beneficially, to the extent known to the benefit corporation without independent investigation, or of record.
Examples of Published Benefit Reports:
Below are examples of published benefit reports. Please note that these reports are from companies located in various states and thus the reporting and logistical requirements of their benefit reports differ. Before using these reports as a model for your own report please check the specific reporting requirements in your own state here.
- Fireclay Tile 2017 Benefit Report
- Greyston Bakery 2014 Benefit Report
- Patagonia 2014 Benefit Report
- King Arthur Flour 2014 Benefit Report
- Urbane & Gallant 2014 Benefit Report
- Turnstile Tours 2014 Benefit Report
- TMI 2015 Benefit Report
- The Refill Shoppe 2015 Benefit Report
- SCS Global Services 2012 Benefit Report
- 3Degrees 2013 Benefit Report
- Substance151 2012 Benefit Report
- Substance151 2011 Benefit Report
- Turnstile Tours 2012 Benefit Report