Etsy became certified as a B Corporation in 2012, a designation for for-profit companies that meet “rigorous standards of social and environmental performance, accountability, and transparency.” On Tuesday, Etsy CEO Chad Dickerson announced it has been recertified as a B Corp.
Writing on the corporate blog, he said, “When Etsy went public last year, there was a lot of discussion about whether we could be both a public company and a socially responsible business. As I wrote at the time, “we reject the premise that there is a choice to make between the two. Etsy’s strength as a business and community comes from its uniqueness in the world and we intend to preserve it.”
Some also questioned whether Etsy could remain a B Corp given its creation of a subsidiary in Ireland, the location of its European headquarters. The Wall Street Journal wrote in August, “the structure is expected to eventually reduce Etsy’s U.S. tax bill because the income associated with the intellectual property held in Dublin will be taxed at the Irish rate of 12.5%, much lower than the U.S. rate.”
B Lab, the organization that certifies companies as B Corporations, addressed the issue in this PDF document on its website.
“During Etsy’s recertification process, several articles were published regarding Etsy’s tax practices, which spurred public complaints to B Lab. B Lab management deemed these complaints to be material, credible, and specific, and therefore initiated a formal investigation consistent with B Lab’s Complaints Process. Upon completion of this investigation, B Lab’s independent Standards Advisory Council determined that Etsy was eligible for recertification contingent upon additional public disclosure of their tax strategy and practices.”
The document includes more details about Etsy and the process by which it assessed Etsy’s tax practices.
Etsy is the first U.S. company to complete the assessment process following an IPO. A company spokesperson told EcommerceBytes, “B Lab’s additional requirements of evaluation and transparency for public companies mean that, in addition to our annual Progress Report and SEC filings, we are continuing to share more details about our business than ever before. You can find all the details on our profile page.”
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