We present the first theoretical investigation of solvent effects on the Faraday $${\mathcal{B}}$$ term of magnetic circular dichroism (MCD) at the density–functional level of theory. In our model, the solvent is described by the polarizable continuum model in its integral-equation formulation. We present the extensions required for including electron correlation effects using density–functional theory (DFT) as well as the necessary extensions for including the effects of a dielectric continuum. The new code is applied to the study of the Faraday $${\mathcal{B}}$$ term of MCD in a series of benzoquinones. It is demonstrated that electron correlation effects, as described by DFT, are essential in order to recover the experimentally observed signs of the $${\mathcal{B}}$$ term. Dielectric continuum effects increase, in general, the magnitude of the $${\mathcal{B}}$$ term, leading to an overestimation of the experimental observations in most cases.