The Benefit Corporation

While many may disagree, for a number of cynics (or should we say ‘disappointed idealists?) the corporate world is a dark and foreboding presence – the perpetrator of global harm and the flagship of a whole fleet of social inequalities and injustices.

But those who subscribe to this view may now take heart!

Enter the “Benefit Corporation” …

As defined by the Benefit Corp Information Center, this is a new form of corporation and a legal status conferred by the state (in the US) for a business that  voluntarily meets higher standards of corporate purpose, accountability, and transparency.

Benefit Corporations are required to:

1) Purpose: have a corporate purpose to create a material positive impact on society and the environment;
2) Accountability: expand fiduciary duty to require consideration of the interests of workers, community and the environment; and
3) Transparency: publicly report annually on overall social and environmental performance against a comprehensive, credible, independent, and transparent third party standard.

The story of how this movement has grown in the US is not only interesting but also may give the most hardened cynic pause …

In April 2010, Maryland became the first state in the US to pass benefit corporation legislation. Early in February this year, New York became the most recent of a total of seven states in the US to pass similar legislation.  To date, there are 517 B Corporations in the US, worth $2.9 billion in revenues and representing 60 industries.

All this in less than two years – pretty impressive!

And the movement is apparently spreading ‘like wildfire‘, according to Andrew Greenblatt, one of those responsible for getting the legislation passed in New York.

Andrew Kassoy, Co-Founder of B Lab, says “The creation of benefit corporations in New York is a testament to the strength of this global movement to redefine success in business.”

If they wish to do so, a benefit corporation may also be assessed and become a “Certified B Corp” through B Lab:

B Lab is a non-profit organization dedicated to using the power of business to address the world’s most pressing challenges. We support entrepreneurs who use business as a force for good …

We are not activists standing against the old order; instead we are empowering people by giving them an opportunity to stand for something positive.

Certification is not compulsory – but at time of writing 450 businesses have become Certified B Corporations through B Lab.

Also very interesting to read, and providing much more detail, are two articles by Francesca Rheannon on the Corporate Social Responsibility Newswire website:

The Benefit Corporation: Transforming Corporations from Psychopaths to Good Citizens

The Benefit Corporation: Changing the Fabric of Society

There are of course many businesses here in Australia and elsewhere in the world that take very seriously their corporate social responsibility.

However, as far as we know, they are not similarly supported by formal legislation and certification. Though if any reader of this blog knows differently, we’d love to be proved wrong about that! :)

We believe the growth of the Benefit Corporation so far in the US is a very promising sign. We’ll watch with interest to see where it goes from here.

And we’re envisioning a tipping point at which it becomes the way to do business – not only in the US but also in Australia and other countries around the globe.

 

Footnote: Our thanks to Diana Whitney for bringing Benefit Corporations to our attention.