Benefit Corporations the Norm in One Generation, says B Lab Founder
B Lab aims to see benefit corporation law adopted in all 50 U.S. states
Monday April 16, 2012 -- Camille Jensen
Jay Coen Gilbert has good reason to believe in one generation the traditional corporate model we know today will no longer exist, and will be replaced by what’s called the benefit corporation which allows business to pursue social and environmental goals in addition to profit.
Seven states have passed benefit corporation legislation, and another seven states — Michigan, North Carolina, South Carolina, Pennsylvania, Louisiana, Illinois and Indiana, plus Washington, D.C., — are moving bills forward.
Support for the legislation has also parlayed across partisan lines — 92 per cent of all votes cast have been in favor of the legislation.
“It’s exciting,” says Coen Gilbert. “It’s a pretty big deal and an awful lot of progress in a very short period of time.”
Benefit corporations are exactly the same as traditional corporations except for three things that make them game-changers. Benefit corporations are required to:
• Have a corporate purpose to create a material positive impact on society and the environment
• Expand fiduciary duty to require consideration of the interests of workers, community and the environment
• Publicly report annually on overall social and environmental performance against a comprehensive, credible, independent, and transparent third party standard
Coen Gilbert credits the certified B corporations, many of them Social Venture Network (SVN) members, who have advocated for the bill. Benefit corporation legislation has also been widely supported because it offers a voluntary market-based solution to using business to solve social and environmental problems.
“It’s pretty hard to be against something that is market-based, voluntary, free and useful. Not to mention that has a bunch of business support,” says Coen Gilbert.
“As a result it’s attracted broad, bi-partisan support in the midst of an incredibly partisan time.”
It’s for these reasons, Coen Gilbert sees the model continuing to advance and build support among business and the public. He says B Lab’s immediate goal is to see benefit corporation legislation adopted in all 50 states.
Once that happens, he says benefit corps will become the standard bearers for how business should operate. He points to companies who’ve already adopted the legislation like Patagonia, which sources sustainable materials, has dramatically decreased its waste and uses a portion of its sales to support environmental groups.
Give Something Back Office Supplies, another company to incorporate as a benefit corporation, donates almost all of its profits to nonprofit organizations selected by its customers and staff.
Before long, Coen Gilbert says all business will become benefit corporations due to demand.
“In a generation every company will be a benefit corporation because benefit corporations will out-compete traditional corporations for talent and consumers and capital,” says Coen Gilbert.
“Just like cars replaced horse and buggies, ovens and microwaves displaced fire pits, benefit corporations will displace traditional corporations because people will prefer them and they will prefer them because they create value for all of us, not just shareholders.”
— More to Come
This article written by Axiom News is part of a Social Venture Network series featuring the work of socially responsible business leaders.