Benefit corporations, as recognized in the laws of a few states, aim to benefit society and the environment in addition to their shareholders. A slight variation on the model is the B Corporation, created through a private certification process that requires companies to declare a social purpose in their governing documents to meet independent standards of social and environmental performance.
In 2010, Maryland became the first state to pass benefit corporation legislation, formalizing this new option in law. Other states soon followed, including Vermont, New Jersey, New York, Virginia, Hawaii, and California, with many others expressing interest. Within two years, some 500 companies signed up to be B Corporations, including a few fairly substantial companies, like Seventh Generation.
Upsteam 21, an Oregan holding company that buys and holds small, local companies committed to sustainability. Upsteam 21 adpoted articles of incorporation that say the “best interests” of the company embrace not only shareholder interests but also those of the environment, customers, suppliers, and local communities. The firm also changed voting rights, so that those with a living stake in the firm – such as employees and initial direct investors – have more voting power that those who might purchase company stock secondhand. Voting rights diminish when they pass from direct investors to investors in the secondary market.
…The benefit corporation movement is without doubt a huge step in the right direction. It represents a vital codification of an emerging new sensibility. The B Corporation certification builds consumer awareness, brands responsible companies, and creates a potential learning community of companies. As society becomes more familiar with the concept of benefit corporations, the concept could also help create the cultural awareness that will facilitate further systemic reforms. The benefit corporation model is vitally important.
Kelly, Marjorie. (2012) Owning Our Future: the emerging ownership revolution. Williston, VT: Berrett-Koehler Publishers.