Corporate social responsibility is a growing movement, and now it is fostered a new form of business entity. Over the past few years, we have seen a steady growth of the public “Benefit Corporation” or “B Corporation” movement. The B Corp is a statutory corporate form that enables a company to enhance and encourage corporate social responsibility without running afoul of traditional notions that a company exists solely to serve the shareholder. While traditional corporations generally look out for the benefit of their shareholders, B Corps can also take into consideration employee, community, social and environmental interests when making corporate decisions.
Recently, a friend of mine, DCS Corporation General Counsel Curtis Schehr, and I were talking with some fascination about this new form of business entity. Curtis was working on an article on B Corps at the time (which you may read here if you are interested. He said that Maryland was the first state to adopt legislation recognizing the B Corp as a standalone business form. Vermont, Virginia and New Jersey have passed similar laws, and, now seven additional states are considering legislation Colorado, Hawaii, New York, North Carolina, Pennsylvania, California and Michigan).
According to a B Corporation website (www.bcorporation.net), B Corps are unlike traditional businesses because they “meet comprehensive and transparent social and environmental performance standards; meet higher legal accountability standards; and build business constituency for good business.” Currently there are 416 B Corps representing 54 industries with combined revenues of $1.94 billion.
Curtis Schehr speculates that someday “B Corporations may command higher valuations if they have established a trusting, transparent relationship with their customers, employees, suppliers and other stakeholders. Such loyalty may translate into substantial goodwill for which buyers may be prepared to pay. In addition, private equity and venture capital firms are paying increasing attention to and funding B Corporations.” I offer no opinion on that, but it will be interesting to watch the trend unfold.
(Thanks to Curtis Schehr and Tamara Jack, Ass’t General Counsel, LMI, for their thoughts on this).