By contrast, a Benefit Corporation (the main topic of this article) is a type of corporation currently recognized in 27 states with legally protected requirements of higher purpose, accountability, and transparency. It’s legally recognized along with LLCs, LLPs, C Corps, S Corps and the like – https://en.wikipedia.org/wiki/Benefit_corporation. The Benefit Corporation was spawned out of the B Corp movement. It arose because many entrepreneurs felt that the B Corp certification could not provide the kind of legal protection that a government recognized legal form could provide. Unlike a B Corp, which can be any type of for-profit legal entity, a Benefit Corporation is a type of corporation in and of itself.
Here’s a Venn diagram for those of you that like visuals:
While mostly comprised of small to medium sized businesses, I think the benefit corporation should be the primary structure of multinational conglomerates going forward – wishful thinking I know. I’d like to believe that the 4,400+ Benefit Corporations (and 2,000+ B Corps for that matter) could serve as individual lightning rods that would help to lead by overall example as to how social issues can be addressed while still turning a profit. I will attest to the fact that operating a Benefit Corporation is not the path of least resistance – you’re still held accountable by all the regulations under older corporate law, with an extra layer of social well-being added on top. It would be much easier to not care what the long-term side effects of the new drug will be or where you will dump the oil or how that factory smog adds to CO2 emissions. Yes, companies must make a commitment to innovation to grow their bottom line in a way that also does the least amount of harm, but that must be the standard rather than the “extra credit”. Steering the incentives towards this type of thinking is the only way to bring about proper change. Please post your comments as to how we can incentivize new companies to take on Benefit Corporation status, as well as tangible ways established corporations can be “convinced” to take on this new motif.