Time for Plan "B"? Can Corporations "B" different??

Photo credit: https://www.cultivatingcapital.com/b-corporation/

We are currently dealing with one of the largest crises of our lifetimes. The novel coronavirus COVID-19 has caused havoc and death throughout the world. The global economy is in a freefall and for the second time in my life corporations are looking for a taxpayer funded bailout. I cannot help but wonder if they are really worth saving. Many of these global companies have posted record profits for decades. This leaves many of us questioning, “Where did their money go?” or “How could they be so close to insolvency after a couple of bad months?”. Shareholder primacy, hedge fund payouts, and corporate executive compensation practices are largely what traditionally governs corporate decision-making practices at the highest level. This situates the interest of maximizing profits for shareholder value above the interests of all else, such as the employees, the community, and the environment. This corporate policy has a long history in America, but we are quickly realizing it does not have to be this way and there are other ways to form, and manage, a corporation.

This brings us to a relatively new formation of business structure that has emerged in the last decade called Benefit corporations. Benefit corporations are businesses that are for profit entities with a clearly defined public benefit, such as social and environmental mission, attached to the framework of corporate decision-making processes.  Companies are voluntarily adopting this as policy, and many states are passing legislation that paves the way for benefit corporations to exist as a legal entity. This provides legal protections for directors and board officers to shape and define a company’s goals towards social and environmental sustainability rather than sole profit maximization.

A Benefit corporation is legal designation that exists in states where legislation has been passed to allow their existence in the business world. Benefit corporations require a third-party verification for validity and accountability. B Lab is a non-profit agency that advocates for Benefit corporation legislation, administers B impact management programs and software, and provides a third-party certification called B Corp. B Corp boasts 3,275 current members in 71 countries. B Corp certification is a holistic analysis that measures a company’s complete social and environmental performance. B Corp certification provides public transparency, legal accountability, and third-party verification.

Benefit corporations and B Corp certified businesses build a public benefit into the governing structures and decision-making processes without the fear of shareholder retaliation or repercussions for redirecting revenue from profits. Benefit corporations can assist society in achieving sustainability goals and utilize business as a force for good. Benefit corporations are a model for change in the ways we conduct business within corporations and our everyday lives. Companies with name brand recognition are becoming B Corp certified such as such Patagonia, Ben & Jerry’s, and Horizon organic are joining thousands of other companies in this movement.  
Supporting benefit corporation legislation, investing in benefit corporations, and purchasing products or services from B Corp certified companies, will help shift the formation and policies of our future economic systems. Investors are seeing the opportunity and economic viability of sustainable business measures as consumers demands rise.

This is also something to keep in mind as many of us will be looking for new opportunities when the current crisis passes.

Benefit corporations may face similar challenges to traditional companies when next crisis emerges; but shaping our current economic system towards a wider environmental benefit and towards a stronger societal resilience will produce companies worth bailing out if need be. “B” Ready to “B” on the look out for the rise of Benefit corporations and the B Corp Logo!