For benefit corporations (B-corps) are emerging as the new business model, as companies realize that ‘for benefit’ means ‘for profit’, not the other way around. While it’s nothing new now to find corporations weaving conscious capitalism into their core structures, the strength of purpose with which they’re evolving is driving a new legislative framework that’s sweeping across states such as Washington, California, Hawaii and New York.
Conceived to support, recognize and legally authorize ‘social purpose corporations’, there are very few legal differences between how they must conduct business compared to other companies, the major difference being (which must be proven to qualify for legal b-corp status) they must include a statement in their certificate of incorporation that the business was formed for the purpose of creating a “general public benefit,” defined as “a material positive impact on society and the environment, taken as a whole, assessed against an independent third-party standard, from the business and operations of a benefit corporation.” Continuing status must be maintained by independent assessment from a recognized third party that is able to prove adherence to the standards outlined in the legislation. Existing for-profit corporations can amend their current certificates of incorporation to become a benefit corporation with a super-majority vote of their shareholders.
Why is becoming a benefit corporation important? Jim Stengel, author of GROW demonstrates in his book “how brand ideals aren’t simply about altruism or corporate social responsibility but a fundamental human value that is authentic to the brand and ultimately a driver for extraordinary growth.” In fact, “Millward Brown Optimor’s analysis discovered that those who centered their businesses on ideals had a growth rate triple that of competitors in their categories.” —Sustainable Brands