Home Political science Sustainability of Agro-Food and Natural Resource Systems in the Mediterranean Basin
The benefit corporation movement is part of a broader movement for redesigning economic activity in more socially responsive and Earth-friendly ways. Other practical experiments are evolving, for example, around more community-oriented banking, the expansion of worker and consumer cooperatives, more equitable and locally based ways to capitalize enterprises, and an expansion of approaches and resources available for socially responsible investment. (See Chapter 17.)
The most progressive examples promote new institutional structures for systematically sharing a company's financial returns more equitably with a broad range of stakeholders responsible for generating that wealth—including local communities, or future generations who will not have access to the natural resources that were used. (See Chapter 8.) That is an evolution from the conventional goal for profits to be “owned” only by the company, and it goes further than the typical understanding of the “triple bottom line” in the benefit corporation movement, although that movement does value worker ownership. Also, benefit corporations, while required to consider the interests of a wide range of stakeholders, are not required to actually include representatives of those stakeholders in their decision-making processes—a fact that some critics point to in questioning the real difference that this movement can make.
What is striking about the benefit corporation movement, though, is its promotion of a higher legal standard for corporate behavior that businesses themselves are seeking. At this point, that standard is one that only a relatively few companies have chosen voluntarily to function under. But it is still a minor revolution, with considerable potential to entice other companies to join in moving corporate culture and practices toward the triple bottom line—and to inspire the public to expect and eventually demand that other companies join them.
The fundamental acknowledgment in state law after state law that (1) it is possible for for-profit companies to strive to adhere to a broad set of social and ecological ethics, (2) the public will benefit when they do, and (3) there are enough entrepreneurs wanting to be held to such a standard to warrant such laws—all add up to an essential, unprecedented step toward a more sustainable economy.
Noting the progress of the movement so far, B Lab's Jay Coen Gilbert predicts that, “[i]n a generation's time…most of the Fortune 500s will be benefit corporations.” Although a tidal wave is not likely anytime soon, Gilbert foresees several small waves of change that would make a larger shift possible over time. Over the next few decades, he suggests, more large multinationals are likely to become connected through mergers or acquisitions of smaller benefit corporations. Big corporations also will recognize the value of the “halo effect” that they can earn by giving preference to benefit corporations in their procurement supply chains. And rapidly growing, privately held companies could provide their own wave of disruptive innovation by choosing to become benefit corporations or public benefit corporations while still privately owned, and then, as they grow and need more capital, going public. Their initial public offerings would tap into public demand for investment opportunities that can have a positive social impact, even at the expense of not necessarily maximizing profits.
All of those developments would then set the stage for the next major milestone: one or more Fortune 500 companies that already have enthusiastic major investors on board will seize the public relations opportunity to be first to file as a benefit corporation or public benefit corporation. Even more likely, a few corporations will take the step together. Just after Delaware enacted its new PBC statute, some “key pillars” of the environmental community reached out to B Lab and indicated that they believed the movement was now “ready for prime time,” and they wanted to engage to help move it forward. B Lab's hope is that major environmental organizations will bring to the table with them some of the large corporations that they have been building working relationships with in recent years and that are the most forward thinking.
Although it could take years for a Fortune 500 benefit corporation to emerge, such conversations—and broader advocacy by citizens and public interest groups—could begin now to firm up and speed up that possibility. To date, the movement has been driven by B Lab and by committed businesses and corporate lawyers, who have tried hard to present the idea to lawmakers as an uncontroversial, pro-business measure. But if the benefit corporation movement is to realize its potential for transformational change, there will need to be more active engagement by strong advocacy groups, sharing both their corporate-watchdog expertise and grassroots skills in mobilizing concerned citizens to help shape it, protect and increase its rigor, and scale it up quickly.
“In a political sense, the surging popularity of [benefit corporations] will change the way people think about business,” observed Jamie Raskin, the progressive Maryland lawmaker who pushed through the first benefit corporation statute. “We can have a market economy without having a market society, and we can have prosperous corporations that act with conscience. Our besieged labor unions and nonprofits should bolster these businesses— green, local, progressive, entrepreneurial, community-focused—as an alternative to an economy controlled by massive state-subsidized corporations that are too big to fail and whose executives are too rich to jail.”
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