The Rise of the Benefit Corporation

Posted on June 13, 2011. Filed under: Uncategorized |

The corporate nature in the United States can be called a lot of things. Cut-throat and dog-eat dog are some words that come to my mind. What happened to the for-profit companies that used to care for its employees and community? What happened to the mission statements for organizations that wanted to change the world for the better? I found my answer in two words; profit maximization. The increased competition from the increased number of players in the for-profit world as a result of globalization has spurred an era of lean manufacturing. A normal C-class corporation can be sued by shareholders for not pursuing methods of profit maximization. Many companies have to cut costs as much as possible to maintain their competitive edge.

In doing this many have lost track of values that once were embodied by every individual in an organization, and now appear only as feeble attempts for companies to boost their PR. Doing the right thing is no longer the right thing to do to make a profit, and it shows. It can be seen in companies such as Enron, Lehman Brothers, Exxon Mobile, BP, Blackwater, AIG to name a  few. Corporations have taken to reckless behavior in search of short term, quarter to quarter profits.

America needs planners. Corporations that understand that it is not about the short term. Profits can come at a constant rate and the glory (and power) of making the S&P 500 does not have to be the backbone of the organization. Organizations that realize that there is more than money in this world, and the true nature of a business should emerge from one simple concept; making the world a better place. Essentially, companies that care.

This need has spurred the rise of the Benefit-Corporation (B-Corp). This type of corporation has been written into law in several states (Maryland, New Jersey, Vermont and Virginia) and other states are quickly following suit. This type of corporation focuses on being socially responsible along with pursuing methods of profit maximization. They must pass a series of conditions that to achieve B-Corp status, mostly having to do with community outreach and employee treatment. The most important difference between B-Corps and C-Corps is that shareholders cannot sue a B-Corp for not conducting business in a manner that maximizes shareholder equity because it is understood that is not the sole purpose of these corporation.

B-Corps are becoming increasingly popular because they are taking root right here in the United States. They are providing community outreach that is more than just a PR effort, it is the way the business is run. Most of these businesses are small, progressive, and local which provides a stark comparison to companies that normally come to mind (such as Wal-mart and Exxon Mobile) who are large, profit seeking, and extremely content with the status quo.

The truth is that B-corps are the way of the future. A study from Princeton University shows that the the “link between income and happiness is mainly an illusion.”  After a certain income level, the quality of life indicators show that happiness comes from other factors. Having a plethora of socially responsible companies will increase the quality of life for Americans across income levels. This is is how we can help make a more cohesive, better society.

Clean Currents is honored to be the first registered B-Corporation in Maryland. Helping the communities in Maryland, Pennsylvania and the District of Columbia through community outreach as well as supplying clean wind power are our priorities. Clean Currents is on what is hopefully the start of a wave of B-corps that will change the business landscape back to what it should be, focused on the consumer in a holistic sense, not just in a monetary sense.

( read more at http://www.princeton.edu/main/news/archive/S15/15/09S18/index.xml?section=topstories
and http://www.thenation.com/article/161261/rise-benefit-corporations)

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