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Corporate Responsibility: Benefit Corp Status Available In Three More States
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Corporate Responsibility: Benefit Corp Status Available In Three More States - Executive Leadership Articles

Corporate Responsibility: Benefit Corp Status Available In Three More States

Executive Leadership Articles

Corporate Responsibility: Benefit Corp Status Available In Three More States

In the time since our last article on Benefit Corporations, laws enabling Benefit Corp status have become effective in three states: Arizona, Minnesota, and New Hampshire joined twenty-five others (including the District of Columbia) at the turn of the year in protecting qualifying corporations.

As a reminder, state-certified Benefit Corp status is different from B-Lab certified status, though B-Lab has taken the lead in tracing and tracking such state certification. Certification varies from state to state, but it generally means protection against shareholders suing companies striving for benefits to the environment, communities, and employees as well as financial profit. Without the legislation, shareholders could accuse corporations of not acting in their best financial interest.

In exchange for the protection, corporations file public reports each year, in which they share their practices in serving the environment, contributing to the community, caring for their employees, and practicing transparency. Even states who have been historically less environmentally friendly at the legislative level are passing these laws, since Benefit Corps do not receive tax credits or any other financial considerations that would cost their states money. The benefit for corporations is strictly in protection against being sued as they spread profits among all stakeholders, plus the added social credibility that many consumers favor. On a practical level, for many companies it comes down to transparency in exchange for public relations.

Legislation was passed far enough ahead of time for corporations to earn their status as soon as laws took effect. Minnesota already has 21 certified B Corps. Arizona and New Hampshire are not far behind, with several companies stating their intention to file for status.

Two states, Kentucky and Indiana, have prefiled (ahead of their legislative sessions) legislation for Benefit Corporation certification, to be presented later in 2015.

Reference Links:
Minnesota: http://www.bizjournals.com/twincities/news/2015/01/06/minnesotas-first-public-benefit-corporations.html
Arizona: http://www.abqjournal.com/517922/biz/rules-recognizing-benefit-corporations.html
New Hampshire: http://www.seacoastonline.com/article/20150105/News/150109750
Benefit Corps, State by State: http://benefitcorp.net/state-by-state-legislative-status

 

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