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Corporate Responsibility: When A B-Corporation Is Not A B-Corporation
We've discussed in past articles the concept of the B-Corporation, that business entity focusing on the "triple bottom line" of profit, people, and planet, where employees, the community, and the environment are considered stakeholders along with a company's shareholders. Companies that satisfy rigorous criteria set by B-Lab, the certifying body, are included on the list and may display the B-Corporation seal on their products, advertising, and communication, and consumers or other partners can have confidence that they are doing business with a socially conscious, responsible company that meets a third party's requirements in transparency, employee relations, environmental impact, and contributing to the community.
The B-Lab certification is a standard of compliance, but is only a description for consumers' and partners' enlightenment; it carries no legal status or separation from strictly profit-centered companies. Thus, in times of a change in ownership or control, B-Corporations are subject to laws dictating delivery of highest monetary value for shareholders, something that can act against many of a B-Corporation's stated interests.
In order to protect companies, whether they are officially B-Lab certified or merely making independent sacrifices of profit for better social responsibility, many of the U.S. states have enacted legislation allowing companies to be legal beneficial corporations, or B-corporations (lower-case C). The qualifications vary by state, of course, and certification by third-party entities such as B-Labs is not necessarily among them, meaning a socially responsible company might be a B-Corporation (capital C) without being a B-corporation (lower-case C), or vice-versa, or it may be both.
The exact legal implications are outside the reach of this article, so responsible-thinking companies are encouraged to seek legal advice elsewhere, especially as specifics vary by state. B-Lab has set up a website tracking B-corporation legislation (http://benefitcorp.net), separate from its main website focusing on certified B-Corporations (http://bcorporation.net). According to the informational site, these states already have passed and enacted legislation:
- 2010: Maryland
- 2011: Hawaii, New Jersey, Vermont, Virginia
- 2012: California, Louisiana, Massachusetts, New York, South Carolina
- 2013: Arkansas, Delaware, Illinois, Pennsylvania, District of Columbia
- 2014: Arizona, Colorado, Connecticut, Florida, Nebraska, Nevada, Oregon, Rhode Island, Utah, West Virginia
- 2015: Minnesota, New Hampshire
States where legislation is in some phase of introduction, committee, debate, or voting: Alaska, Alabama, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Michigan, Montana, Ohio, Puerto Rico, Wisconsin.
As you can see, there is a popular movement toward protecting the well-being of companies striving to satisfy a triple bottom line, and why not? The profit line helps a consumerist economy thrive, while the other lines work to improve the qualities of life for us all, in both the short and long terms. At an ever-increasing rate, the American populace is making a statement that doing business for the common interest is sustainable and desired.
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