Wisdom Exchange Tv gathers and shares from people and organizations making conscious-contributions™ in our companies and communities. The views and opinions expressed do not necessarily reflect those of Wisdom Exchange Tv. Links to the original article are found below.
See If Your Southeastern State Provides a Governance Structure for Businesses Seeking Purpose and Profit
In our experience, Certified B Corporations and benefit corporations are not common knowledge in Tennessee or the Southeast … at least not yet. We’ve been working to change that, or even to just slightly move the needle, by spreading the word about B Corps and benefit corporation structures through workshops and articles.
The next phase of our plan involves distribution of regional guides that provide insight for companies into what “going B” would look like. Our goal is to clear up some common misconceptions and present B Corp certification or benefit corporation designation (or both) as viable paths forward for businesses looking to pursue both purpose and profit.
Benefit corporations give consumers and prospective employees confidence in their values because they are legally committed to their mission. Learn more about benefit corporations.
Introduction to the Guide
Here’s an excerpt from the guide, which includes a Q&A, a breakdown of state-by-state statutes, and some notable examples.
“A corporation is a creature of state law. It is governed first and foremost by laws of the place in which it is incorporated and/or principally operates and additionally by the standards to greater or lesser degrees of the places in which it conducts business. Of course, from Alabama to California, we are a diverse country of diverse sets of rules and regulations. Rising above the diversity, however, is the universal principle of shareholder primacy; that is, corporate directors are elected by corporate shareholders, and the directors in their management of the corporation must above all else provide a financial return to shareholders.
“An unfortunate byproduct of shareholder primacy is that it limits the ability of corporate management to at times esteem its employees and environmental footprints or to measure the social consequences of its practices, if such estimation or measurement endangers stockholder return. This is admittedly an oversimplification, but not an egregious one. Time and time again, corporations have been prevented from, say, paying employees higher wages at the expense of issuing dividends by lawsuits initiated by shareholders against corporate directors, aka shareholder suits.
“The rise of the benefit corporation is in direct response to shareholder primacy. Under benefit corporation statutes, corporations that operate according to a ‘doing well by doing good’ ethos are shielded from a range of acquisition tactics and shareholder suits when compliant with the respective statutes. Moreover, data is showing that benefit corporations tend to attract better talent and scale better than their non-benefit peers. They may even find tax advantages not otherwise available.”
This article was originally published by Rockridge Venture Law, which notes that the informational guide is a resource and reference tool and that laws change frequently, so be sure to check for updates in each state.
B the Change gathers and shares the voices from within the movement of people using business as a force for good and the community of Certified B Corporations. The opinions expressed do not necessarily reflect those of the nonprofit B Lab.