The Benefit Corporation (B Corp), a new type of corporate entity that purports to use business to address environmental and social problems, has passed the California State Assembly [Assembly Bill 361 ], and is heading to the Governor for his signature, the final step to make it law. California joins other USA states, Maryland, Vermont, New Jersey, Virginia, and Hawaii, in passing Benefit Corp legislation. In the USA there are already 444 B Corporations in 54 Industries. California in particular has a vast array of corporate entities, including various types of non-profits, corporations, and limited liability companies. Traditionally, a corporation’s mission is solely for profits, whose main benefactors are the shareholders. The B Corp changes all this. From the bill itself, “A benefit corporation shall have the purpose of creating a general public benefit. Alongside its purpose for general public benefit, one thing makes a California B Corp stand out from a traditional corporation: transparency. There is a legal mandate towards the general public benefit. In terms of transparency, a Benefit Corp has to include in its annual report overall social and environmental performance. This is on top of the traditional financial statements. Furthermore, a benefit corporation shall post all of its benefit reports on the public portion of its Internet Web site, if any. Almost any corporation can potentially become a B Corp, granted the corporation meets strict requirements.
Also a New York startup, WhoIsGreen.com [ http://www.whoisgreen.com/ ] is hoping to cash in on consumers’ rush to feel good about the businesses they deal with—and the products they buy—by providing “a Yellow Pages” of companies that use sustainable practices / for sustainable businesses. WhoIsGreen.com launched its beta product allowing businesses of all kinds that run themselves in a green way to join the company’s directory. KAYWEB Angels is the group backing WhoIsGreen.com by providing software development help and advice. The company started development 18 months ago and says it signed up about 20,000 businesses during a private beta run.
What do you think? Can a B Corp legal structure truly create corporations that benefit the general public? Do you think established corporations would be willing to change their charter to fit B Corp? Do you think companies want to be on a list of ‘sustainable businesses’given how tough consumers can be, and just how quickly word spreads on social media these days? Companies might want to think twice about listing themselves unless they can prove they are indeed green?