Talk about business innovation! There’s a new category of corporation giving ethical business a boost—making business attend to profit, people and planet—with transparency and accountability.
What do an investment advisory firm, a start-up incubator, and a boutique law firm have in common?Benefit Corporation, a new class of corporation that requires third party certification of their compliance with environmental and social standards. Legislation creating the B Corporation classification took effective in Vermont and Virginia this month. Hawaii, Maryland and New Jersey have passed B-Corp laws, too, and six other states have pending legislation.
Benefit Corporations are required to “create a material positive impact on society and the environment.” They face higher standards of accountability and transparency. Most importantly, the B-Corp redefines fiduciary duty to require officers to consider non-financial interests when making decisions.
Several progressive businesses have already filed as Benefit Corporations:
- Clean Yield is an SEC-registered investment advisory firm working exclusively with social investors. The company uses investment “to promote a sustainable society” while still achieving a strong financial return on their investments.
- Merritt & Merritt & Moulton is a boutique law firm that collaborates with publicly-and-privately-held growth companies and the angel, venture capital and private equity investors that support them. The firm works to support local businesses rather than investing in the “Wall Street casino.”
- StartUp Owl is run by Will Keyser, the managing director of Venture Founders LLC. StartUp Owl is a source of information for startups and early stage businesses, with a strong focus on sustainability.
The B-Corp classification moves us closer to a business culture where profits, people and the planet are held in equal regard. Perhaps one day all businesses will be B-Corps. Until then, we must continue to trumpet leaders and firms who let core values, not profits alone, drive their actions.
As a business leader, would you reclassify your business as a B-Corp if it meant higher scrutiny into your social and environmental impact? If you were an investor, would you shift your investments to B Corporations? Please share your thoughts.