The History of Benefit Corporations
New Podcast Connecting the Role of Business in Society with Corporate Governance
The role of business in society has come under heightened scrutiny these past months. But, in truth, the impact of business on the environment and people — sometimes referred to as “stakeholders” in contrast to a corporation’s shareholders— has been the subject of concern among corporate legal scholars and legislators for much longer.
Recently, I had the privilege to discuss benefit corporations on Evan Epstein’s excellent Boardroom Governance podcast. Benefit corporations are a relatively new form of corporate governance that require directors to consider the impact of business decisions on all stakeholders, not only shareholders. This fundamentally shifts the operating purpose of a business in a way that I, and many others, believe can lead to the structural change our economy needs to move toward a more just economy that works for everyone.
I had an opportunity to discuss my own journey from being a lawyer who advised corporate executives and directors about their obligations to optimize shareholder returns to being an advocate for a new form of corporation that is required to consider the interests of all stakeholders. In fact, after 25 years of legal practice, I ended up going to work for B Lab, which invented the benefit corporation, and have since spun out an organization called The Shareholder Commons, whose mission is to spread the same concept to institutional investors.
As a result of my perspective, this conversation includes several looks at legal precedents and provides an insider’s view of the sometimes-questioned need for a new corporate governance structure to change the role of business and the freedom and responsibility of directors.
On the podcast, we covered the history of benefit corporations, including the evolution of different forms adopted around the world, and also the increasing utilization of the form by companies raising money from venture capitalists and trading in the public markets, and even a couple recent IPOs of benefit corporations. We also discussed my book on the subject, which provides further details for those who want to fully understand the potential of benefit corporations and the legal framework that supports that potential.
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.
