The Rise of Benefit Corporations

What do Kickstarter, Patagonia, Plum Organics, AltSchool, Method, & Klean Kanteen all have in common?

They are a new class of Benefit Corporation that voluntarily meets different standards of corporate purpose, accountability, and transparency.

In 24 states, they are a legally incorporated entity.

The entrepreneurs in charge of these companies protect their “social goals” by mandating considerations other than profit.

Making money by doing good. Kickstarter credits its financial success with its commitment to improving people’s lives. It even has pursued a separate “B Corp” designation with its own set of environmental and social considerations. The “B Corp” designation is certified by a nonprofit called B Lab. Today there are more than 1,300 B Corp companies in operation across 38 countries.

Etsy, the online bazaar of handcrafted goods, became the first B Corp company to trade publicly. In April 2015 its IPO shares nearly doubled to close at $30. Some of the things Etsy has done to earn its B Corp designation is give workers paid time off to volunteer, pay employees well above the local living wage and compost its office food waste.

Many credit the rise of these businesses to the Millenial Generation who place a high currency on goods and services that meet their ethical standards. But others see it as a return to how businesses once operated. A New Yorker article on this topic noted:

“Henry Ford declared that, instead of boosting dividends, he’d rather use the money to build better cars and pay better wages. And Johnson & Johnson’s credo, written in 1943, stated that the company’s “first responsibility” was not to investors but to doctors, nurses, and patients.”

While this way of doing business sometimes had problems, there is growing consensus the unrelenting pursuit of profits has encouraged corporations to focus on short-term prospects at the expense of everything that makes us human and the profits worth having