Is shareholder capitalism broken?
Few would argue that it’s working well. Business as usual has us on a path to climate catastrophe. The housing/banking industry collapse threw the world into recession. We’ve seen Fukushima, the BP oil spill, the Massey coal mine deaths. Growing income inequality has become a persistent worry.
The conventional response to all that – indeed, the one that I share – is that smarter (though not more) regulation is needed. But a growing number of business people say the problems go deeper. They say a new kind of corporate legal structure is needed to require companies to operate for the good of society, not just for their shareholders. These new corporations—they’re called B Corporations—are growing in number, and their structure has been enshrined into law in four states—Vermont, Maryland, New Jersey and Virginia.
Here’s what B Lab, the nonprofit behind B Corp, says on its website:
Our vision is simple yet ambitious: to create a new sector of the economy which uses the power of business to solve social and environmental problems. This sector will be comprised of a new type of corporation – the B Corporation – that meets rigorous and independent standards of social and environmental performance, accountability, and transparency.
And in its annual report:
After the latest round of economic and environmental crises, it’s clear we need systemic solutions to the systemic problem that places the interests of shareholders over the interests of workers, community and the environment.
Interesting, no? A couple of months ago, I heard Jay Coen Gilbert, a founder of B Lab along with Bart Houlahan and Andrew Kassoy, talk about B Corp (it stands for Benefit Corp.) at a GreenBiz conference; afterwards, we caught up by phone to talk some more. [click to continue…]
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