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A Huge Shift In Business Began on October 1st, 2010

| Friday November 19th, 2010 | 2 Comments

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Something huge quietly happened on October 1st, 2010. Something that is the start of a powerful, powerfully beneficial way to do business: Global Contribution Corporation became one of the first Benefit Corporations in the world.

Hang on. Hasn’t B Lab‘s B Corp status been in existence since 2006, and there’s now hundreds of companies that have done it?

This is different, in a crucial way.

As B Lab put it,

Many B Corporations and other mission-driven entrepreneurs struggle to fit their mission into existing corporate law…The legal component of the B Corporation Certification – adding language to governing documents mandating consideration of stakeholders – was a first effort to harmonize these one-off innovations with a common approach. Now, the Benefit Corporation provides legal recognition for companies that are creating public benefit and shareholder value.

What does that mean?

It means that, thanks to Maryland nearly unanimously voting into law Benefit Corporation legislation back in April (with several states following):

Unlike traditional corporations, Benefit Corporations must by law create a material positive impact on society; consider how decisions affect employees, community and the environment; and publicly report their social and environmental performance using established third-party standards.

Now, rather than the profit above all else focus of typical corporate (C corp) requirements, Benefit Corporations are able to have the economic benefits that corporate status confers, with a firm emphasis on value creation – Human, ecological, as well as economic. Crucially, this is the case even in liquidity scenarios. In these instances,  conventional corporations must either take the highest offer no matter the other implications, or it’s legally ambiguous whether it’s ok for them to act on broader considerations.

The key to making this stick beyond the green choir is for it to have practical, direct, clearly tangible financial benefits for those that choose the Benefit Corporation route.

Global Contribution Corporation is not one, but four brands, and is open to others being a part of it. What will they be doing? GCC’s site says it,

…will work with governments, entrepreneurs and organizations across the globe to incubate local communities of enterprise and innovation connected through breathtaking virtual and physical spaces.

And that translates as?

Zanby, as Leif Utne demonstrated to me last week, makes groups of groups, empowering them to do more together. So, rather than several groups that duplicate/overlap each other operating in silos, they are able to pool their resources, communities and ideas, while maintaining their individual identities. Think of it as Meetup, minus the limitations and separation, plus much more capabilities to create exactly the online community environment you wish. Suitable for everybody from cause organizations to city governments to companies.

Warecorp is a software firm based both in the US and Eastern Europe that practices “Rightsourcing.” It’s “a distinctive combination of insourcing and outsourcing to help clients solve their business problems and achieve real measurable results in a cost effective manner.” This means Warecorp both create custom software and take care of routine maintenance and development tasks, thus allowing companies to focus their time and resources on other, higher impact areas.

The Uptake is “Citizen fueled news,” where a mix of trained amateurs and professional journalists work in tandem to cover a range of political news, and has thus far gotten numerous awards for its efforts.

CoCo is a coworking space based in St. Paul, Minnesota. Judging by its active and well followed Twitter account and frequent events at the space itself, they’re on to something that fits these times that demand creative rethinking of what and how work happens.

Will filing as a Benefit Corporation spread into the mainstream of business? With a society that is weary and increasingly distrustful of big business, you can bet it’s going to get a lot more consideration than it may have.

Readers: Your thoughts on Benefit Corporation vs. C Corp? What needs to happen for it to be embraced by a wide swath of businesses?

Paul Smith is a sustainable business innovator, the founder of GreenSmith Consulting, and has an MBA in Sustainable Management from Presidio Graduate School in San Francisco. He creates interest in, conversations about, and business for green (and greening) companies, via social media marketing.


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  • http://www.ascensuslaw.com Jon Widrick

    Good article. Important to bring attention to the benefit corp. Would just like to point out one thing. Regarding liquidation scenarios, many states (including Maryland) already have “other constituency” statutes that explicitly allow (and even sometimes REQUIRES) them to consider factors and stakeholders other than shareholder value maximization. These statutes were popular in the wake of the hostile corporate takeovers in the 80s.

    Often times the biggest problem with these is that they are explicitly LIMITED to mergers, sales or liquidations of the company, begging the question of whether or not, in the absence of other statutory authority, Directors can consider these other stakeholders outside of this context. The MD benefit corp law effectively answers this question for those that take advantage of it.

  • Steve Cohn

    There have been companies for quite some time that have been attempting to bring “social good” into the business place for some time.
    I have been doing business with the Credo Corp. for years. Not only do they devote a fair fraction of income to helping NGOs, needy causes, etc. but they ask their clients for input, treat all workers in an ethical manner and participate in many petition drives.
    I think that contacting such places and having dialogs with them would be fruitfull for everyone involved.