By Cory Doctorow at 9:49 am Mon, Oct 22, 2012
This is great news and a BIG DEAL. One of the excuses that companies give all the time for their horrendous behavior is, “We have to increase shareholder value.” And if they don’t do the things that wall street wants they are punished. And Wall Street wants constant growth each quarter at the expense of everything else. So becoming a B corp can give the people running the company another reason to do something that Wall Street doesn’t like, long term plans that can be good for the company and good for society.
Of course Wall Street will want to discourage companies from doing this, expect stories from the media explaining why this will be bad for their business and doomed to fail.
Is it just me or is it crazy that we have gotten so bad that it is actually illegal for companies to act for the social good in favor of profits? Here’s to small step in a more sane direction. Hopefully it will catch on. Your move “don’t be evil” Google…
It’s not illegal, it’s just against policy and conventional wisdom. This is a policy step in another direction.
Actually, corporations have a single legal mandate – maximize shareholder value. This, of course, allows little to no room for morals, values or good citizenship.
Well, ACTUALLY, I would argue that “maximize shareholder value” is a meaningless statement & that an rational argument to the tune of “well we don’t pollute the environment as much because we think that if climate change brings our civilization into a new dark age it will really bottom out profits” or “we don’t act like tremendous jerks to our employees because we think happy enfranchised workers produce the best long term results” or whatever would really show that you don’t NEED a special classification to do social good.
BUT you know, I’m all for this anyhow, good for them.
In addition to Ben & Jerry’s, I’d love to see a list of socially and environmentally responsible, politically progressive corporations, so they can have my business more often.
There’s several ubiquitous businesses I actively avoid (Wal-Mart, for example), there’s others I’d like to seek out. In my own small world, push back the status quo of predatory humongous-business capitalism.
Since you raised the question, is “shareholder value” a legally-defined term?
As I understand it, that was kind of made up by a business school prof (econ?). As a legal mater, the purposes of a corporation are what ever their charter says they are, if undefined, sure, maximize “value” for the shareholders.
Personally, I’d keep anything I founded (hah) private, or plan to walk away quickly once it went public.
To be more specific we’re talking about corporations–not companies. Corporations can be formed for many purposes. The purposes are stated in the corporate charter when the corporation is created. States divide them up into for-profit and not-for-profit corporations. Not-for-profit corporations are required by law to manage finances so that income and expenses match as closely as possible. The managers of for-profit corporations have a legal obligation to shareholders to manage the corporation so as to maximize profits within the constraints of the corporations stated purpose and the limitations set by the shareholders. The shareholders can decide if they want to forsake some profits for the public good. The managers cannot do this except when instructed by the shareholders.
There are some mutual fund corporations whose charters impose public good constraints on the managers actions such as investing only in green technology or investing only in businesses which do not produce war materials.
A “B”corporation is what we used to call a Corporation.
Expect such businesses and firms to take hits from rating agencies.
Well, hits along the single-axis upon which businesses are rated, but this throws a little wrench into the operation by introducing an alternate axis.
For anyone interested in the social benefits brought on by ice cream – consider The Stamp Stampede, a Ben Cohen initiative to stamp money (aka, paper currency) with messages calling for a constitutional amendment to get money out of politics.
This Wednesday, there will be a big demonstration of this concept at Union Square in New York, from 9am – 9pm.
And yes – there WILL BE FREE ICE CREAM for all.
(This is a nonprofit initiative, and not a project of Ben and Jerry’s, the company. But they are helping us out where possible!)
Here is a link to the FB event page so folks can get all the deetz and show up.
Bets on how long the crafty accountants at certain corporations find a way to use this to siphon money somewhere other than “social good”.
Corporations should be REQUIRED to do this!
Anyone else getting a “Content Encoding Error” message when trying the link (http://www.fastcoexist.com/1680771/ben-and-jerry-s-becomes-a-b-corporation?utm_source=twitterfeed&utm_medium=twitter )? Perhaps it’s just my day for encoding errors….
The first social good to consider would be to lower the outrageous prices they charge for their products in China.
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