Benefit Corporations Gain Recognition viaTompkins Weekly

from Tompkins Weekly, Vol. 5, No. 27. July 11-17, 2011

There is a new form of corporate organization taking root across America: the Benefit Corporation, or B Corp. B Corps are similar to existing C Corp or S Corp businesses, but they have legal responsibility to not just shareholders, but also to employees, consumers, the environment and the community.

As Wikipedia explains, “A Benefit Corporation's charter of incorporation legally requires the company to adhere to socially-beneficial practices, such as protecting the environment or preserving employee benefits. The [B Corporation] movement to legally define socially beneficial corporations has grown out of the larger investment industry trend toward socially responsible investing.”

This June saw two noteworthy advancements for this movement, one at the New York State level, and the other here in Tompkins County. Legislation allowing for Benefit Corporations in New York State passed the state Senate on June 16 and the Assembly on June 17. Both bills passed unanimously, and the legislation has been sent to Gov. Andrew Cuomo.

Assembly Speaker Sheldon Silver stated, “This legislation demonstrates that profit and social responsibility are not mutually exclusive and that socially and environmentally-friendly business practices can enhance a company’s strength and profitability."

To become a B Corp, a company must pass third-party certification, and must “pursue a general public benefit, defined as a positive material impact on society and the environment,” according to an Assembly press release. Only four other states have recognized Benefit Corporations: Maryland, New Jersey, Vermont and Virginia.

Locally there was a gathering in Ithaca on June 29 at Comet Skateboard’s new store on the Commons, where about 40 people from local businesses heard presentations from B Lab, a nonprofit organization based near Philadelphia that is dedicated to certifying B Corps, and from Singlebrook Technology, a web development firm located in Ithaca that is a Certified B Corp.

Heather Van Dusen works with B Lab in certification and community development, and she explained how B Lab was launched. “B Lab started in 2006 to create a corporate certification so that consumers, investors and policy makers would be able to tell the difference between a good company and good marketing,” she explained. “The two requirements to become a B Corp is to take and pass the B Impact Assessment, which takes into account your impact across all of your stake holders; and then to take the legal step to put into your legal DNA a commitment to consider your stakeholders as well as your shareholders.”

There are now more than 400 B Corps across 54 industries, representing an almost $2 billion marketplace. Some of the better known companies include King Arthur Flour, 7th Generation, Method and Dansko.

Nathan Gilbert is a program associate with B Lab, and he was impressed with the turnout for the Ithaca presentation. “There is already so much business activity in Ithaca that is happening in this space. We look forward to building partnerships with various associations and companies to strengthen the B Corp community in Ithaca and build a better, more sustainable local economy,” he said.

Heather Filiberto is director of economic development services for Tompkins County Area Development (TCAD). According to its website, TCAD i s “focused on building a thriving and sustainable economy that improves the quality of life in Tompkins County by fostering the growth of business and employment.” Filiberto attended the presentation, and thinks there could be a lot of early B Corp adopters in Ithaca.

“The B Corp movement is a great way to provide legitimacy for triple bottom line companies with its independent social and environmental performance standards,” she said.

Leon Miller-Out is president and C.T.O. of Singlebrook Technology, a company that has been certified as a B Corp since 2009. He thinks that “Benefit Corporations are the embodiment of sustainable capitalism, and represent the most promising vision I've seen for what a healthy economy could look like. This movement couples the power of deeply-rooted American-style capitalism with a holistic worldview. This new ‘capitalism with a conscience’ has the potential to fix many of our biggest problems, including environmental degradation, widespread poverty, our massive-and-growing wealth and income gaps, and maybe even global warming.”

Elisa Miller-Out, C.E.O. of Singlebrook Technology, noted that, “There are several bottom line benefits to being a B Corp. We get tremendous savings from service partners who offer discounts to the B Corp community including QuickBooks, Salesforce, iContact and many more. Our clients appreciate the transparency and rigorous commitment to values that the B Corp certification stands for.”

When asked about the certification process, Elisa said, “I really enjoyed the process of becoming certified, because it gave me so many great ideas about ways to improve our company and our impact.”

With passage of the New York State legislation, Elisa hopes Singlebrook can be the first Benefit Corporation in the state. “This landmark legislation puts New York State on the cutting edge of a new movement of companies using the power of business to solve social and environmental problems. It's a whole new approach to capitalism that truly recognizes the triple bottom line of people, planet and profits,” she said.