Campbell Soup Company brand Plum Organics, Ecover’s US home goods company Method and fair trade food business Alter Eco were among the first 17 companies to register as benefit corporations since Delaware passed a law to give businesses greater freedom to pursue social and environmental objectives.
Other companies to register as benefit corporations in Delaware include online personal delivery farmer’s market Farmigo, paper company New Leaf, Grassroots Capital Management, Profile Health Systems, Plexx, RSF Capital Management and VenturePilot. SustainAbility, Honest Company, Good Inc. and Performance Management Institute have committed to registering as benefit corporations in the coming year.
Current Delaware law requires corporations to prioritize the financial interests of shareholders over the interests of workers, communities and the environment. The state’s new benefit corporation law allows investors, entrepreneurs and consumers the ability to build, finance and patronize for-profit businesses that pledge, as part of their corporate structure, to operate in a socially and environmentally responsible manner.
B Lab, a non-profit behind the new category, is responsible for certifying benefit corporations. Such certified entities are called “B Corporations” or “B Corps.” Farmigo, AlterEco, New Leaf Paper, Method and Plum Organics are certified B Corps, according to B Labs website.
Delaware is the 19th state, plus the District of Columbia, to enact benefit corporation legislation. However, its adoption is important because the state is the legal home to the majority of publicly traded companies, numerous venture-backed businesses and nearly two-thirds of the Fortune 500 companies.
In other states where legislation has passed, benefit corporations are required to publicly report annually on its overall social and environmental performance using a comprehensive, credible, independent and transparent third party standard. Delaware’s new statute doesn’t require use of a third party. Benefit corporations in Delaware will only have to report to shareholders, not the general public.
An increasing number of municipal and state governments have addressed benefit corporations through legislation and tax incentive programs. Philadelphia was among the first cities in the US to provide a pilot tax incentive for certified benefit corporations.
In California, Gov. Jerry Brown signed two bills into law in 2011 to give businesses greater freedom to pursue social and environmental objectives. From January 2012, when the law went into effect, until November 2012, about 75 companies in the state registered as benefit or flexible-purpose corporations.
Last year, legal experts at a National Association of State Charity Officials conference pressed California regulators to provide more oversight of these companies.