Organization

What are Benefit Corporations and are they destined to be a small niche or can B-Corps emerge as significant alternatives to limited Liability joint stock companies?

A Benefit Corporation is a new class of corporation that voluntarily meets higher standards of corporate purpose, accountability, and transparency. Benefit Corporations have a corporate purpose to create a material positive impact on society and the environment; are required to consider the impact of their decisions not only on shareholders but also on workers, community, and the environment; and are required to make available to the public an annual benefit report that assesses their overall social and environmental performance against a third party standard (benefitcorp.net). Today, even though some business are putting into practice this new way of corporate structure it, only suits a small niche of them. The Benefit Corporation contract gives managers wide discretion at the cost of shareholders and creates the legal framework for firms to remain true to their social goals (benefitcor.net). However, knowing that, companies will not be hundred percent willing to voluntarily embrace such a structure. Like Milton Friedman, numerous companies are growing with the idea that managers primarily duty is to act in the best interest of shareholders. Despite the fact that Ben and Jerry’s was a social responsible organization with a corporate purpose to create a positive impact on society, there is no guarantee that the new owner Unilever will continue to do so. Another problem why Benefit Corporation are destined to be a small niche is because their legislation requires organizations to be reviewed by a third party to verify if businesses meet standards established. This radical transformation is not well received by many organizations because it is not only expensive but also when making decision companies would be obligated to consider both shareholders and stakeholders which appear as constraints that...