New Hampshire Passes Benefit Corporation Legislation
It's official! This month, New Hampshire joins 25 other states and the District of Columbia that have already passed Benefit Corporation Legislation. NH businesses now have the option to register their business as a benefit corporation... but if you're anything like me you might be wondering: what exactly does this mean?
In short, it is a legal framework for a for-profit company seeking to do the right thing in the world. The business still pays taxes, but corporate purpose, accountability, and transparency requirements are added. When a business registers as a benefit corporation it is legally required to leave a positive impact on society and the environment.
This just in: we can use business for good again.
It may seem kind of strange to most of us, but using business to solve social problems has legal challenges. Current law requires corporations to prioritize the financial interests of shareholders over the interests of workers, communities, and the environment. It’s been this way for nearly 100 years, dating all the way back to Dodge v. Ford when the court ruled that the sole purpose of a corporation is to make a profit for the shareholders. Period. Meaning that if a business wanted to do anything that took away from shareholder’s profit – for example: support a charity, or invest in renewable energy – they could be subject to litigation by their shareholders. Yep, the shareholders could actually sue the directors for doing good things. Another example: if the business was being sold they’d be required to sell to the highest bidder, thereby maximizing their shareholder’s profit. But what if the business leader wanted to sell to a lower bidder that promised not to move all manufacturing overseas?
Traditionally a company’s directors are required to make decisions that are in the best interest of the corporation. Under benefit corporation legislation, directors have the freedom to take into account non-financial interests that are in the best interests of the corporation. And they can do so without fear of litigation.
As you can imagine this is a pretty complicated issue, and the above is a pretty simplified explanation. The language around benefit corporation legislation, like most legalese, is the stuff of sleeping pills. So why is Badger so excited about it? We believe that benefit corporation legislation and Certified B Corporations are making the world, and business, a better place. New Hampshire is the 27th state to enact benefit corporation legislation and this new law creates the legal framework for mission-driven companies, like Badger, to incorporate their commitment to bettering their communities and the environment as a part of their business model. Badger played an integral role alongside NH Senator Molly Kelly and others in getting the bill passed, and we're proud to have registered today as one of the first benefit corporations in New Hampshire!
"I was honored to have sponsored the new Benefit Corporation Law and to have worked with W.S. Badger,” said Senator Molly Kelly “The new benefit corporation law allows our NH businesses to compete, attract talent, market what they do best to investors and customers, and create jobs. I am so proud that W.S. Badger will be the first to take advantage of this new law, which allows them to have a broader impact benefiting our environment and our community.”
If you are here reading the Badger Blog, you likely care about the world around you and making it a better place. Chances are you might be interested in supporting B Corporations and benefit corporation legislation!
Companies don’t care about you… or do they?
How many times have you felt as though companies don’t care about you? Don’t care about the planet? I know I’ve felt that way, even while reading statements to the contrary. Benefit corporations and Certified B Corporations consider the interests of their stakeholders, not just shareholders. Stakeholders are employees, suppliers, community, and customers. So these companies actually do care about you, and their voluntary involvement in the “B” movement give you a tool to identify and support them. This is especially important nowadays when “being green” has become more of a marketing angle than a mandate. I don't know about you, but I choose to support companies that care about the greater good. It fuels my work here at Badger, as well as my purchasing decisions.
Benefit corporation legislation gives businesses, like Badger, the ability to use our business to help solve social and environmental issues. It gives us the freedom to #BtheChange we seek in business and the world — and the ability to pursue both profit and mission, as opposed to profit being the mission
"This is an exciting time for New Hampshire businesses that believe in making a positive impact on society and the environment, as well as a profit,” said Jay Coen Gilbert, CoFounder of B Lab. “Badger‘s initiative and leadership helps pave the way for other purpose-driven NH companies to use their business as a force for good.”
Ready to learn more?
There are over 1400 registered benefit corporations. You can search them here. This site also has all of the ins-and-outs of the legislation, as well as frequently asked questions.
Being a Certified B Corporation, which is a certification conferred by the nonprofit B Lab, means a business meets a high standard of overall social and environmental performance. It's not the same as benefit corporation legislation, because it's a certification as opposed to a legal status - but the impetus is the same: business as a force for good. Visit their website to find out if your favorite business is a B Corporation as well as other ways you can get involved in the movement.
Watch the B the Change anthem: