Companies looking to pursue something other than the bottom line will soon have another option in New York State. Legislation creating benefit corporations was passed by the State Legislature on June 17 and is awaiting Gov. Andrew M. Cuomo's expected signature.
Benefit corporations must focus on some public benefit, rather than entirely on profits, as current corporations are required to do, said Heather Van Dusen from B Lab, a group that works to solve social and environmental problems through business. She spoke Tuesday at a panel for the Partnership for the Public Good in Buffalo.
"The current corporate structures in America don't work for the kind of economy that we need to move towards," Van Dusen said. "Current corporate law doesn't allow for companies to push for [public benefits]. It really restricts them, and it puts them in this pigeonhole that says they have to be focused on the bottom line Companies across the country don't want that."
The concept of a benefit corporation is still being defined, Van Dusen said. The pending law requires the company to be audited by a third party to ensure it is pursuing its goals. Warren Embildge Jr., president of McCullagh Coffee, likened this to having an auditor review a company's finances.
"We believe in third-party certification because there is so much green-washing going on these days," Embildge said, refering to companies overstating their environmental efforts.
Existing businesses could become benefit corporations through shareholder votes. New businesses will be able to incorporate as benefit corporations.
There are currently no tax incentives for a benefit corporation, but the status provides legal protection for the company and its board to pursue a public benefit, Van Dusen said.
New York is the fifth state to pass this sort of legislation, following Maryland, New Jersey, Vermont and Virginia.
Kelly Maurer, a board member of the Buffalo Federal Credit Union, said benefit corporations could help the local economy, stabilize employment and decrease pollution.
"You have to do something useful, not just make money," Maurer said. "The actual act of your business will be meaningful."
Many local co-ops, credit unions and other small businesses would qualify and have expressed interest in the program, said Sarah Bishop, executive director of Buffalo First, an organization that works to build a local green economy.
The Lexington Co-op walks the fine line of meeting customer needs and trying to provide a common good, said manager Tim Bartlett. The co-op has to report its actions to the board of directors. Like a benefit corporation, it can be held accountable for nonfinancial objectives.
The benefit corporation status will help companies like the Lexington Co-op and McCullagh Coffee stay true to their goals, Van Dusen said.
"It will make it easier for companies that are already doing this to run their companies and to grow their companies without worrying about losing their mission," she said.