"I found that my interests in law, business, and community overlap, because corporations influence the lives of millions of people ... Executives need to be concerned not only with profits, but also with childcare, education, drug abuse, and other social issues that have traditionally faced our elected politicians. I view the interaction of law and the business world on these issues as a unique challenge and an opportunity to contribute to society. It is for this reason that I want to attend law school."
— Bonnie J. Host Law School Application Essay, 1988
The business landscape in the United States of America has begun to shift away from a model in which corporate executives and directors worry only about shareholder profits. It is moving toward a model in which executives are expected to measure the impact of their business decisions on other stakeholders as well, including employees, the community, the environment, customers, and other stakeholders.
The traditional C Corporation structure, often bound by the fiduciary duty to maximize value for shareholders, too often results in executives choosing short term shareholder profits over better long term choices. Constituency statutes were passed in some states, allowing executives and directors to incorporate other factors into their business decisions. These statutes, however, are largely permissive, not obligatory. In addition to constituency statutes, laws have been passed in about two-thirds of the States in the USA to provide an alternative to the C Corporation structure. These laws created a new corporate form called the "Benefit Corporation." The Benefit Corporation laws create legal protection for executives and directors to take legitimate social purposes, known as social "benefits," into account when making business decisions. This new corporate form better balances the drive for shareholder profits with the modern drive to harness the power of the corporate form to do some good in the world.
Today, more and more people are seeking to invest in, work for, and buy from socially responsible business organizations. People care about what products a company places into the stream of commerce. People care about how a company treats its employees. People care about a company's environmental record and the way in which a company interacts with its community. Corporate impact principles are permeating all aspects of business, even amongst the more traditional corporate forms, such as the C Corporations. More and more investors consciously put their money into companies doing some good in the world, not just earning a competitive rate of return.
There are many overlapping terms and measurement tools for corporate impact, including Environmental, Social, and Governance (ESG), Corporate Social Responsibility (CSR), Impact Investing, Socially Responsible Investing (SRI), Double and Triple Bottom Line Accounting, Sustainable Accounting Standards, and GIIRS to name a few. The truth is that entrepreneurs are spending more time thinking about ways to harness the corporate form to make a positive impact as well as a competitive rate of return.
Host Law Firm PLLC offers the following flat-rate legal services for benefit corporations and socially-minded corporations:
Host Law Firm PLLC offers the following hourly legal services related to benefit corporations and socially-minded corporations:
To discuss how Host Law Firm can help your organization with business-related legal work and to benefit from social responsibility principles, contact the Firm.
To learn more about Benefit Corporation law, read the Firm's Primer on Benefit Corporation Law.