Saving Capitalisim: The Concept of the B Corporation
Did you know that corporations are legally prevented from being decent and humane? Say a corporate leader discovers that he can make a higher profit by moving a factory to China and throwing thousands of Americans out of their jobs. If he decides to make profits secondary to the well-being of his workers and neighbors, his stockholders can sue him. That's because corporate laws are written so that a company's "fiduciary responsibility" is to the stockholders. Nothing else matters. If the choice was between the survival of the corporation and the survival of America itself, the law would compel him to pick the corporation.
As a college student, Jay Cohen Gilbet founded a very successful apparel company And One. When he sold it 13 years later, the company was worth 250 million dollars. He and his partners were trying to come up with an answer to what's next. Seeking to find a way for corporations to act socially responsible and to consider the needs of employees and other considerations outside the stockholder only requirements of traditional corporations. Hence the idea of the B (benefit) corporations. The concept requires corporations to voluntarily change their by-laws to include considerations of the environment, the employees well being, and a host of other socially responsible endeavors measured by a list of criteria. Apparently the concept is gaining some traction. Since founding B Lab in 2007, Gilbert and his partners has signed up over 300 companies that agree with the B Corp concept. While not legally recognized by federal law, the state of Maryland has passed legislation giving B Corporations state legal status and plans are underway in other states to follow suit.
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New York, United States