February 27th, 2012 by B Corporation
A Benefit Corporation, a new kind of corporation, became available in New York State on 10 February 2012.
The benefit corporation passed both houses unanimously and was signed into law by New York State Governor Cuomo.
This law has the ability to transform the New York State and US national economy by creating businesses that must create benefit for society and the environment in addition to profit.
Thirteen businesses from across New York State rushed to adopt the new corporate form as they build a new economy.
One company even left the State of Delaware and incorporated in New York State to take advantage of this innovative corporate form. Currently seven states, including New York, have enacted benefit corporation laws.
“The creation of benefit corporations in New York is a testament to the strength of this global movement to redefine success in business” said Andrew Kassoy, Co-Founder of B Lab, a non-profit organization that supported the legislation.
“Now interested investors in New York have a way to make sure their money is doing much more than just making a profit.”
Benefit corporations are a new kind of corporation legally required to:
Traditional corporate law requires corporations to prioritize the financial interests of shareholders over the interests of workers, communities, and the environment.
“This legislation is a validation of the double-bottom line mission that Greyston Bakery has championed for the past 30 years and we are proud to be a part of business history in the State of New York as one of the state’s first Benefit Corporations” said Mike Brady, President of Greyston Bakery, New York State’s first benefit corporation.
Investors are also interested in the new law.
“We like to back entrepreneurs who have embraced solving social problems as part of the goals for their companies,” said Albert Wenger, Partner at Union Square Ventures, an investor in innovative internet businesses like Twitter, Etsy, Edmodo, and Tumblr.
“We believe this creates more long term value for both shareholders and society.
The Benefit Corporation legal structure is an important innovation to help maintain that dual focus as the companies scale.”
The US States of California, New Jersey, Virginia, and Hawaii passed similar legislation in 2011, joining Vermont and Maryland who did so in 2010.
Benefit corporation legislation has also been introduced in Michigan, Pennsylvania, North Carolina, Illinois and the District of Columbia. The legislation has enjoyed strong bi-partisan (Republican and Democrat) support in every US state.
“Benefit corporations will bring new businesses into our market and unlock billions in investments, all while promoting a new socially-minded approach to entrepreneurship,” said New York State Senator Daniel Squadron
This is an important development “for all who believe that profitable business and social responsibility can be inextricably connected. I look forward to welcoming many new benefit corps to New York in the coming weeks and months.”
“Businesses in New York State are now empowered to embrace social responsibility and to pursue vital goals such as safeguarding workers’ rights and protecting our environment as part of their core mission. By enabling benefit corporations in New York, we are continuing our efforts to strengthen and diversify our economy while demonstrating that profit and the pursuit of social justice are not mutually exclusive,” said Assembly Speaker Sheldon Silver, one of the Prime Sponsors of the Legislation.
“This new option allows our businesses to stay competitive while promoting best-practices that are good for both the environment and society,” said New York State Senator Bill Larkin, a Co-Sponsor of the bill.
“New York State Governor Cuomo has opened New York State for business while reinvigorating our tradition as the USA’s progressive leader. By combining these key objectives, benefit corporations allow New York State businesses to pursue goals beyond the bottom line while promoting continued investment and development in our state,” New York Secretary of State Cesar Perales said.
The New York bill had significant business support, including companies such as Eileen Fisher; Greyston Bakery, Icestone and Uncommon Goods, all interested in creating better choices for the growing number of entrepreneurs and investors who seek to create businesses that create both social and shareholder value.
“The passage of Benefit Corporation legislation is an important and much needed step forward to grow our New York State economy,” said David Levine, co-founder of the American Sustainable Business Council whose members’ organizations represent over 100,000 businesses.
“New York State is helping to lead the way with an innovative and sustainable business strategy that will grow businesses and create jobs which will also provide social and environmental benefit.”
Visit the Benefit Corp Information Center for additional background on benefit corporations, including US national and local legislative updates.
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