B Corporations and the future of business

In one of those coincidences that makes a great excuse for a blog entry, I have twice in less than a week read about an interesting new kind of corporation, designed to make business more environmentally aware.

The first mention was in Daniel Pink’s Drive, where the author describes the B Corporation, along with L3Cs (low-profit limited liability corporations) and the “social businesses” of Muhammad Yunus, as structures that serve a larger social mission than making money.

Then this story on Treehugger caught my attention, as my favorite company, Patagonia, filed in California as a B corporation.

Corporations, it has been often argued, have no business performing charitable acts. Their duty – moral as well as financial – is to maximize profits for their shareholders, not to do good deeds, even if those acts enhance their images.

As the website bcorporation.net states,

  1. Current corporate law makes it difficult for businesses to take employee, community, and environmental interests into consideration when making decisions  
  2. The lack of transparent standards makes it difficult to tell the difference between a ‘good company’ and just good marketing 

 That’s where the B corporation comes in. By stipulating “comprehensive and transparent social and environmental performance standards” and “higher legal accountability standards,” B corporations replace profit-maximization with a combination of profit and social benefit.

 An intriguing idea for the new economy.