Friday, September 6, 2013

It's Time for Sustainability to Reach Critical Mass - Benefit Corporations Can Help

(Authored by Reese Nank, APR, Vice Chair of the BCSI, Inc. Board of Directors)

Since the end of the 1960s, when the Ecology movement emerged, the U.S. has cyclically supported then abandoned the ideologies and attitudes of socially conscious living.  Beginning with planetary conservation efforts such as limiting nuclear proliferation, acid rain and deforestation and moving into the broader and less activist umbrella of corporate social responsibility, sustainability has contained as broad a range of topics as it has had levels of support over the last half century.

Finally, in the past few years, an official avenue for businesses committed to sustainable practices has been created in the form of Benefit Corporation legislation (18 states and counting in the U.S.).  Notably, there also are a few other countries with significant efforts in this regard (i.e., U.K., Canada, Australia) and some of these have been consistently active. We at BCSI are optimistic that a real global movement is building and this time will have staying power.

We wholeheartedly support this forward thinking and holistic legislative approach, but the standards for evaluating the performance of these new entities do yet not exist.  To escape judging B-corps by Wall Street standards or by the characteristics of a true non-profit, BCSI is taking on the scrupulous task of creating and establishing appropriate, reasonable and meaningful standards for these businesses.

We invite you will join in our effort to create structure for these brave new businesses.

BCSI’s mission statement is to fundamentally transform how marketplace performance is measured and perceived by business, consumers and investors.  We recognize this is a big, hairy, audacious goal. Content today with applying this mission to all those who venture into the B-corporation arena, our belief is that a new economy will grow and thrive when looking out for the whole of society is an equally compelling business goal vis-a-vis capitalist profit. So, we encourage all businesses to take a cue from B-corps and adopt sustainability standards – ours or their own.

Our hope is that now, unlike efforts in the past, a groundswell of support for B-corps and all that they stand for, will achieve the critical mass necessary for true and lasting change. We believe there is a better way to do business and a better way to measure success.  Isn’t it time the needs of the many truly outweighed the needs of the few?

Thursday, July 11, 2013

Benefit Corporations, Social Enterprise and our BCSI Global Advisory Network

(Authored by John Dane, CAE, Chair, BCSI Global Advisory Network)

The explosive growth in state benefit corporation laws in the past two years is one of the most progressive business trends in the United States.  In late June 2013, eighteen states, including the District of Columbia have passed laws regarding the establishment and operation of benefit corporations. A Governor's signature is due soon on a Delaware benefit corporation law, significant not because of the state's size (it's very small), but rather because two-thirds of Fortune 500 firms are incorporated in Delaware.

Moreover, Washington State has enacted "social purpose corporation" legislation and, in Canada, British Columbia enacted "community contribution companies" legislation and Nova Scotia followed enacting "community interest companies" legislation.

So clearly, these states and provinces are "ahead of the game" and can serve as examples for other states, provinces and countries seeking progressive, cutting-edge business innovation ideas, right?

Well, not exactly.

It turns out that our benefit corporation movement in the United States and Canada has its roots in "community interest company" legislation passed in the United Kingdom in 2005.  Closely allied to that legislation has been a recent and broader international movement to create new social enterprise organizations, promote social entrepreneurship and advance socially responsible investing.

These social enterprise organizations are amazingly diverse and active as economic change agents in their respective countries.  For example:

  • Social Enterprise United Kingdom is sponsoring an already sold-out political summit, is promoting a tax relief initiative for social enterprises and is seeking to broaden coverage of social entrepreneurs on British Broadcasting Corporation shows like "The Apprentice."
  • Social Enterprise Scotland (SES) recently sponsored what they term "the world's largest social enterprise event."  SES has an ongoing interest in reforming public procurement to include social entrepreneurship goods and services.  Their "Just Enterprise" initiative is a "one-stop" for business support.
  • Social Entrepreneurs Ireland (SEI) uses the brand "Think big. Act now.  Change Ireland."  SEI supports a variety of entrepreneurial progams including a Minnovation Fund to provide seed capital for high potential business startups.
  • Social Venture Australia has a strong focus on non-profit sustainability. SVA runs a School for Social Entrepreneurs and recently raised $7 million in private capital for a social benefit bond.
These social enterprise organizations promote social entrepreneurship and smaller scale business investments and are laboratories for innovation and change.  Their approaches can serve, selectively, as examples for benefit corporations as leaders seek to identify high priority missions.

We are pleased that our international BCSI Board of Directors has a growing Global Advisors Network that has representatives connected closely with social enterprise organizations from the United Kingdom, separately from Scotland and from Australia.  Combined with our Canadian and United States advisors, the BCSI Board of Directors is developing a deep reservoir of talent that can provide a global (and local) perspective on the future opportunities for social entrepreneurship and for rapidly emerging benefit corporations.

For more information and to get involved, please visit our website!  We would love to hear from you!

Friday, June 14, 2013

The Rise of Benefit Corporations

(Authored by Michael Lee, CEO of the ATM Industry Association ( and author of "Knowing the Future - The Startling Case for Futurology")

As a futurist and head of a global non-profit trade association for the 2.4 million strong ATM industry, I urge business leaders to consider becoming Benefit Corporation Champions, embracing a new, more gratifying way of conducting business by being of benefit to society and the environment while succeeding in business. Consider evolving, along with a growing number of business and social leaders, into a benefit business.

A new paradigm for business, one focused more on defining how to bring broader benefits to society, has become desirable following the self-evident failures of governance which led to the 2008 global credit crisis and subsequent economic crash and slow-down.  In addition, climate change, along with the extreme and damaging weather it's increasingly bringing, requires public leaders to consider the environmental impacts of industry.  Everyone loses if we tip over into irreversible ecological decline.

Even if there had been no global economic crisis and even if climate change did not exist, it would still be true that it is ultimately people who make the world of business go around.  They are the customers, employees and employers.  Being people-friendly is good for the sustainability and governance of business.

Our world has a crying need today for more companies to become benefit businesses.

But just what is a benefit corporation? It's a simple but grand idea that I, for one, would like to champion, along with my esteemed colleagues at the Benefit Corporation Standards Institute (BCSI) -  To this point, fifteen states and the District of Columbia have passed benefit corporation legislation in the United States alone.

It all starts with one powerful word: benefit.  Benefit means gaining an advantage or profit from doing something well which brings good to the world, however humble.   The Latin word benefactum means to do good, from bene, meaning "well" or "good." The adjective "beneficial" refers to an action which results in favorable, or advantageous, conditions.

Specifically, we are talking about businesses upping the ante when it comes to recognizing their social, economic and environmental responsibilities.  When last did you or I do something good for our world, whether for our community, our wider society, our economy or our environment? A benefit business believes that the whole is always greater than the sum of its parts, that we are all part of an interlocking world with many ecosystems which provide the resources and power we need to conduct business in the first place.

At BCSI, our mission, in the light of wanting businesses to be beneficial, is straightforward: to fundamentally transform how marketplace performance is measured and perceived by businesses, consumers and investors.

To do that, we set credible, meaningful standards for the rising number of benefit corporations we would like to publicly recognize and endorse.

If you are in business, BCSI believes our standards, embodying this triple responsibility to society, the economy and the environment, will empower you to prioritize sustainable policies and decision-making for today's complex, globalized and rapidly evolving society.

To get started on your journey to become a benefit corporation champion, first read our Core Principles.  If you identify with them, as I'm sure you will, get in touch with us.  It's a journey we all need to travel together.

Becoming a benefit business is literally a world-changing idea.

Wednesday, October 31, 2012

Pennsylvania Authorizes Benefit Corporations

We have great news to report!

Pennsylvania has become the 12th state in the nation to pass and sign legislation allowing for-profit businesses to select the "benefit corporation" designation.  Here is a link to the bill.

Associations in Pennsylvania should be paying close attention to the advent of benefit corporations in their state.  This new designation may give your members added flexibility in their business practices as well as the ability to differentiate themselves in the marketplace.

This bill contains restrictions on the ability of associations to set standards for benefit corporations much like the other bills in California, New York, etc.  However, the Benefit Corporation Standards Institute, Inc., (BCSI) has a cross-functional platform built for you to positively engage in the important work of setting standards without running afoul of those restrictions.

As always, we are compelled to remind everyone that Benefit Corporations are legal designations administered by the states they operate in.  The entity that is sponsoring the legislation does have a certification program that they run, but that certification is not a requirement for operating as a benefit corporation.  Selecting solid, credible and meaningful standards to abide by and then providing an annual report as to how you did in meeting those standards is. Our mission is to develop those standards and freely and openly publish them for businesses and consumers alike.

Please stay tuned as we continue to move forward with this important work.

Friday, August 3, 2012

Benefit Corporations Signed Into Law in Illinois

Today we got the word that legislation authorizing the formation of benefit corporations has been signed into law in Illinois.  Illinois now joins California,HawaiiLouisianaMarylandNew Jersey, New York, South CarolinaVermont, and Virginia.

In other news, our Board of Directors just met this past week and we are getting ready to adopt the BCSI Core Principles that will be the foundation for all of our activities. These principles will also serve as a guiding road-map for each of the third-party standards we are developing for benefit corporations to use in their respective states.  As soon as the Core Principles are ready to go, we will be sure to publish here.

The discussion in the 501(c)(3) and 501(c)(6) community continues to ramp up and we are excited to see some of the pieces coming together in terms of building bridges between each sector of the economy.  We are taking a systems thinking approach to our activities and developing specific ways to build collaborative opportunities between our home sector (the third sector) and the new fourth sector.

Stay tuned for more developments!

Wednesday, July 11, 2012

Benefit Corporation Standards Institute - Announcing New Board Members

We have not been blogging as much as we would like to but we expect that to change very shortly as we continue to ramp our operations up.

In addition to the promotional work we have been doing, we are proud to announce that our Board of Directors has added four new members - Betsy Boyd-Flynn, MA, CAE, Kevin Brennan, CBAP, PAP, Mike Lee and Sandra Giarde, CAE.  They join Shelly Alcorn, CAE, John Dane, CAE, Rob Gustafson, CAE, CSI, Charles Eley, FAIA, PE and Curt Robinson, Ph.D to bring the Board up to nine members.  Click to see our full Board of Directors listing with biographies.  They are a hard working group and we appreciate their volunteer efforts.

The BCSI Board would also like to welcome Tom Ingram, Executive Director of the Diving Equipment and Marketing Association to our Global Advisors Network.  Tom joins Margaret H. Mason, Esq, (British Columbia), Kevin Robbe (Australia) and Peter Holbrook (United Kingdom).  We are grateful they let us bend their ears and are excited to learn about developments in sustainable business practices both here in the United States and abroad.

We are hard at work preparing for our next board meeting in August and expect to have some more exciting announcements coming in the weeks ahead.  Please stay tuned, we are just about ready to kick in the afterburners!

Wednesday, June 20, 2012

A Response to Glenn Tecker on Benefit Corporations

Guest Post
John Dane, CAE, Vice Chair, Benefit Corporation Standards Institute (BCSI)

Thanks to Glenn Tecker for his June 14, 2012  blog post “Thoughts About Benefit Corporations” wherein he reflects upon Shelly and Mark Alcorn’s article “A New Formula for Social Change” appearing the June 2012 issue of the American Society of Association Executives (ASAE) magazine Associations Now.

Mr. Tecker is correct that benefit corporations are new on the American corporate legal landscape. To date ten states and the province of British Columbia have enacted essentially similar laws permitting corporations to pursue specific social and environmental initiatives in addition to their traditional imperative to maximize shareholder value.

Rather than perceiving some disingenuous motive or tax avoidance scheme as he suggests, however, I see the rise of benefit corporations as a positive response to three key international trends.

First, benefit corporations are a legal, commercial and social entrepreneurial-based outgrowth of a broader global sustainability movement. Specifically, benefit corporations have their roots in the “community interest corporation” legislation first passed in the United Kingdom in 2005. With shareholder approval, benefit corporations are now able to allocate a portion of their earnings to social and environmental purposes with lessened risk of shareholder lawsuits.  As the Alcorn’s article points out, the ability to deeply embed social and environmental benefit concepts into the for-profit corporate DNA has tremendous potential for creative partnerships between non-profits, associations and those benefit corporations seeking to devote funds to ongoing social and environmental programs.  These intentional actions have the potential to enhance the global sustainability movement through the infusion of new capital, purpose and private sector energy.

Second, benefit corporations allow firms to more closely align with values-based consumer and socially conscious investment funds. Every day these consumers and fund managers make values-based purchase and investment decisions in the private marketplace based upon a corporation’s social and environmental performance. Under these new state laws, benefit corporations are required to meet third-party standards for specific social and environmental practices. Values-based consumers and investors will “vote with their feet” turning away from those firms that lag in their commitments to these agreed upon standards. This emphasis on values alignment as a substitute for rigid regulatory guidelines has made benefit corporations popular with the political left and right and has permitted swift state legislative passage of benefit corporations with large bi-partisan majorities – a rare occurrence in recent years.

Third, corporate social entrepreneurs such as Yvon Chouinard, founder of Patagonia, have sought ways to take their corporate asset base and apply some portion of it to address international social and environment problems at a scale and with a directedness that has been harder to achieve in the past. The benefit corporation designation permits the realization of this broad social impact vision.

The advent of benefit corporations is pre-dated by the creation of B Lab, a Philadelphia-based 501(c)(3) socially entrepreneurial venture launched by three Stanford graduates. Their pioneering “B Corporation” certification” process has certified over 530 companies in 60 industries accounting for $3.1 billion in annual revenues since its founding. With financial support from The Rockefeller Foundation, The Prudential Foundation, the Robert Wood Johnson Foundation, the Annie E. Casey Foundation and The United States Agency for International Development to name several benefactors, B Lab has played a key role in building their “B Corporation” brand and in expanding the concept to include fundamental changes to state laws through passage of benefit corporation legislation.  In other words - the movement is strong, well funded and well underway.

It is true we believe there is additional room to set credible, meaningful standards for benefit corporations that are different than those currently offered by B-Lab and, contrary to popular belief, obtaining B-Lab's "B Corporation" certification is not a requirement to be a benefit corporation.  We believe associations should rapidly engage in standard setting activities on behalf of their industries and professions.  As more and more companies see the advantages to switching to a benefit corporation structure, associations who want to remain relevant need to be able to build resources and provide assistance to members making the transition. Associations also need to position themselves as a resource to younger members, many of whom are starting new businesses and choosing the benefit corporation designation right from the start. Pretending this movement is going to go away is probably not the best strategy for associations to adopt.

Our Sacramento-based Benefit Corporation Standards Institute (BCSI) is designed to work with international, national and state associations to assist them in establishing social and environmental standards for their respective industries and professions. Developing this expertise builds upon the well-grounded standard setting role associations have played historically, provides associations today with cutting edge relevance, and  permits associations to play a leading role in defining social and environmental values for those member firms choosing to become benefit corporations.

Will some misuse of the benefit corporation movement happen?  Of course.  But the same could be said of many for-profit and non-profits currently in operation today.  We cannot predict with certainty which unintended consequences may arise in the future. However, weighing those concerns against the positive potential of seeing benefit corporations trigger major gains for society and the environment seems worth the risk.  We believe association energy spent on trying to oppose the creation of benefit corporations would be better spent on setting meaningful standards and helping those members who pursue the benefit corporation designation live up to their potential and become forces for good on the national and international stage.