As corporations of all sizes increasingly choose to monitor and report on their social and environmental impacts, a growing number of mostly small- and medium-sized companies are going even further: they are volunteering to be held publicly accountable to a new triple bottom line, prioritising people, the planet and profits.
This is according to Worldwatch Institute’s Vital Signs Online service,
Just how broadly, rapidly, and rigorously this movement can spread is of critical importance, given the supersized global impacts of for-profit enterprises.
“Sustainable economies are likely to remain elusive without substantial shifts in corporate norms,” says Colleen Cordes, a public policy consultant and the study’s author. “Recent data provide signs that such change is possible and indeed may even have begun.”
Over the last 15 years, for example, the number of businesses of all sizes that choose to self-assess how sustainable their operations are, using widely accepted social and environmental standards, and to publicly disclose their results has been growing rapidly, especially in Europe and Asia.
Recently there also has been a rise of a fast-moving movement, with significant leadership provided by sustainably minded businesses, whose goal is to persuade lawmakers to create a new legal status known as “benefit corporation” that for-profit businesses can choose voluntarily.
The movement for benefit corporation statutes began in the United States, under the leadership of B Lab, which developed model legislation with the pro bono help of US law firms.
A “benefit corporation” is a corporate form that requires a company to legally establish in its original or amended articles of incorporation that it has a general purpose of having a positive impact on society and the environment and that its board of directors, in making decisions, is required to take into account the interests of multiple stakeholders in addition to the financial interests of its shareholders.
The stakeholders it must consider, by law, include the company’s own workforce and that of its suppliers, its customers, the local community and general society, and the local and global environment.
Proponents of this new corporate form say it essentially bakes a triple bottom line into a company’s DNA that frees companies from the fear of shareholder lawsuits if their decisions fail to maximise shareholder value because of some competing interest of other stakeholders, such as workers.
Under current corporate case law in the US, for example, corporate directors are generally assumed to be liable in such suits. Incorporation as a benefit corporation is intended to establish the directors’ fiduciary responsibility to consider the interests of all stakeholders.
Formalising a company’s social and environmental purposes under a legal framework also makes it more likely that its good intentions will survive the departure of its founders or any major spurts of growth and that its directors will have the legal backbone to fend off buyout offers from conventional corporations that do not have the same commitments.
Just how broadly, rapidly, and rigorously this movement can spread is of critical importance, given the supersized global impacts of for-profit enterprises.
“Sustainable economies are likely to remain elusive without substantial shifts in corporate norms,” says Colleen Cordes, a public policy consultant and the study’s author. “Recent data provide signs that such change is possible and indeed may even have begun.”
Over the last 15 years, for example, the number of businesses of all sizes that choose to self-assess how sustainable their operations are, using widely accepted social and environmental standards, and to publicly disclose their results has been growing rapidly, especially in Europe and Asia.
Recently there also has been a rise of a fast-moving movement, with significant leadership provided by sustainably minded businesses, whose goal is to persuade lawmakers to create a new legal status known as “benefit corporation” that for-profit businesses can choose voluntarily.
The movement for benefit corporation statutes began in the United States, under the leadership of B Lab, which developed model legislation with the pro bono help of US law firms.
A “benefit corporation” is a corporate form that requires a company to legally establish in its original or amended articles of incorporation that it has a general purpose of having a positive impact on society and the environment and that its board of directors, in making decisions, is required to take into account the interests of multiple stakeholders in addition to the financial interests of its shareholders.
The stakeholders it must consider, by law, include the company’s own workforce and that of its suppliers, its customers, the local community and general society, and the local and global environment.
Proponents of this new corporate form say it essentially bakes a triple bottom line into a company’s DNA that frees companies from the fear of shareholder lawsuits if their decisions fail to maximise shareholder value because of some competing interest of other stakeholders, such as workers.
Under current corporate case law in the US, for example, corporate directors are generally assumed to be liable in such suits. Incorporation as a benefit corporation is intended to establish the directors’ fiduciary responsibility to consider the interests of all stakeholders.
Formalising a company’s social and environmental purposes under a legal framework also makes it more likely that its good intentions will survive the departure of its founders or any major spurts of growth and that its directors will have the legal backbone to fend off buyout offers from conventional corporations that do not have the same commitments.