The benefit of benefit corporations

TriplePundit has teamed up with Abbott to produce an article series on the future of corporate philanthropy. Please read the rest of the series here.

Triple-bottom-line businesses are getting legit. It started in Maryland in April, 2010. Well, that's not really the beginning - it all really started in 2006, when three friends and business associates started a nonprofit called B Lab, with the aim of creating a foundation for businesses that wanted to do more than make money. 

Since 2007, B Lab has been certifying companies that pledged to meet comprehensive standards for social and environmental performance (in addition to running viable businesses, of course). Through a vetting and auditing process, B Lab began certifying some applicant companies as "B Corps" and today there are more than 475 of these firms across 60 different industries. 

But B Lab's end goal has always been to go deeper. That started taking shape when B Lab began working with sustainable business advocates in a number of states to draft legislation to push this concept from a certification to a legal designation. And so when Maryland passed a Benefit Corporation bill into law in April 2010, it codified this effort. And this past October, when California became the sixth state in the nation to pass a law designating Benefit Corporations as a new type of corporate structure, it marked an important milestone in the sustainable business movement. As they say, as California goes, so goes the nation.

A Benefit Corporation is one with a mission to create a "material positive impact on society and the environment" as well as to widen its fiduciary duty "to require consideration of non-financial interests when making decisions" and then to report its "overall social and environmental performance using recognized third party standards." (It's important to note that a Benefit Corporation is a legal designation and therefore much different than a B Corp, which is the certification that B Lab provides -- for more on this, see Jonathan Mariano's clarifying post.)