New York Registers First Benefit Corporations

 New York Feb. 10 began registering benefit corporations, a new class of companies required to create positive impacts for the environment and society as well as shareholders.

Incorporating as a benefit corporation provides company directors a legal defense for safeguarding workers’ rights and protecting the environment in addition to promoting shareholder value. Benefit corporations, called B Corps, also enable shareholders to hold directors accountable for a company's failure to create a material positive impact on society or to consider the impact of decisions on employees, community, and the environment. Benefit corporations are also required to prepare an annual benefit report for shareholders detailing their social, environmental, and performance.

Benefit corporations in New York were authorized under a state bill (S. 79) that was signed into law Dec. 12 by Gov. Andrew M. Cuomo and went into effect Feb. 10.

Six other states have benefit corporation laws. California, Maryland, New Jersey, Vermont, Virginia, and Hawaii have passed B Corp laws, and legislation is pending in Michigan, North Carolina, Pennsylvania, Illinois, and Washington, D.C.

New York companies that registered as benefit corporations in New York Feb. 10 include Agrodolce for Fast Foodies, Call2Action,, Corn Cow Inc., eco, Greyston Bakery, On Belay Business Advisors, Outlier, Sahara Reporters, Singlebrook Technology, Stephen Vardin & Colleagues, Inc., and Strugatz Ventures.

The New York bill was proposed by the American Sustainable Business Council and B Lab, a Pennsylvania nonprofit organization. B Lab also is working to advance B Corp legislation in Washington state, Oregon, Colorado, and Massachusetts this year.

B Corps Coming to Delaware?

Some companies have left Delaware to become incorporated as benefit corporations in other states. Jay Coen Gilbert, a cofounder of B Lab, told Bloomberg BNA Feb. 10, "We expect Delaware to consider [B Corp legislation] but not likely in 2012."

There are currently 517 registered benefit corporations representing $2.9 billion in revenue.

The B Corp. concept also has support from investor groups. “We like to back entrepreneurs who have embraced solving social problems as part of the goals for their companies,” said Albert Wenger, a partner at Union Square Ventures, which invested in Twitter, Etsy, and Tumblr. “We believe this creates more long term value for both shareholders and society,” he said.