During the 2013 New Mexico legislative session, the New Mexico Green Chamber of Commerce supported House Bill 40 sponsored by Sen. Tim Keller and Rep. Zachary Cook for the designation of benefit corporations. The bill passed the Senate by a vote of 33-6 and the House by 62-6. According to the Economic Development Department and the Public Regulation Commission, the bill would have no fiscal impact. Twenty states have passed legislation that allows a corporation to be designated as a benefit corporation, including several states that have Republican governors. Yet the bill died on Gov. Martinez’s desk in a pocket veto, when she failed to sign the bill.
So, what is a benefit corporation and why are they valuable to New Mexico and its economy? First, a benefit corporation or B corporation, is a corporate form in the United States used by for-profit entities that want to consider society and the environment in addition to profit in their decision-making process, true adherents to the triple bottom line. Their goals are to use the power of business to solve social and environmental issues. The difference between a benefit corporation and a traditional corporation lies mainly in the purpose of the corporation. The overriding mission of a benefit corporation is to create general public benefit, defined as a material positive impact on society and the environment. The corporation may identify a specific public benefit in its articles of incorporation. A benefit corporation is more interested in stakeholder than shareholder value.
A benefit corporation’s directors operate the business with the same authority as in a traditional corporation. However, where a traditional corporation is held to maximizing profits for the corporation’s shareholders, and can be sued for decisions and policies that are counter to that mission, shareholders in a benefit corporation determine if the benefit corporation has achieved a material positive impact. Benefit corporations also differ in their accountability and transparency practices. Every benefit corporation must submit an annual report to shareholders delineating its progress in achieving the general public benefit or any specific public benefit it has identified, describing the process and rationale for selecting or changing the third-party standard used to measure that achievement and assessing its overall social and environmental performance. If a dispute occurs it is up to the courts to determine if the benefit corporation did achieve a material positive impact. Additionally, through the issuance of an annual benefit report to the public, consumers are provided information to determine if they agree or disagree with the benefit corporation’s methods of achieving a material positive impact on society and the environment.
Why would benefit corporations be good for New Mexico? According to an assessment done by B Labi, here is why New Mexico should value having a benefit corporation designation:
B Corps are improving the quality of life in their communities because compared to other sustainable businesses they are:
- 68 percent more likely to donate at least 10 percent of profits to charity
- 47 percent more likely to use on-site renewable energy
- 18 percent more likely to use suppliers from low-income communities
- 4 times more likely to give paid professional development opportunities
B Corps create higher quality jobs for their workers because compared to other sustainable businesses B Corps are:
- 55 percent more likely to cover at least some health insurance costs for employees
- 45 percent more likely to give bonuses to non-executive members
- 28 percent more likely to have women and minorities in management
- 2.5 times more likely to give employees at least 20 hours per year paid time off to volunteer in their community
And finally, benefit corporations are good for New Mexico because they attract capital. There is over $3 trillion of Social Impact Investment dollars in the US, with 842 benefit corporations in 20 states. Given this information, why wouldn’t we want our state’s economy and businesses to have access to a portion of that pie?
The steps to becoming a benefit corporation include both legal and performance requirements that are not susceptible to companies looking to greenwash. Besides high-profile companies like Ben & Jerry’s and Patagonia, the New Mexico Green Chamber of Commerce has four members that have gone through this rigorous process to become B certified. They are Positive Energy Solar, Your Day, Inc., Concept Green, LLC and Dapwood. We support and applaud their missions and accomplishments.
i B Lab is a 501(c)3 nonprofit that serves a global movement of entrepreneurs using the power of business to solve social and environmental problems. See http://www.bcorporation.net/what-are-b-corps/the-non-profit-behind-b-corps
Glen Schiffbauer is executive director of the Santa Fe Green Chamber of Commerce. 505.428.9123, Glenn@nmgreenchamber.com