Opinion: In Support of Benefit Corporations
The following post is written by David Bolotsky, the founder of UncommonGoods, and a longtime Lower East Side resident. The Lo-Down welcomes ‘letters to the editor.” Submissions should be sent to firstname.lastname@example.org
Today, a national issue becomes local. Last week, a bill introduced by Daniel Squadron, passed the State Senate 60 to 1. The bill would allow for the creation of a new legal framework for businesses called “benefit corporations”. These are businesses that not only pursue profits, but also focus on their impact on the community and the environment.
In my previous career as a researcher on Wall Street analyzing retail companies, I saw first hand how the focus on short-term profits often trumped critical issues tied to the welfare of employees and the environment. Current corporate law requires that corporate officers focus on maximizing shareholder returns, i.e. profits. If a manager decided to do something to benefit employees, but hurt profits, the company could be sued for not looking out for investors’ interests. Benefit Corporations would provide legal protection for these types of decisions, but only after the majority of the company’s owners decided to adopt the new legal framework.
The New York State government has an opportunity to encourage businesses to adopt this more socially responsible framework. Maryland and Vermont have already signed similar legislation into law. The bill is now in the hands of the Assembly – I hope that our leadership has the vision to prioritize this important piece of legislation. You can learn more about the national effort at www.bcorporation.net