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13 businesses become first Benefit Corporations in New York
Submitted by mffocus on Sat, 02/11/2012 - 00:46
Microfinance Focus, February 11, 2012: New York’s Governor Andrew Cuomo has on Friday signed the Benefit Corporations Bill which will allow businesses in New York to organize as Benefit Corporations and create benefits for the society and the environment in addition to making profits.
Thirteen businesses from across the State adopted the new corporate form on the first day. One company even left Delaware and incorporated in New York State to take advantage of this innovative corporate form. Currently seven states, including New York, have enacted benefit corporation laws.
“The creation of benefit corporations in New York is a testament to the strength of this global movement to redefine success in business” said Andrew Kassoy, Co-Founder of B Lab, a non-profit organization that supported the legislation. “New York is the heart of global finance and now interested investors in New York have a way to make sure their money is doing much more than just making a profit.”
Benefit corporations are a new kind of corporation legally required to: 1) have a corporate purpose to create a material positive impact on society and the environment; 2) expand fiduciary duty to require consideration of the interests of workers, community and the environment; and 3) publicly report annually on its overall social and environmental performance using a comprehensive, credible, independent, and transparent third party standard.
Traditional corporate law requires corporations to prioritize the financial interests of shareholders over the interests of workers, communities, and the environment.
Investors are also interested in the new law. "We like to back entrepreneurs who have embraced solving social problems as part of the goals for their companies,” said Albert Wenger, Partner at Union Square Ventures, an investor in innovative internet businesses like Twitter, Etsy, Edmodo, and Tumblr. “We believe this creates more long term value for both shareholders and society. The Benefit Corporation legal structure is an important innovation to help maintain that dual focus as the companies scale."
California, New Jersey, Virginia, and Hawaii passed similar legislation in 2011, joining Vermont and Maryland who did so in 2010. Benefit corporation legislation has also been introduced in Michigan, Pennsylvania, North Carolina, Illinois and the District of Columbia. The legislation has enjoyed strong bi-partisan support in every state.
The bill was originally proposed by the American Sustainable Business Council and B Lab; and the citizen advocacy campaign was led by Care2.com.
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