Sen. Mary Jo White (R-Venango) took part in a press conference today unveiling legislation to create a new class of corporation in Pennsylvania.
Senate Bill 433 (not yet online), sponsored by Sen. Daylin Leach (D-Montgomery), would provide for the recognition of Benefit Corporations ("B Corps") -- businesses that have the ability to more positively impact their communities.
The Benefit Corporation class would reclassify the fiduciary duties of corporation directors, allowing them to take non-financial interests into consideration when making decisions for the corporation.
"Benefit Corporations are an intriguing concept that I believe is worth exploring, and I look forward to hearing from Pennsylvania businesses as this legislation moves forward," said Sen. White. "With their input, Pennsylvania can establish a new voluntary class of corporation that would be appealing to those investors looking for dividends that go beyond financial to include a host of needs such as education, housing, health and the environment."
Under Senate Bill 433, companies that see value in making a positive social and environmental impact on their communities would be able to make those "for benefit" operations part of their corporate mission. Other corporation classes do not currently allow directors to take not-for-profit benefits into account. Under the new corporate classification model, Benefit Corporations could not be held liable for lost monetary value as a result of socially-conscious decisions made.
"Simply put, this legislation would allow businesses to use their power and influence to solve social and environmental problems without needing to muddle through red tape and the current corporate legal environment," Sen. Leach said. "Under this new model of business management, corporations will have unsurpassed freedom and accountability in their decision-making process so that they may ultimately make decisions that are good for society, rather than just for their shareholders."
The process of becoming a Benefit Corporation would be entirely voluntary and based on shareholder desire. If a business chooses to become a Benefit Corporation, it must designate a benefit director and provide yearly disclosures to shareholders of the public benefit efforts the company has undertaken.
The senators were joined by Jay Coen Gilbert, co-founder of B Lab, and Jacob Gray, Managing Partner at Murex Investments and Founder of Good Company Ventures in support of the bill. According to Gilbert, Certified B Corporations meet rigorous standards of social and environmental performance, legally expand their corporate responsibilities to include consideration of stakeholder interests and build collective voice through the power of the unifying B Corporation brand.
As of August 2010, there are over 320 certified B Corporations from over 60 industries. Similar legislation has been enacted in Maryland and Vermont, and is being considered in California, New York, North Carolina, Oregon and Colorado. The legislation is supported by the Pennsylvania Bar Association.
"The recent economic challenges have made it abundantly clear that there are limits to what government can do and what it can afford," said Sen. White. "In times of government belt-tightening, the option of Benefit Corporations could be a tool for the private sector to provide much needed resources to meet social needs."