This past week I attended the DEC’s Eighth Annual New York State Environmental Excellence Awards Ceremony, where the University of Rochester was recognized for its Go Green Conserve and Save program. During one of the sessions it was announced that New York State will soon allow businesses to be recognized as benefit corporations. Tuesday afternoon it was announced: Cuomo signs legislation allowing benefit corporations
Current laws make it difficult for businesses to consider employee, community and environmental interests when making decisions. The legal structure of businesses is to maximize profit for the shareholder. The legal structure of benefit corporations allows them to make decisions that are environmentally friendly rather than solely to benefit shareholders. New York State has now opened the door for businesses promoting sustainable practices.
So what is a benefit corporation and what does it mean for sustainability?
A benefits corporation meets rigorous and independent standards of social and environmental performance, accountability, and transparency. The goal is environmental stewardship, community involvement, and employee well-being. Here is some text from the bill:
1 VOTES THAT ALL SHAREHOLDERS OF THE CLASS OR SERIES ARE ENTITLED TO CAST
3 (E) “SPECIFIC PUBLIC BENEFIT,” INCLUDES:
4 (1) PROVIDING LOW-INCOME OR UNDERSERVED INDIVIDUALS OR COMMUNITIES
5 WITH BENEFICIAL PRODUCTS OR SERVICES;
6 (2) PROMOTING ECONOMIC OPPORTUNITY FOR INDIVIDUALS OR COMMUNITIES
7 BEYOND THE CREATION OF JOBS IN THE NORMAL COURSE OF BUSINESS;
8 (3) PRESERVING THE ENVIRONMENT;
9 (4) IMPROVING HUMAN HEALTH;
10 (5) PROMOTING THE ARTS, SCIENCES OR ADVANCEMENT OF KNOWLEDGE;
11 (6) INCREASING THE FLOW OF CAPITAL TO ENTITIES WITH A PUBLIC BENEFIT
12 PURPOSE; AND
13 (7) THE ACCOMPLISHMENT OF ANY OTHER PARTICULAR BENEFIT FOR SOCIETY OR
14 THE ENVIRONMENT.
We will have to wait and see if benefit corporations meet the desired expectation.
The legislation was sponsored in the state Assembly by Speaker Sheldon Silver and in the state Senate by Democrat Daniel Squadron.
- California creates new corporation types that reward doing good (FAQ) (venturebeat.com)
- Cuomo signs legislation allowing benefit corporations (Rochester Business Journal)