Twitter co-founder Evan Williams today declared at SXSW
that the company’s first principle is to “be a force for good.” Like
Google’s longstanding “don’t be evil” slogan, it’s a fine idea. It also
could seem to conflict with each companies’ legal obligation to maximize
returns for investors.
What would it
look like if a company actually had that sentiment baked into its
corporate charter? It might instruct directors to
consider
the effects of any action … on the shareholders, employees, suppliers,
and customers … the economy of the state, region and nation, community,
and societal considerations, … and the local and global environment.
That’s
from a bill before the Vermont Senate that would create a new legal
form for companies in the state to that want to become designated
“for-benefit corporations.” It’s designed to let companies that have
social missions to codify those values in their governing documents. The
proposed law also instructs directors to “consider the long-term and
short-term interests of the corporation, including the possibility that
those interests may be best served by the continued independence of the
for-benefit corporation.” That would help firms avoid what happened to
Ben & Jerry’s: reluctantly selling out to a buyer that doesn’t share
the original firm’s values.
The Berwyn,
Pa.-based nonprofit B-Lab, which certifies member businesses on social
and environmental performance, is pushing for laws in several states to
make it easier to formalize values in business. Vermont may be the first
to pass legislation. Maryland legislators are considering a similar
proposal, and efforts are underway in New York, Pennsylvania, North
Carolina, Colorado, and Oregon. California lawmakers are weighing a
different bill that would give companies the flexibility to incorporate
with a particular non-financial purpose, but not the requirement to
consider all the stakeholders that Vermont’s bill names.
“What
the corporation will be doing will be committing to create general
public benefit and may also elect to pick specific public benefit,” says
Bill Clark, a partner at law firm Drinker Biddle who is helping B-Lab
develop legislation on a pro-bono basis.
The
movement to do create this in Vermont didn’t begin in earnest until
last year, according to Andrea Cohen, public policy manager at Vermont
Businesses for Social Responsibility. I mentioned a few months ago that
one of the big ideas we’d see this year is new forms for social
enterprise and new ways to finance them. Vermont could be the first
state to make that law in the next several weeks before the state’s
legislative session ends. Then companies that want to “be a force for
good,” as Twitter’s founder says, could write it into their charter.
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