One of the great challenges faced by humanity is to wrangle in the unchecked power of for-profit corporations.  They have infiltrated our governments at all levels and rule supreme in the global arena where no enforceable laws exist.  Corporate profits flourish as death and destruction grow all around.

This has got to end and it is going to take more than visionary leadership within these dominant institutions to do it. Alternative institutional forms are desperately needed to replace them.

An article today in the San Francisco Chronicle highlights one possible solution: Write community values directly into the corporate charter.

The article, ‘B corporation’ plan helps philanthropic firms, presents an innovative idea formulated by Jay Coen Gilbert, Bart Houlahan, and Andrew Kassoy that broadens the legal mandate of corporations to include the broader community and the environment.  The “B” stands for benefit and is a starting point for incorporating social values (in addition to profits) into corporate charters.  What do you need to do to become a B corporation?  Here’s what the author has to say:

B corporations must receive a passing grade on a long scorecard that covers environmental practices, employment practices, purchasing policies and whether their products are beneficial to society.

They must also adopt legal language stating that their directors may consider the welfare of outside stakeholders such as employees, customers, their community and the environment, as well as the financial interest of shareholders.

 

I think this is a pretty cool idea and I hope it goes far.

One thing I’d like to focus on is the way Coen Gilbert, Houlahan, and Kassoy came up with the idea of B corporation. After establishing themselves financially, they wanted to focus on social entrepreneurship.

This is a signature feature of social entrepreneurs - transform the social environment through strategic thinking.  And they are well on their way with the B Corp idea.  It goes beyond any one business endeavor and creates a new pathway for future entrepreneurs to build on and explore.

The B Corp idea is still in its infancy and is going to need to be developed further.  One area of ambiguity that is currently being grappled with is what happens when one company merges with another.  Will the B Corp lose its values if it gets swallowed up by a competitor?  Or does the legal charter hold up and force the new entity to respect its identity?  Questions like these are important if this idea is to gain enough traction to make a lasting difference.

In the meantime, we’ll be watching to see where things go.