Taking Stock of the Benefit Corporation

Almost a decade ago, the “benefit corporation” first appeared on American soil. Its supporters proclaimed that this would usher in a new era of corporate social responsibility. Its detractors complained that the benefit corporation would facilitate managerial abuses that corporate law had worked so hard to curb. After nearly ten years of experience with the benefit corporation, who was the more accurate prognosticator? Moreover, has the benefit corporation given rise to developments, whether beneficial or negative, that were not expected or foreseen? This Article traces the history of the benefit corporation, with a focus on the promise that its early supporters identified with it. It also examines the criticisms that this new form of business organization provoked. The Article concludes that, contrary to the predictions of both camps, the benefit corporation has not, apparently, resulted in much change at all. In its final Section, the Article explores the reasons why the benefit corporation has had, thus far at least, such minimal impact on the course of American business and corporate law. The conclusion reached is that, for good or for ill, benefit corporation statutes do not materially change the rules of corporate governance. Rather, they simply explicitly permit benefit corporations to conduct themselves according to standards of conduct that traditional corporate law statutes already implicitly permit. Although the promoters of benefit corporation legislation have argued that even this minor change would have an impact on businesses by effecting a normative shift in corporate decision-making, contemporary market forces appear to have had the same result on a far broader scale. Lastly, this Article considers some of the unexpected repercussions of the benefit corporation, whether manifested or growing in potential.