Are Changes in Corporate Governance an Answer?

2021 ◽  
pp. 189-213
Author(s):  
Matt Fischer-Daly
Keyword(s):  
Corporate Governance ◽  
Positive Impact ◽  
The United States ◽  
Detailed Examination ◽  
Due Diligence ◽  
Private Regulation ◽  
For Profit ◽  
Benefit Corporation ◽  
Corporate Entity ◽  
Benefit Corporations

This chapter explores the potential for changes in corporate governance to overcome the decoupling problem in private regulation, through a detailed examination of the case of benefit corporations. In the United States, a benefit corporation is a type of for-profit corporate entity that includes among its goals — in addition to profits — a positive impact on society, workers, the community, and the environment. The chapter argues that the B-Corp movement is a false promise because of the legal limitations of actors to seek remedy if a benefit corporation does not meet its “benefit goals” and because of a variety of issues in the certification process for such a corporation. This argument is supported through the analysis of the private regulation program of a leading benefit corporation, which shows that its status has in no way improved coupling between private regulation practices and outcomes. It would seem that the benefit corporation certification is simply another modern ritual of due diligence, although there is a need for additional research on benefit corporations to confirm this conclusion.

Benefit Corporations Approach to Environmental, Social and Governance Disclosure: A Focus on Italy

2020 ◽  
Vol 10 (4) ◽  
Author(s):  
Mauro Sciarelli ◽  
Silvia Cosimato ◽  
Giovanni Landi
Keyword(s):  
Qualitative Method ◽  
Positive Impact ◽  
Corporate Structure ◽  
New Approach ◽  
For Profit ◽  
Benefit Corporation ◽  
Benefit Corporations ◽  
Multiple Case ◽  
Governance Disclosure

AbstractOver the last decades, Benefit Corporations arouse as a new corporate structure, alternative to traditional ones and pointing to offer a new approach to the management of business and sustainability issues. These companies' activities are statutory aimed at bridging for-profit and no-profit activities; thus, they intentionally and statutory pursue economic purposes together with social and environmental ones, to create a positive impact on economy, society and environment. Even though, Italian and other national laws set some specific disclosure duties for Benefit Corporations, especially in terms of Environmental, Social and Governance (ESG) issues, the literature still calls for further research on the topic. Therefore, this paper is aimed at contributing to bridge this gap, investigating the way Italian Benefit Corporations approach ESG disclosure. To this end, an exploratory analysis has been conducted, implementing a qualitative method, based on a multiple case study strategy. Even though the descriptive nature of the study, the achieved findings pointed out that the Benefit Corporation structure not necessarily implies a better approach to ESG.

scholarly journals O interesse público na sociedade de economia mista brasileira: aproximação com a benefit corporation do direito norte-americano

2020 ◽  
Vol 279 (1) ◽  
pp. 79
Author(s):  
Mario Engler Pinto Junior
Keyword(s):  
Corporate Governance ◽  
Public Interest ◽  
Institutional Design ◽  
Profit Maximization ◽  
Business Decisions ◽  
The Public ◽  
Benefit Corporation ◽  
The Us ◽  
Benefit Corporations ◽  
Shed Light

<p><span>The public interest of Brazilian mixed-capital company: approach to US benefit corporations</span></p><p><span><br /></span></p><p><span>RESUMO<br />O artigo faz um paralelo entre a figura da benefit corporation do direito norte-americano e a sociedade de economia mista brasileira, com o propósito de apontar semelhanças entre as duas estruturas societárias e lançar luzes sobre a racionalidade das soluções de governança adotadas em cada caso. A reflexão resgata inicialmente o conceito de interesse da companhia, destacando sua relevância como referencial jurídico para se aferir a legitimidade das decisões empresariais. Observa-se ainda que o entendimento sobre o tema varia conforme a abordagem teórica adotada, podendo se resumir na maximização dos lucros para partilha entre os sócios, ou combinar o atendimento a outros interesses não financeiros. Por sua vez, os desafios e soluções em matéria de governança corporativa também variam em função da amplitude do escopo atribuído à companhia. A benefit corporation procura combinar a consecução de algum objetivo de interesse público com a manutenção da finalidade lucrativa. A existência do escopo mais amplo permite questionar a adequação do desenho institucional para lidar com os conflitos inerentes ao novo tipo societário. Além disso, propicia uma análise comparativa com o modelo de sociedade de economia mista no direito brasileiro, que também está imbuída de uma missão pública, cuja consecução não afasta a necessidade de remunerar adequadamente o investimento acionário. Conclui-se que algumas medidas contidas na Lei nº 13.303/2016, para fortalecer o controle e gestão das empresas estatais brasileiras, guardam simetria com o tratamento aplicável às benefit corporation no direito norte-americano.</span></p><p><span><br /></span></p><p><span>ABSTRACT<br />The paper compares benefit corporations in the US with mixed-capital corporations in Brazil, in order to point the similarities and differences between both corporate structures. The paper also intends to shed light on the rationale of the governance solutions adopted in each case. The paper restates the concept of company’s interest and highlights it as a key legal reference for assessing the legitimacy of business decisions. Different readings of this concept are likely to translate into markedly different positions, from holding that the idea of interest refers solely to the purpose of profit maximization on behalf of shareholders to affirming the need to simultaneously accomplishing non-financial goals interests. The challenges and solutions concerning corporate governance also vary according to the extent of the corporation’s scope. Benefit corporations in the US seek to </span><span>simultaneously attain some goal of public interest and make profit for </span><span>its shareholders. The existence of a broader scope allows questioning </span><span>the suitability of their institutional design to deal with conflicts that are </span><span>inherent to this new corporate type. Their structure invites a comparison </span><span>to State owned enterprise (SOE) in Brazil. According to Brazilian Law, a </span><span>company controlled by the State is invested with a public mission while </span><span>needing to assure proper return to shareholders’ investment. The paper </span><span>concludes that some measures adopted by Brazilian Law No. 13.303/2016, </span><span>for strengthening the corporate governance of Brazilian SOE’s are similar </span><span>the U.S. Model Benefit Corporation Legislation (MBCL) concerning benefit </span><span>corporations.</span></p>

scholarly journals Certified B Corporations and Benefit Corporations

Management ◽  
2021 ◽  
Keyword(s):  
Theoretical Work ◽  
The United States ◽  
Data Sets ◽  
Central Research ◽  
Legal Form ◽  
Exemplary Teaching ◽  
For Profit ◽  
Theoretical Perspectives ◽  
Research Themes ◽  
Benefit Corporations

Over the past decade, Certified B Corporations and Benefit Corporations, commonly known as B Corps, have emerged as a global phenomenon. Both organizational forms are for-profit businesses. Whereas Certified B Corporations have been accredited for their environmental, social, and governance (ESG) practices, Benefit Corporations are a new legal form, currently available in thirty-eight states and jurisdictions in the United States (US) as well as in British Columbia (Canada), Colombia, Ecuador, and Italy. Both types were promulgated by B Lab, a US-based nonprofit organization. Founded in 2006 in the suburbs of Philadelphia, Pennsylvania, B Lab has sought to institutionalize business as a force for good. At present, certification is available to any business worldwide, and approximately 3,700 companies in seventy-four countries are currently certified. Prominent Certified B Corporations include Ben & Jerry’s, Danone North America, and Patagonia. Examples of Benefit Corporations include Data.World, Kickstarter, and Plum Organics. Overall, the B Corp movement’s radical aspiration to redefine business has garnered substantial attention from policymakers, media, businesses, nongovernmental organizations (NGOs), and academe. This article provides an overview of burgeoning scholarly work—ranging from general references and cutting-edge theoretical work to accumulating empirical findings and key pedagogical resources. A core focus is on enumerating the variety of theoretical perspectives that have been taken and the central research themes in extant work, including interdisciplinary publications. We close by discussing exemplary teaching materials and introducing other resources, such as the B Academics research community and available data sets for research.

Social Enterprise Law

2017 ◽  
Author(s):  
Dana Brakman Reiser ◽  
Steven A. Dean
Keyword(s):  
Social Enterprise ◽  
Social Enterprises ◽  
Social Entrepreneurs ◽  
Bottom Line ◽  
Social Mission ◽  
For Profit ◽  
Benefit Corporation ◽  
Benefit Corporations ◽  
Contingent Convertible Debt ◽  
Legislative Changes

Social Enterprise Law presents a series of audacious legal technologies designed to unleash the potential of social enterprise. Until now, the law has been viewed as an obstacle to social entrepreneurship, too inflexible to embrace for-profit businesses with a social mission at their core. Legislators have poured resources into creating hybrid corporate forms such as the benefit corporation to eliminate barriers to the creation of social enterprises. That first generation of social enterprise law has not done enough. The authors provide a framework for future legislation to do what benefit corporations have not: create durable commitments by social entrepreneurs and investors to balance financial gains and social mission by putting a speed limit on profits. They show how sophisticated investors need not wait for the advent of these legislative changes, outlining a contingent convertible debt instrument that relies instead on financial engineering to build trust between those with capital and those ready to use it to nurture a double bottom line. To allow social enterprises to harness the vast power of the crowd, they develop a tax regime that would provide crowdfunding platforms the means to screen the commitment of for-profit startups. Armed with these tools of social enterprise law 2.0 and the burgeoning metrics of measuring public benefit, entrepreneurs and investors can navigate even the turbulent waters of exit without sacrificing mission, so that a sale need not mean selling out.

Organizational Identity Formation in Alternative Organizations: A Study of Three Benefit Corporations

2019 ◽  
Vol 33 (4) ◽  
pp. 484-511 ◽  
Author(s):  
Irina M. Kopaneva ◽  
George Cheney
Keyword(s):  
Identity Formation ◽  
Organizational Identity ◽  
Profit Maximization ◽  
The United States ◽  
Bottom Line ◽  
Social Mission ◽  
Benefit Corporation ◽  
Benefit Corporations ◽  
Multiple Case ◽  
New Type

The benefit corporation (BC) in the United States is a new type of corporation legally required to generate profit for its shareholders and to pursue public benefit. BCs explicitly work to balance profit maximization and social mission, which is an ongoing challenge for businesses with an expansive view of the bottom line. This multiple case study extends scholarship on identity formation (IF) in nontraditional organizations, such as BCs, by providing empirical evidence of how identities develop in relation to prevailing cultural sentiments. In particular, we demonstrate how BC struggles over organizational identity (OI) reference broader socioeconomic discourses, identify mechanisms through which perceived pressures suppress alternative interpretations of OI at a micro-level of member interaction, and expose tensions between dominant and alternative frames for business enterprise.

scholarly journals Better Benefits for Better Business: Certified Benefit Corporations Connected Through Internal Communications

2021 ◽  
Vol 10 (2) ◽  
Author(s):  
Carly Adair ◽  
Holly Overton
Keyword(s):  
Decision Makers ◽  
Bottom Line ◽  
Social Good ◽  
For Profit ◽  
Benefit Corporation ◽  
Benefit Corporations ◽  
Social And Environmental Performance ◽  
Corporate Social ◽  
Internal Communications ◽  
Qualitative Characteristics

Despite the broad body of research examining Corporate Social Responsibility (CSR) communications, there remains a lack of literature discussing the expansion of Certified Benefit Corporations (B Corps), which are businesses that meet a verified social and environmental performance to advance social good. Existing research analyzes the connection of internal communications and CSR. The following research reviews this relationship and suggests that more for profit companies qualify to be an effective B Corp due to shared qualitative characteristics of internal communications. The characteristics reviewed are corporate storytelling, triple bottom line values, and the importance of key decision makers. The literature review connects CSR and internal communications to form the foundation of 21 interview questions. The interview questions were used to identify qualitative characteristics of B Corps through an in-depth interview process. Top key decision makers in B Corps were selected to interview to gather qualitative information on their internal communications. The interview questions led to an open dialogue about the influence B Corps has had on each company. Each interview was transcribed accordingly and discussed in the research below. Three themes were discovered after reviewing the primary research. The overall consensus suggests that a sense of strong internal communications in a company can be represented in a Certified Benefit Corporation.

Board restructuring and successful demutualization: the stock exchanges

2018 ◽  
Vol 31 (3) ◽  
pp. 598-618 ◽  
Author(s):  
Laura Padilla-Angulo ◽  
Faten Ben Slimane
Keyword(s):  
Corporate Governance ◽  
Positive Impact ◽  
Stock Exchanges ◽  
Board Composition ◽  
Content Type ◽  
For Profit ◽  
Fine Grained ◽  
The Board Of Directors ◽  
The Impact ◽  
A Company

Purpose The purpose of this paper is to study corporate governance restructuring strategies of companies to adapt to new market conditions following conversion into a for-profit structure. It focuses on the changes in the composition of the board of directors. Design/methodology/approach The paper conducts a field experiment using stock exchanges, which have become more international over time, and many of which have been forced to demutualize and convert to for-profit structures to compete more efficiently. The paper does a fine-grained analysis of restructuring in the composition of the board using the ANOVA technique. The paper also examines the impact of this board composition restructuring on the reputation of the exchanges using a regression technique. Findings The authors find that the stock exchanges restructured board composition and refocused them to create better value. Results suggest that the conversion of a company to a for-profit structure brings efficiencies when accompanied by changes in the governing bodies. The authors also find that converting to for-profit firms had a positive impact on the reputation of the exchanges. The positive impact was even greater when accompanied by changes in board composition. Research limitations/implications A stronger focus on the corporate governance dimension to understand the successful demutualization of stock exchanges is needed. Originality/value The authors analyze the corporate governance dimension during demutualization processes of an under examined sector. The financial performance of the stock exchanges the authors study significantly improved after their conversion to for-profit organizations and provide an example of successful corporate governance restructuring.

Benefit Corporations and Corporate Social Intrapreneurship

2020 ◽  
Vol 10 (4) ◽  
Author(s):  
Salvatore Esposito De Falco ◽  
Antonio Renzi
Keyword(s):  
Positive Impact ◽  
Economic Policies ◽  
Economic Activities ◽  
Business Economics ◽  
Benefit Corporation ◽  
Current Economic Crisis ◽  
The Social ◽  
Benefit Corporations ◽  
Short Run ◽  
The One

AbstractThe present Special Issue focuses benefit corporation and social intrapreneurship as two topics which in the last decades have taken on a growing role in studies about both management and economics. This growing interest comes from globalization and digitization phenomena that have determined a change in firms’ stakeholders expectations. In this regard, social pressures about the behavior of companies have determined a new way of conceiving profit seen not only as shareholder remuneration but also as a direct or indirect tool to foster greater interdependence between economic activities and social objectives. For instance, the relationship between profit and sustainability no longer follows dichotomous logic. The firms are moving towards a path of socialization essential for their survival. The issue of sustainability, which previously appeared secondary in business economics studies, today is a pure necessity; the current competitive dimensions are based on intense and continuous engagement actions towards all stakeholders. This perspective is reflected in new theoretical strands such as the Social Emotional Wealth Theory, in which profit in the short run assumes secondary positions with respect to the survival not only of the company, but also of its founder, who tends to link its “immortality” to his/her firm. Thus, issues related to the sustainability are entering more and more the DNA of the firms on the one hand and economic policies are increasingly interested in the global aspects of sustainability (social, economic, environmental and governance) on the other hand. These trends have favored the development of new types of businesses, such as benefit corporation and start-ups related to the social entrepreneurship logic, committed to combining long-term profitability with certain standards and optimizing their positive impact on employees, the community in which they operate and the environment as well. The current economic crisis caused by Covid-19 seems to have accelerated this tendency to combine economic and social benefits.

Hospitals: N.Y. Appellate Court Denies Move to Privatize Public Hospital

1999 ◽  
Vol 27 (2) ◽  
pp. 202-203
Author(s):  
Robert Chatham
Keyword(s):  
New York ◽  
New York City ◽  
York City ◽  
Public Health System ◽  
Municipal Hospital ◽  
The Public ◽  
Public Benefit ◽  
For Profit ◽  
Benefit Corporation ◽  
The City

The Court of Appeals of New York held, in Council of the City of New York u. Giuliani, slip op. 02634, 1999 WL 179257 (N.Y. Mar. 30, 1999), that New York City may not privatize a public city hospital without state statutory authorization. The court found invalid a sublease of a municipal hospital operated by a public benefit corporation to a private, for-profit entity. The court reasoned that the controlling statute prescribed the operation of a municipal hospital as a government function that must be fulfilled by the public benefit corporation as long as it exists, and nothing short of legislative action could put an end to the corporation's existence.In 1969, the New York State legislature enacted the Health and Hospitals Corporation Act (HHCA), establishing the New York City Health and Hospitals Corporation (HHC) as an attempt to improve the New York City public health system. Thirty years later, on a renewed perception that the public health system was once again lacking, the city administration approved a sublease of Coney Island Hospital from HHC to PHS New York, Inc. (PHS), a private, for-profit entity.

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