All Companies should become Benefit Corporations

With all the resources shrinking in our world, stories of corporate greed and corruption, and the proliferation of products that harm people(cigarettes, porn, casinos, junk food, etc), it makes you wonder “How can we better realign incentives with capitalism to help improve our world?” I think one solution to that is have all companies become Benefit Corporations.

Benefit Corporations are companies like regular C Corporations, but also have a legal responsibility to be accountable for a social issue of their choosing. They are still for profit, but they have an extra responsibility to their shareholders to report on progress of their social mission. So at your typical board meeting, the company would present their quarterly financials along with metrics for their social responsibility. A Benefit Corporation can choose whatever social responsibility they care about, such as protecting the environment, creating sustainable plastics, educating the poor, expanding the arts, etc. Some well known companies that are Benefit Corporations are Kickstarter and Patagonia. You can read more about Benefit Corporations on Wikipedia.

If a company has been around for at least 10 years, is a public company, is making an annual profit of at least $50m , or has annual revenue exceeding $200m, then the company should be required to work on some social issue to directly help society. Many companies try to help with social issues, but often this is really just part of their marketing department. By making this a requirement that is reported, they will be putting their money where their mouth is. It will help them put more focus on helping society and set an example for other companies. Of course there will still be corporate greed and corruption, but it would be an overall net improvement. You would not want startups to participate in this, because they are focused on staying alive, but they should be planning for it. Just like we have children who we train in school to eventually enter human society. The way forward with this is probably to get current large corporations like Apple and Google to commit to converting which would create a domino effect with other companies. Maybe there are benefits or tax incentives that government could offer to help accelerate this conversion.

Or if you want to really stir things ups, imagine if you take cryptocurrencies and combine them with Benefit Corporations. Cryptocurrencies still mostly seem like a scam to me, but I still have hopes that something good will eventually come out of them. One of the initial promises of cryptocurrencies was the idea of decentralized autonomous organizations (DAO), but nothing useful has emerged yet. Now that is an idea to ponder on for next time….

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