Joe KoshollekWisconsin Governor Scott Walker signed benefit corporation legislation into law on November 27, 2017.
A few weeks ago, Wisconsin’s Republican Governor, Scott Walker, and its Republican legislature signed new legislation allowing Wisconsin businesses to formally incorporate as benefit corporations. If you haven’t heard the term before, a “benefit corporation” is a new for-profit corporate model that requires a corporation to consider its impacts on society, workers, the community, and the environment in addition to shareholder profits.
That a conservative led state would pass such seemingly liberal-minded legislation struck me as noteworthy, and, quite frankly, a bit odd. So I decided to ask Abigail Barnes, the woman who helped pass the legislation and the author of Yale’s recently released guide to benefit corporations, about it.
Here’s what she had to say:
How is a benefit corporation different from a more traditional corporation like a C Corp?
There’s very little difference between a benefit corporation and a C Corp. Tax law treats them equally. The main difference is that a benefit corporation builds language into its articles of incorporation and bylaws requiring that its corporate directors and officers consider all stakeholder interests (e.g., shareholders, community, environment, employees and customers) in corporate decision-making, while creating a material positive impact on society and the environment. Many businesses do this anyway, but it’s a way of formalizing a company’s commitment to higher standards of corporate governance.
This doesn’t seem like the type of legislation that would garner enough support and be of a high-enough priority to get passed in such a heavily conservative-leaning state. How and why do you think it gained Republican support?
When you think about it, it’s really not all that surprising. Benefit corporations are a free-market solution for companies that don’t believe short-termism is a good business model, or that want to use business as a force for social good while staying profitable. In many respects, benefit corporations are shifting what are otherwise government responsibilities to the private sector. The market is demanding these types of companies, and the government shouldn’t get in the way of allowing them to exist. Besides, when two-thirds of states recognize these entities, at a certain point you reach critical mass, and those states that haven’t yet passed this legislation are likely shutting out business opportunities.
What are the benefits of becoming a benefit corporation?
">Joe KoshollekWisconsin Governor Scott Walker signed benefit corporation legislation into law on November 27, 2017.
A few weeks ago, Wisconsin’s Republican Governor, Scott Walker, and its Republican legislature signed new legislation allowing Wisconsin businesses to formally incorporate as benefit corporations. If you haven’t heard the term before, a “benefit corporation” is a new for-profit corporate model that requires a corporation to consider its impacts on society, workers, the community, and the environment in addition to shareholder profits.
That a conservative led state would pass such seemingly liberal-minded legislation struck me as noteworthy, and, quite frankly, a bit odd. So I decided to ask Abigail Barnes, the woman who helped pass the legislation and the author of Yale’s recently released guide to benefit corporations, about it.
Here’s what she had to say:
How is a benefit corporation different from a more traditional corporation like a C Corp?
There’s very little difference between a benefit corporation and a C Corp. Tax law treats them equally. The main difference is that a benefit corporation builds language into its articles of incorporation and bylaws requiring that its corporate directors and officers consider all stakeholder interests (e.g., shareholders, community, environment, employees and customers) in corporate decision-making, while creating a material positive impact on society and the environment. Many businesses do this anyway, but it’s a way of formalizing a company’s commitment to higher standards of corporate governance.
This doesn’t seem like the type of legislation that would garner enough support and be of a high-enough priority to get passed in such a heavily conservative-leaning state. How and why do you think it gained Republican support?
When you think about it, it’s really not all that surprising. Benefit corporations are a free-market solution for companies that don’t believe short-termism is a good business model, or that want to use business as a force for social good while staying profitable. In many respects, benefit corporations are shifting what are otherwise government responsibilities to the private sector. The market is demanding these types of companies, and the government shouldn’t get in the way of allowing them to exist. Besides, when two-thirds of states recognize these entities, at a certain point you reach critical mass, and those states that haven’t yet passed this legislation are likely shutting out business opportunities.
What are the benefits of becoming a benefit corporation?
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