Pennsylvania recently passed legislation creating a new type of corporate legal entity, called the benefit corporation. A for profit company registered under these provisions can have as their purpose some beneficially social, environmental or other cause rather than purely profit driven. Over 600 businesses worldwide have already joined this socially-driven business movement. Legislation recognizing the benefit corporation as an entity has already been passed in 10 other states and is moving forward in 16 additional states.
Benefit corporations are a new class of corporation which is required to create a materially positive impact on society. The core principles of the structure of any certified benefit corporation are purpose, accountability and transparency. Companies interested in becoming a benefit corporation choose to do so because it will help forward a social mission, expand shareholder rights and provide the option to enact one or more general public benefit purposes.
To qualify as a benefit corporation the entity must:
1. Have a corporate purpose to create a material positive impact on the environment and society.
2. Have an expansion of the duties of directors to require consideration of non-financial stakeholders as well as the financial interests of shareholders.
3. Report on its overall social and environmental performance using a comprehensive, credible, independent and transparent third-party standard.