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Benefit Corporations Look Beyond The Profit Motive

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Benefit Corporations Look Beyond The Profit Motive

Benefit Corporations Look Beyond The Profit Motive

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LINDA WERTHEIMER, HOST:

Corporations generally exist for one reason, to make money. But there's a movement now among some corporations to create, not only profit, but also a tangible benefit to society and the environment. They're called benefit corporations. And as Jack Rodolico reports, they have caught the attention of lawmakers across the country.

JACK RODOLICO, BYLINE: Before I tell you what a benefit corporation is, let's just visit one. In the tiny town of Gilsum, New Hampshire, you'll find the headquarters of W.S.Badger, Inc. The company makes all-natural cosmetics marketed under the name Badger Balm. When CEO Bill Whyte founded the company in 1994, the staff was lean.

BILL WHYTE: Early on, I started making soup on Friday. And I loved what happened to the company, seeing everybody sit down at the same time.

RODOLICO: That sense of togetherness extends to the company's seventy employees today. Whyte took me on a tour.

WHYTE: We have a gym right here. And down at the other end, we have a yoga room. This is the mixing room.

RODOLICO: Smells like sunscreen and bug spray - smells good.

WHYTE: I think that'd be citronella, lemongrass, geranium -would probably be the signature smells.

RODOLICO: The cubicles at Badger are naturally lit and lined with wood. You can bring your baby to work or leave your three-year-old at the company day care center up the road. So it's a nice place for the employees. And that seems to pay off for the business. Badger has doubled in five years, expanding their market to 26 countries. Badger is a good example of what's called a benefit corporation. This is a type of company certified as being motivated by more than just the hunger for profit. Think of it this way. The USDA certifies organic foods, and Good Housekeeping puts its seal of approval on quality products, like washing machines and skillets. And since 2006, a nonprofit organization called B Lab has been certifying entire corporations. It deems to be concerned about their communities and the environment. Erik Trojian, the director of policy, says B Lab measures just about everything the company does.

ERIK TROJIAN: Supply chain - their interaction with the community - the environment. So that's one way that they signal to the consumer that they're a different type of company - all the way from Badger in New Hampshire, Patagonia, Ben and Jerry's. But another way to do that is to bake your morals and your missions into the DNA of your company.

RODOLICO: Many consumers want to do business with companies that have that kind of DNA. But how can you tell which ones are the real deal? In 27 states, legislatures have created a legal status for benefit corporations. The bill in New Hampshire originated with Badger. So why would a company want a law? It's extra work, and there are no tax breaks.

POLINA PINCHEVSKY: There's so much green washing going on out there. There's so many companies claiming to care and to do the right thing.

TIM FRICK: And it's all being part of a larger global movement of, you know, making sure that business is being used as a force for good and not for evil.

RODOLICO: That was Polina Pinchevsky at RoundPeg Communications in Maryland and Tim Frick from MightyBytes, a tech company in Chicago. They also point out there are legal protections when a state signs on. A shareholder can't sue a benefit corporation for valuing the environment as much as profit. So basically, a state can create a legal framework for a benefit corporation to work in. Then the company and the stakeholders can hash out what benefit the corporation will provide. Erik Trojian says B Lab, headquartered northwest of Philadelphia, will continue certifying companies with their more rigorous standards. And he points out there are problems because of the patchwork nature of state laws. For example, in Nevada, the state's incorporation document clearly lists benefit status as an option. And 236 companies signed up in only four months. That's a very different experience from New Jersey.

TROJIAN: Unfortunately, on the state's website, you can't find their information. And you can't find stuff about benefit corporations.

RODOLICO: And New Jersey and some other states don't count how many companies have registered, so it's tricky to know how many there are. But we can count at least 750 benefit corporations from the states that do count. Despite the differences from one state to the next, the overall movement is gaining momentum. As many as nine states may take it up next year. For NPR News I'm Jack Rodolico in Concord, New Hampshire.

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