As the New Economy expands with its emphasis on triple-bottom-line principles of people, planet and profit, innovative legal forms and business models have emerged. ASBC endorses the Benefit Corporation, Co-ops and other socially responsible business models. These legal entities help ensure that corporations serve both shareholders and society by considering their impact on multiple stakeholders, not simply investors.
Corporations, as a legal form, are a compromise between the interests of business owners and the interests of the rest of society. The corporate entity gives owners and investors strong legal protection against liability for the actions of the Corporation. Society had the right to expect something in return in exchange for this valuable protection: That all corporations measure up to some basic standards of social responsibility. This responsibility includes: 1) responsibility toward stakeholders including employees, consumers and communities affected by the Corporation; and 2) responsibility for natural resources consumed or impaired by the operations of the Corporation.
To evolve corporate structure to better balance these competing interests, we must:
- Create alternative entity forms such as benefit corporations which let corporations declare a public benefit as part of their purpose and to be measured in accordance with their delivery on this benefit.
- Facilitate hybrid forms of organizations such as social enterprise, in which a profit-making purpose and a public benefit purpose exist side-by-side.
- Change governance rules to make boards of directors more independent, less captive to management interests and more responsive to other stakeholders in society.
- Encourage employee ownership through cooperatives, ESOPs and other structures that give workers a greater voice, incentivizing ownership share in corporate operations.
- Enact and enforce regulations that give greater protection to other stakeholders, i.e. protecting consumers from faulty products and protecting employees from dangerous working conditions.
- Develop legal structures which create a better balance between corporations and the communities in which they operate. Balance would forestall potentially predatory practices, such as when an expanding corporation plays one community against another in a race to the bottom to attract a new employer.
ASBC believes strongly in the dynamic value of market forces and open competition to spur innovation and reward entrepreneurship. We also understand that these forces must operate in a results-oriented structure of rules, regulations, and practices so that economic activity is sustainable and the needs and interests of all stakeholders are met.