South Mountain Company of West Tisbury was among the first six companies lined up December 3 to file the first benefit corporation paperwork with the Secretary of the Commonwealth’s office, the first day the new law became effective.
“This is a terrific day for Massachusetts as we become an even more attractive place for companies to do business and create jobs,” said Senator Brian A. Joyce, one of the authors of the provision included in a jobs bill passed this year said. “The benefit corporation designation is a cost-free tool that will promote economic development and bring considerable social and environmental improvements to the Commonwealth. A new economy is growing across the country made up of businesses that are finding ways to be successful while helping our environment and society at large, and the states that welcome these new businesses will be best poised for growth.”
A benefit corporation is a new corporate entity offering entrepreneurs and investors the option to build and invest in businesses that meet higher standards of corporate purpose, accountability, and transparency. In a traditional corporation, fiduciary duty focuses almost exclusively on increasing shareholder profits. Organizing as a benefit corporation allows corporations to consider public benefit in addition to profit, according to a press release.
In the standard structure for a large corporation, called a “C corporation,” the CEO has a legal duty to maximize return for shareholders. A benefit corporation, on the other hand, is required by law to create “a material, positive impact on society and the environment,” and — while still making a profit — to consider the effects of its actions on its customers, its employees, society, and the environment, according to a report in the Boston Globe.
Representatives from Dimagi, Inc. in Cambridge, Project Repat in Roxbury, ZeroEnergy Design, P.C. in Boston and Orleans, South Mountain Company, Inc., Dancing Deer Baking Company in Boston, LEAP Organics in Cambridge, and Green Engineer LLP in Concord were all on hand for the event, and most were able to file their paperwork with the Secretary of the Commonwealth’s office today or plan to in the immediate future.
“As a worker-owned cooperative and a confirmed triple bottom line (people, planet, and profits) business, South Mountain was made for benefit corporation status and benefit corporation status was made for us,” said president John Abrams of South Mountain. “In a nutshell, it’s who we are We are thrilled that the Legislature and B Lab have teamed up to make this opportunity available for Massachusetts businesses. It’s one more sign that a new, restorative economy is coming to life in the wake of the troubling times of the recent past.”