NY Law Creates New Kind of Corporation

Spurs Investment to Create High Quality Jobs and Use Business to Solve Social Problems

ALBANY, N.Y., Dec. 13 /CSRwire/ – At midnight last night a law was enacted creating benefit corporations, a new class of corporations required to create benefit for society as well as shareholders.  Unlike traditional corporations, benefit corporations are required to create a material positive impact on society and the environment; consider how decisions affect employees, community and the environment; and publicly report their social and environmental performance using established third-party standards.

Continuing a national trend of strong bi-partisan support for benefit corporation legislation, the New York bill (S79-A and A4692-A), sponsored by Senators Daniel Squadron (D-25) and Assembly Speaker Sheldon Silver (D-64) and co-sponsored by William Larkin (R, C-39), passed both houses of the New York legislature unanimously.

“Political leaders like Speaker Silver, and Senators Squadron and Larkin understand that New York needs to attract businesses whose core purpose is to create more high quality jobs and to improve the quality of life in communities across the state,” said Andrew Kassoy, co founder of B Lab, the nonprofit organization that drafted the model legislation.  “The benefit corporation bill will unlock billions of dollars in impact investment capital and enable entrepreneurs across the state to start businesses that solve some of society’s greatest challenges.”

“Benefit corporations will mean New York is open for business in an important new way. Benefit corporations will unlock billions of dollars in new investments in New York while empowering companies to do well and do good,” said Senator Squadron. “By offering this opportunity to entrepreneurs and investors, New York will bring new businesses into the state, new investors into the market and a new socially-minded approach for our entrepreneurs.”

“By bringing benefit corporations to New York, we are showing that profit and social responsibility are not mutually exclusive,” said Speaker Silver.  “This law will continue our efforts to strengthen and diversify our economy while ensuring that New York remains a national leader in progressive policies that help our environment, protect consumers and bolster the rights of working men and women.”

“I am very happy to see that this bill has finally become law.  It will enable businesses to grow without the infringement of state government, and will help New York become a more business friendly state,” added Senator Larkin.

The new law addresses a long time concern among entrepreneurs who need to raise growth capital but fear losing control of the social or environmental mission of their business. These entrepreneurs and other shareholders of benefit corporations now have additional rights to hold directors accountable for failure to create a material positive impact on society, to consider the impact of decisions on employees, community, and the environment, or to inform the public about the company’s overall social and environmental impact as assessed against a credible, independent third party standard.

New York is the seventh state to pass benefit corporation legislation, joining Maryland, Vermont, New Jersey, Virginia, Hawaii, and most recently, California.  The legislation has enjoyed broad bi-partisan support nationally, with a vote tally of 892 ayes and 62 nays, and the signatures of both Republican and Democratic governors. The New York bill had significant support from business (partial list below), including Eileen Fisher, City Light Capital, and UncommonGoods; and from more than 2,600 New York citizens, all interested in creating better choices for the growing number of entrepreneurs and investors who seek to create businesses that create both social and shareholder value.

“The passage of benefit corporation legislation is an important and much needed step forward to grow our New York state economy and create more jobs which can also provide greater social and environmental benefit,” says David Levine, co-founder of the American Sustainable Business Council whose members’ organizations represent over 100,000 businesses. “At a time when the country is looking for solutions to build the economy, New York is helping to lead the way with an innovative and sustainable business strategy.”

See below for list of supporters and individuals willing to comment on the legislation

B Lab: is a nonprofit organization dedicated to building a new sector of the economy that uses the power of business to solve social and environmental problems.  B Lab drives systemic change through three interrelated initiatives: 1) building a community of Certified B Corporations to make it easier for all of us to tell the difference between “good companies” and just good marketing; 2) driving capital to impact investments through use of GIIRS Ratings and Analytics; and 3) advancing supportive public policies to accelerate growth of social entrepreneurship and impact investing.  For more information, check www.bcorporation.net and www.benefitcorp.net.

American Sustainable Business Council: is a growing coalition network of business networks organizations and businesses committed to advancing a new vision, framework and policies to support a vibrant, equitable and sustainable economy. The Council brings the business perspective, experience and strength to stimulate our economy, benefit our communities, and preserve our environment. Today, the organizations that have joined in this partnership represent over 10065,000 businesses and social enterprises and more than 150,200,000 entrepreneurs, owners, executives, investors and business professionals and other individuals. For more information, check www.asbcouncil.org.

Care2:  with more than 17 million members and over 700 nonprofit partners worldwide, Care2 is the largest online community that empowers millions of individuals to lead a healthy, sustainable lifestyle and support important causes. Care2 is a B Corporation, or social enterprise, that generates revenues by connecting individuals with nonprofits and business that are making the world a better place. Care2 has worked with B Lab to provide thousands of signatures to advocate for Benefit Corporation legislation passed in California and New York. Founded in 1998, Care2 has collected over 80 million signatures on petitions featuring timely and important issues. Please visit the Care2 community at http://www.care2.com.

Supporters of New York State’s Benefit Corporation law:

Business Organizations American Sustainable Business Council; B Lab; Syracuse First; Buffalo First; Ithaca First; Onondaga Citizens League; The JustGreen Partnership; Westminster Economic Development Initiative, Inc.

Individual Businesses City Light Capital; Eileen Fisher; Comet Skateboards; CSRHUB; Green Forestry; Green Team; Greyston Bakery; Icestone; Management Resources; Mission Markets; Peeled Snacks; RecycleBank; Runa; Singlebrook Technology; Uncommon Goods; Vendorboon, LLC

Other Individuals Willing to Comment On the Bill

David Bolotsky, Founder of UncommonGoods, a catalog and online gift store based in Brooklyn, NY.  718.210.1175

Andrew Greenblatt, Adjunct Assistant Professor at NYU’s Wagner School of Public Service, a Professor specializing in social ventures.  917-885-9309

Tim McCausland, Vice President of Orange County Trust Company, a regional bank in the Hudson Valley.  (845) 467-6011

Gary Schuster, Senior Counsel, Jacobowitz & Gubits, LLP, attorney in the Hudson Valley.  845-778-2121 Ext. 230

Kyle Westaway, Westaway Law, attorney in New York City and lecturer at Harvard Law School.  646-942-2380