Over the weekend, Virginia Governor Bob McDonnell signed legislation that will make Virginia the fourth state to allow stock corporations to become Benefit Corporations (B Corps). The bill had unanimously passed both the Virginia State Senate and the Viriginia State legislature. Governor McDonnell signed HB 2358 on March 26, 2011 and the legislation will take effect on July 1, 2011.
Previous states that have adopted B Corp legislation include Maryland, Vermont and New Jersey. Several other states are working on their own versions of benefit corporation legislation.
While companies in any state can choose to be certified B Corps through the nonprofit B Labs (as Care2 has done), the legislation adds a way to put “social good before shareholder value”. B Lab, in their 2011 annual report described the reasons for the legislation:
The legislation requires officers and directors to consider all stakeholders in major business decisions, and it provides increased accountability, as shareholders are able to enforce that higher standard of consideration. In addition to this change in fiduciary duties, Benefit Corps are required to “create a material positive impact on society and the environment” as measured by—and publicly reported using—a recognized, independent and transparent third-party standard.
Photo credit: via Flickr by Tony the Misfit