B corporations

[pktechgirlbackup]

Publicly traded corporations are legally obligated to be sociopathic: doing something moral at the cost of profits is a violation of shareholder rights. This isn't as terrible an idea as it sounds. The actual point of the law is to prevent executives or large share holders from ripping off small shareholders by funneling money from the large corporation to their personal holdings (by, e.g., giving to a charity but earmarking the money to buy products produced by a family member). I support that idea. Letting individuals with little money and no connections invest with minimal friction is important to class mobility. But it did have this rather nasty side effect.

Someone finally fixed this with a Benefit Corporation. B Corporations specify their altruistic mission in their articles of incorporation, and are required to report their progress using established third party standards in their annual reports. I'm freaking out a little bit at the ambiguity implied by "established third party standards", but I'm not sure there was a better solution. And there's even a non-profit dedicated to certifying with companies that meet (their vision of) acceptable levels of accountability and performance. We gave people more freedom and private organizations popped up to help people use it wisely. It's a libertarian wet dream.

Comments

[dukhat.livejournal.com]

This article seems to suggest that the original purpose of the "shareholder rights" laws was something else. http://www.forbes.com/sites/stevedenning/2011/11/28/maximizing-shareholder-value-the-dumbest-idea-in-the-world/

Surely there would be other ways to make pillaging a company illegal unless you owned a controlling share of the company?