In a classroom at San Francisco State University’s downtown campus, about 40 academics joined a like number of social entrepreneurs to discuss how to bring academic rigor to an emerging business concept.
It was, said Dermont Hikisch of B Lab, a nonprofit group that has developed an assessment to certify socially responsible businesses as "B Corps,” "the first engagement between the academic community and benefit corporations at such a large scale.”
The (B)enefit Corporations: West Coast Forum, hosted in late April by B Lab and SF State’s Center for Ethical and Sustainable Business, sought to integrate B Corp and benefit corporation issues into business school curriculum. The promise of academic research and case studies to anchor the burgeoning field with theory and objective guidance also drew the social entrepreneurs.
These social entrepreneurs were searching for scholastic bedfellows to join them as architects in their grand experiment.
Benefit corporations are a new type of corporation, which possess legal recognition under corporate law in some states to consider stakeholders, not just stockholders, in making decisions. B Corps, on the other hand, are businesses certified to be socially responsible through B Lab. They do not have a distinct legal status.
Steve Piersanti, president and publisher of Berrett-Koehler Publishers, a certified B Corp, and a speaker on the morning panel, described his dilemma in the form of a challenge to the academics. “We need a parallel profession of auditors of companies' social responsibility, environmental responsibility, and organizational practices. And we need theories, research, standards, and infrastructure to support this endeavor. If it’s going to happen, then this group is going to be part of it,” he said.
Later in the day, Kirsten Tobey, co-founder and chief information officer of Revolution Foods, echoed Piersanti’s sentiment. Her seven-year-old company has provided more than 40 million meals to children in partnership with schools across the United States.
Tobey, like many B Corp executives, is on the front lines, navigating a dynamically evolving field with millions in high-stakes investments. She said her company needs “academic rigor behind us to demonstrate to investors who don’t get it yet that there is a real benefit as an investor, not just as a stakeholder.”
Seven States and Counting
While the concept of benefit corporations has historic roots in the charters of early America, the construct has picked up steam since 2010, when Maryland became the first state to legally recognize this new class of corporation.
This January, California became the sixth state to recognize this new legal entity, with the signing of AB 361. Soon after, New York became the seventh and legislation is in the works in four more states. But Delaware, where more than half of publically-traded US companies are incorporated, is not yet among them.