The 3 C’s of a Modern and Enlightened Society
[image error] Creating, Creative, and Caring
If we look around in most advanced nations of the world, there is surely no shortage of people Creating, being Creative, and Caring:
61,299,500 cars have been produced around the world this year so far (Creating)
$545 Billion dollars of advertising worldwide will have been created by end of 2014 (Creative)
$345 Billion dollars will be given to charities in just the U.S. alone in 2014 (Caring)
The numbers are impressive. But for the three C’s to provide us a more enlightened society, they need to work together. In other words, when in the act of creating, we insist on being creative to the best extent possible, and then add to that mix the act of caring about how our creation and creativity impacts others in a positive and helpful way, then we unleash the best of what capitalism can do for us. Unfortunately, much of the time, most people and companies let Creation and Creativity act independently and the moral grounding of Caring is not brought to the dance. In fact, our legal requirements for corporate directors explicitly state that they must focus on maximizing shareholder wealth and profit. To do otherwise, risks bringing on shareholder lawsuits.
Certainly, we have had some corporate leaders take some steps in the direction of what’s called a “triple bottom line focus” (profits, people, planet). But usually, this needs to always be couched in a way that whatever you do as a public company can always be linked back to maximizing profit. So, if the Coca-Cola Company for example, helps to alleviate water shortages in some parts of the world, they are doing it primarily because climate change has disrupted the water supply for their beverages and is thus hurting profitability. In this case, then, working on sustainable practices helps their long term profitability. This of course is good for them and for the local population they are helping. But it still leaves a wide gap in what truly needs to be done to improve things in many different areas. And, it also is usually a reactive measure (finally done when an issue is going to hurt profits, rather than a proactive act done to benefit society).
Benefit Corporations (B Corps)
But there is hope. A better, more caring form of corporate structure has been created, which allows Caring to be part of the corporate mission. It’s called the Benefit Corporation (B Corp). It is now possible to be registered as a B Corp in 26 states, including Delaware. You can also be certified as a B Corp (by meeting a set of criteria that shows how well you align with the mission of the Benefit Corporation framework). As of today, there are 1,140 registered B Corporations in the U.S.
B Labs explains the background on Benefit Corporations as follows:
A benefit corporation is a new class of corporation that voluntarily meets higher standards of corporate purpose, accountability, and transparency. Benefit Corporations: 1) have a corporate purpose to create a material positive impact on society and the environment; 2) are required to consider the impact of their decisions not only on shareholders but also on workers, community, and the environment; and 3) are required to make available to the public an annual benefit report that assesses their overall social and environmental performance against a third party standard. Becoming a benefit corporation gives entrepreneurs and investors an additional choice when determining which corporate form is most suitable to achieve their objectives. Does benefit corp affect our tax status? It doesn’t. Your company can still elect to be taxed as a C or S corp. Benefit corp status only affects requirements of corporate purpose, accountability, and transparency; everything else remains the same.
Benefit Corporations in essence take away the legal jeopardy that typical U.S. corporate structures place on companies for doing the right thing for all stakeholders in the name of profit maximization. They allow us to put another “C” word back into play – “Conscious Capitalism”.
-Jay Kshatri
www.ThinkSmarterWorld.com
Resources:
Benefit Corp Resource Center
B Lab - a nonprofit organization dedicated to using the power of business to solve social and environmental problems.
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