- Purpose: A business must intend to create a general public benefit, a “material positive impact on society and the environment.” A company may also state a more specific public benefit. The company must be assessed by an independent third-party standard whether it is creating positive impact.
- Accountability: A benefit corporation must consider any action in light of employees, customers, environment and long-term interests, described as a “triple bottom line” of people, planet and profits. This represents a significant departure from the traditionally mandated fiduciary requirement to maximize shareholder profits.
- Transparency: A benefit corporation must present a yearly report to its shareholders and the public on its performance in meeting social and environmental goals, assessed against a third-party standard. Failure to achieve public benefit goals may give rise to a shareholder lawsuit.
What is a Public Benefit Corporation?
Maryland allows social enterprises to pursue legal designation
By Judy Malmon
In order to qualify for this designation, an organization must comply in three areas:
- Create a public benefit
- Consider people, planet and profits in every action
- Present a yearly report to shareholders and the public on meeting social and environmental goals