Assembly Speaker Sheldon Silver today announced passage of legislation to allow companies to organize for the first time as benefit corporations in New York. Known as B-Corps, entities organizing under such a designation would be required to pursue a general public benefit, defined generally as having a positive material impact on society and the environment.
"Benefit Corporations require companies to have a legal responsibility to stakeholders as well as shareholders so they can have a positive impact on their surrounding communities," said Silver (D-Manhattan). "This legislation demonstrates that profit and social responsibility are not mutually exclusive and that socially and environmentally-friendly business practices can enhance a company's strength and profitability."
If signed into law, New York would become the fifth state to allow B-Corps. Similar legislation has been signed into law in Maryland, Vermont, New Jersey, and Virginia.
Under the legislation (A4692-A/Silver) companies organizing as a benefit corporation would be required to pursue a general public benefit, defined as a positive material impact on society and the environment as assessed against a third party standard. The third party standard would include a comprehensive report card, used to measure a corporation's material positive impact. The report card would score how the corporation handles employees, consumers, the community, the environment, and overall corporate accountability and transparency.
The third party standard would provide points for each positive impact - for example, paying a living wage, providing health benefits, or using renewable materials. In addition to pursuing a general public benefit, a corporation could pursue a specific public benefit encompassing the environment, the arts and sciences, public health, under-served communities, employees, or other benefits for society.
The bill, sponsored by Senator Daniel Squadron (D-Brooklyn) in the Senate, will now be sent to the Governor.