Bill would allow businesses to create initiatives benefiting communities
HARRISBURG, October 17, 2012 – State Sen. Daylin Leach (D-Montgomery/Delaware) announced that a bill allowing businesses to incentivize corporate activism has been approved by the legislature and is headed to the governor’s desk to be signed into law. The bill was unanimously supported by both the Senate and House of Representatives.
“Many people outside of the business world might be unaware that until now, for-profit organizations had their hands tied when it came to performing activities commonly associated with non-profit groups,” Leach said. “But because of this change to the corporate structure, businesses will be able to do something they’ve never been able to do before — incorporate charitable endeavors into their missions without the fear of legal repercussion.”
House Bill 1616, introduced by Rep. Gordon Denlinger (R-Lancaster) and inspired by Leach’s B-Corps bill, would create a new business class that would provide for the recognition of Benefit Corporations (“B-Corps”) — companies that have the ability to more positively impact their communities and create a new incentive structure to encourage corporate activism. The Benefit Corporation class would reclassify the fiduciary duties of corporation directors, allowing them to take non-financial interests into consideration when making decisions for the corporation.
“I’d like to thank my colleague, Rep. Denlinger, for introducing this bill and bringing it to the attention of the House of Representatives. It’s an issue I’ve been working on for a long time I hope that after Gov. Corbett signs the B-Corps bill into law, it will encourage Pennsylvania businesses to take advantage of this opportunity and give back to their communities,” Leach said.
The bill would allow companies that aim to make a positive social and environmental impact on their communities to make those “for benefit” operations part of their corporate mission. Currently, other corporation classes must make decisions based exclusively on maximizing profits. Under the new corporate classification model, Benefit Corporations could not be held liable for lost monetary value as a result of socially-conscious decisions made.
Under the bill, the process of becoming a Benefit Corporation is entirely voluntary and based on shareholder desire. If a business chooses to become a Benefit Corporation, it must provide yearly disclosures of the public benefit efforts the company has undertaken to shareholders.
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