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(NECN: Peter Howe - Boston) – For years, Massachusetts businesses have been able to register themselves officially as limited liability companies, or general partnerships, or sole proprietorships – and now, under legislation taking effect this month, as something new: a “benefit corporation.”
It’s a form of corporate charter that is to socially-conscious capitalism something like “LEED certification” is to energy conservation and sustainability, or what “fair trade certification” to companies importing coffee or crafts from developing nations. It is a set of standards and promises about how a company will treat its workers, the environment and its community.
The designation also requires companies to have an official “benefit director” on their board, whose job is to guarantee the company is delivering the social benefits it promises.
One of the first seven companies to opt for benefit corporation status is Dancing Deer Baking, long a stalwart of socially-conscious capitalism. As the 65-person company, based in the Readville section of Boston’s Hyde Park, ramps up this month for its busiest time of the year – adding up to 115 part-time seasonal workers to pump out as many as 18,000 gift boxes a day of cookies and brownies and treats – it is also formally celebrating a new corporate identity.
The benefit corporation status means Dancing Deer will commit to publishing a new annual report that isn’t just bottom-line profits and balance sheet data.
“One is community involvement, one is philanthropic efforts, one is our impact on the environment,’’ said Dancing Deer CEO Frank Carpenito in an interview on Monday.
Already, Dancing Deer has been a company where every worker gets stock options starting on day one; English classes are offered at work for employees who have emigrated from Cape Verde, Vietnam, Haiti and many other countries; and 1/3 of proceeds from sales of Dancing Deer’s Sweet Home treats go to organizations working to end homelessness.
“We’ve behaved for a lot of years like a benefit corporation,’’ Carpenito said. “This provides us with the opportunity to formally say we are one. We're going to be held accountable for it, and we want to have a greater impact in what we're doing.’’
In August, Gov. Deval Patrick signed an economic development and job creation bill into law that made Massachusetts, according to BCorporation.net, the 12th state allowing benefit corporation charters, along with California, Hawaii, Maryland, New York, Virginia, South Carolina, New Jersey, Louisiana, Pennsylvania, Illinois and Vermont.
State Senator Brian Joyce (D-Milton)pushed successfully to get the designation included in the law, and he said that on top of all the other benefits, it could protect companies from lawsuits by disgruntled shareholders upset that what the company’s leaders decided was the right thing to do did not necessarily maximize short-term profits, share price or proceeds from selling the business to a new ownership group.
“It makes these companies bulletproof” from such suits, Joyce said, because it sends a clear message to investors that environmental and community and workplace culture considerations are just as important to the business as maximizing profit.
Carpenito said he hopes to see more Massachusetts companies follow suit:
“What I would say to other CEOs is if you're doing the right things as a company, if you're trying to connect with your consumers, if you really want your employees to be part of your culture -- this is an opportunity to demonstrate that publicly and set a higher standard for your company.’’