Benefit Corporation Governance is a Best Practice for Sustainability Leaders

Sustainability performance is critical for 21st Century businesses.  Employees and customers throughout the supply chain demand it.  Investors do as well, and with good reason—one recent survey that looks at 200 academic studies found that 88% of sources found that “robust sustainable practices . . . translate into cash flows.”  However, full integration of “robust sustainable practices” may require a governance change to endure over time, especially in the context of the public markets.

While a governance change may sound intimidating, most states in the US have recently adopted benefit corporation legislation, which makes the transition straightforward.  Adopting a benefit corporation structure aligns a firm’s governance with its sustainability goals, and can be accomplished with a simple amendment to the articles.  This legal change can improve and sustain best in class social and environmental performance.

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Frederick H. Alexander is Head of Legal Policy at B Lab.  Before coming to B Lab, he spent 26 years at Morris, Nichols, Arsht & Tunnell LLP as a corporate law attorney, including four years as managing partner.  He remains counsel to the firm.