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Thursday, July 18, 2013

Socially-responsible companies get special state status

By TIM FAULKNER/ News staff

PROVIDENCE — Do you want your company to have a backbone? Well, now it's about to become a reality in Rhode Island.

bill passed in the waning minutes of the 2013 General Assembly session last week — and sent to Gov. Lincoln Chafee on Thursday — allows corporations to combine its social or environmental mission with capitalism. In fact, it gives credence to the idea that serving the greater good can enhance growth and profits.

A benefit corporation, now permitted in 19 states, simply broadens a business’s fiduciary obligation beyond financial gain. The new legal entity provides “a specific public benefit” such as services to low-income or underserved groups, protecting the environment, improving pulbic health, and promoting the arts and sciences. The company must also produce an annual public-benefit report.

During the floor debate in the House, Rep. Teresa Tanzi, D-South Kingstown, cited the sale of Ben & Jerry’s ice cream to the multinational Unilever in 2000. Although Ben & Jerry’s won conditions to maintain independence, the acquisition gave the socially conscious ice cream makers a reputation of caving to profits over principal.

To show its faith in its commitment to its social mission, Ben & Jerry’s made the leap in 2012 to becoming the first subsidiary to earn the separate a B-Corp certification.

Tanzi said the socially conscious and environmental industry is a $3 trillion sector that Rhode Island can cultivate. Benefit corporation owners like the fact that they can raise additional capital and keep equity in the business while not having to always sell to the highest bidder.

Tanzi has already spoken with a tech start-up entrepreneur from California interested in incorporating as a benefit corporation in Rhode Island.

“It really is a big opportunity,” she said. “A company can set the standards to what they want to give back to the environment, to the neighborhood and investors.”