For my White Paper, I will be exploring the following problem statement: Benefit corporations are not sufficiently regulated or audited to be as successful as they could be.
I have not done much research on this topic yet, but it seems like benefit corporations have a great potential to allow for-profit companies more freedom to pursue social benefit goals. Currently, not many states have laws allowing benefit corporations to form (there are seven to be exact). Once allowed to form, there are still many problems that being organized as a benefit corporation creates for the company. In order for benefit corporations to have as much success as possible and have the greatest effect on social causes, more needs to be done.
Munch, Steven. “Improving the benefit corporation: How traditional governance mechanisms can enhance the innovative new business form.” Nw. JL & Soc. Pol’y 7 (2012): i.
This resource by Steven Munch added to my view of benefit corporations by articulating many opportunities, but also flaws, that lie in benefit corporations. Munch views benefit corporations as the most ambitious new form of business, but also the most promising. Social enterprises struggle to act socially responsible under the traditional organizations of a business, a for-profit corporation or a non-profit. Benefit corporations provide many advantages to business, such as being required to consider all stakeholders in decisions, having legitimate standing as a company trying to have a social benefit, and attracting more socially conscious investors, just to name a few. They also, however, have disadvantages. Currently, due to lack of regulation, there is a possibility of abuse by the directors, and this arrangement may also limit the pursuit of profit. Munch believes that with a combination of legal statutes requiring benefit corporations to consider the impact of decisions on all stakeholders and internal regulation within the companies, benefit corporations can become a more viable option for the organization of a social enterprise. Having external third parties be involved in the regulation and rating of benefit corporations could also help, in his mind.
My thoughts about this topic seem to be very similar to Munch’s. He brings up a lot of good points of the great potential that benefit corporations have to make an impact on society, but how the regulation and standards for them need to be updated to make them as effective as possible. I think this piece of writing contributes to my larger goal by articulating successfully many of the advantages and disadvantages of benefit corporations, and how to improve this kind of incorporation.
This resource comes from the Northwestern Journal of Law and Social Policy, so it is likely an opinion. But, it is from Northwestern Law which seems like a trustable source. Munch references many sources during his piece, which hopefully means that he was thorough in his research. This would be considered a “societal” resource, so I will remember to not take everything that Munch argues as the truth. But, I do think he provides a good framework to view this issue from.