Advocates of socially responsible capitalism are hoping North Carolina becomes one of the few states in the nation that gives businesses legal permission to fulfill moral obligations -- to the poor or to the environment -- at the expense of their own shareholders.
Legislation recently introduced in the N.C. General Assembly could get its first vote as early as Tuesday in a Senate judiciary committee. The bill would allow a business to turn idealistic mission statements into legally enforceable documents by diverting company profits to humanitarian goals.
The bill has been in the works for more than a year by the B Lab, a Pennsylvania group that promotes socially responsible entrepreneurship. Nationwide, 381 companies have incorporated themselves as B corporations, with 13 in this state.
The B stands for "benefit" and requires member companies to commit to serving a public interest and submit to audits measuring governance, accountability, community service, environmental stewardship and other public benefits. The concept runs counter to the well-established principle that the sole purpose of a corporation is to generate wealth for shareholders.
To date, three states -- Maryland, Vermont and New Jersey -- have adopted legislation that gives legal recognition to B corporations. Similar legislation is pending in eight other states, including North Carolina.
North Carolina's bill (S 26) was introduced by two Democrats and two Republicans. The Democrats are Don Vaughan of Guilford County and Eleanor Kinnaird of Orange and Person counties. The two Republicans are Richard Stevens of Wake County and Peter Brunstetter of Forsyth County.
Incorporating as a B corporation would be voluntary, and would likely appeal to a tiny fraction of the state's businesses.
Advocates for socially responsible capitalism say legal backing is needed to help customers, investors and the public distinguish between businesses genuinely committed to social welfare and companies that have slick marketing campaigns.
The absence of legal cover hasn't stopped businesses from incorporating as B corporations, although their mission statements don't carry any legal weight. One local example is the Redwoods Group, a Morrisville company that insures Jewish Community Centers and YMCAs.
Redwoods pays its employees to perform 40 hours a year of volunteer community service for charities or nonprofits. The company caps its CEOs salary at 10 times the wage of its lowest-paid worker.
And Redwoods has taken a loss two years in a row rather than lay off employees. Its CEO, Kevin Trapani, is an outspoken critic of business practices he considers predatory and Darwinistic.
Redwoods' corporate mission statement reads like a moral treatise, sprinkled with references to philosophers, theologians and poets.