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Socially responsible capitalism makes headway in legislature

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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.

 

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I don't quite get it.  They

I don't quite get it.  They seem to want to be a charity type operation, but avoid the legal hassels put on charities and non-profits, and also be allowed to make a profit.

Why not just operate as a business and do what you please with the businesses money.  Customers and 'share holders' will either agree or disagree with your product and philosophy.  Just like any other business.

I suspect there is more to the cover being provided by a B corporation than is being reported.

Hey, if it pees off the

Hey, if it pees off the teabaggers I'm all for it!

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About the blogger

John Murawski has been a full-time newspaper reporter since 1991, with stints at Legal Times and The Chronicle of Philanthropy (both in Washington, DC), The Philadelphia Inquirer and The Palm Beach Post (in South Florida) before arriving at the N&O in December 2004. At the N&O he covers energy (nuclear, coal, renewable, efficiency), hydraulic fracturing (or "fracking"), public utilities and health care. His beat includes PSNC Energy, Piedmont Natural Gas, Duke Energy Progress, PowerSecure International, GlaxoSmithKline, Merck, Novo Nordisk, Pfizer, Biogen Idec and others. He has also contributed more than 30 book reviews on topics spanning botany, history, science and religion. You can reach him at 919-829-8932 or e-mail him.
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