1. Benefit Corp Revolution:
What it means for businesses,
non-profits, and
YOU
SPEAKERS
Jonathan Storper, Esq.
Hanson Bridgett LLP
MODERATED BY
Leslie Keil, Esq.
Dermot Hikisch Hanson Bridgett LLP
B Lab
Josh Becker PRESENTED BY
New Cycle Capital

2. LESLIE KEIL, Esq.
Senior Counsel
Hanson Bridgett LLP
GEO Circle Co-Chair
Full Circle Fund

3. Tweeting Tonight?
Mention
@HansonBridgett
@FullCircleFund
@Bcorporation
@JoshBecker2010
#bcorp #SocEnt #csr

4. Socially Responsible Businesses
Seeking Legal Protection for Stated Values
• Safe harbor for directors for multi-stakeholder approach
• Flexibility to prioritize among profits, environment and social
concerns
Better Exit Strategies and Succession Planning
• Stated values unchanged by sale of minority/majority of stock
• Greater flexibility to identify the "right" buyer and succession
planning

5. Better Business Model
• "Firms of Endearment" beat S&P 500 peer firms return
9x over a 10 year period
• 60 million Americans are "conscious consumers"
• "Socially responsible" investors manage $2.7 trillion
• 100,000 sustainable businesses adopting a better model
• Aligned strategic partners, vendors, suppliers and
stockholders

6. JONATHAN
STORPER, Esq.
Partner & Sustainable
Business Practice Chair
Hanson Bridgett LLP

7. What is a Benefit Corporation?
• New class of for-profit general California corporation
• Create traditional economic value, PLUS...
 Purpose: creates a material positive impact on society and
environment, taken as a whole
 Accountability: In addition to profits, must consider
environmental and social factors in actions and operations
 Transparency: reports annually on environmental and
social performance using independent standards
• Flexible: can revert to general corporation or other entity
• No independent certification requirements

8. What Makes a
Benefit Corporation Different?
Purpose
Traditional Corporations
•Engage in any lawful business activity
•May identify narrower purpose in Articles of Incorporation
Benefit Corporations
•ADDITIONAL purpose to create "general public benefit"
 Definition: A material positive impact on society and the
environment taken as a whole, from the business and
operations of a benefit corporation (§14601(c))
 Adds to and/or limits other corporate purposes

9. What Makes a
Benefit Corporation Different?
Purpose
Option to include 1+ "specific public benefit" purposes
"Specific public benefits" (defined in §14601(e)):
•Providing low-income or underserved individuals or communities:
– beneficial products or services
– economic opportunity beyond creating jobs in ordinary course of
the business
•Preserving the environment
•Improving human health
•Promoting the arts, sciences, or advancement of knowledge
•Increasing flow of capital to entities with public benefit purpose
•Accomplishing any other particular environmental/social benefit

10. What Makes a
Benefit Corporation Different?
Accountability
Mandatory: Board of Directors and Officers must consider impact
on ALL of the following (§14620):
•Shareholders • Customers
•Employees/workforce • Environment (local and global)
•Community and society, including any local community where
company, its subsidiaries or suppliers are located
•Short and long-term interests, including:
– benefits that may arise from its long-term plans; and
– possibility that interests may be best served by retaining control
•Ability to accomplish general, and any specific, public benefit purpose

11. What Makes a
Benefit Corporation Different?
Transparency
Annual Benefit Report (§14630)
•Explanation of how company pursued general/specific public
benefit, the extent to which it was achieved, and circumstances
that hindered achievement
•Process and rationale for selecting the third party standard
used to prepare report
•Any connection between the company and creators of the third
party standard used that might affect credibility

12. What Makes a
Benefit Corporation Different?
Transparency
How does the Assessment work?
•Annually assess triple bottom line performance using an
independent, third-party standard (§14600(g))
•Standard must be comprehensive, credible, independent and
transparent
•Must apply the standard consistently from one year to the next
or explain reasons for inconsistencies
•No auditing or certification required
4024240.1

13. What Makes a
Benefit Corporation Different?
Transparency
Third Party Standard Requirements
• Independent third party standard
• Uses a balanced multi-stakeholder approach
• Developed by a company with no material financial relationship with
the benefit corporation (= or > 5% ownership/income stream)
• No more than 1/3 of the benefit corporation directors represent an
association from a specific industry or a business which is assessed
against the same standard
• The benefit corporation is not materially financed by an association
or business which is assessed by the same standard
4024240.1

14. What Makes a
Benefit Corporation Different?
Transparency
Sample of Qualifying Standards*
• B Impact Assessment (www.bcorporation.net)
• Global Reporting Initiative (www.globalreporting.org)
• Green Seal (www.greenseal.org)
• People4Earth Business Framework (www.people4earth.org)
• Food Alliance (www.foodalliance.org)
• ISO 2600 (www.iso.org/iso/social_responsibility)
• UL Environment – ULE 880 (www.ulenvironment.com)
* New standards are being developed and existing standards being tailored
to meeting Benefit Corporation criteria
4024240.1

15. What Makes a
Benefit Corporation Different?
Transparency
Disclosure of Annual Benefit Report
• Send to all shareholders within 120 days after fiscal year end
• Post on benefit corporation's website
• Website version may exclude any financial or proprietary info
• If no website, then provide free copy to anyone upon request
4024240.1

16. Resources
 Benefit Corporation Information Center hosted by B Lab:
www.benefitcorp.net
 Firms of Endearment: How World-Class Companies Profit from
Passion and Purpose by Rajendra S. Sisodia, David B. Wolfe, and
Jagdish N. Sheth. Upper Saddle River, PA: Wharton School, 2007
 Profit for Life: How Capitalism Excels by Joseph H. Bragdon.
Cambridge, MA: Society for Organizational Learning, 2006
 The Impact of a Corporate Culture of Sustainability on Corporate
Behavior and Performance by Robert G. Eccles, Ioannis Ioannou and
George Serafeim. Boston, MA: Harvard Business School, 2011

17. DERMOT HIKISCH
Director of Business
Development
B Lab

18. Big Problem
Our current capitalist system wasn’t designed for this
• Current corporate law works against sustainability and social impact
• No standards to distinguish ‘good companies’ from good marketing

19. Big Opportunity
The evolution of capitalism
20th Century 21st Century
Shareholder corporation Stakeholder corporation
Maximize Create
shareholder value social and shareholder value
exclusively simultaneously

20. The Entrepreneur is The Engine of Change
B Lab is a nonprofit organization that supports the world’s leading
entrepreneurs using business to solve social problems
Initiative 1:
Shine a light on the
Entrepreneur
Initiative 2: Initiative 3:
Remove legal Drive capital to the
impediments for the Entrepreneur
Entrepreneur

21. Big Need
Standards to drive support
Last 10 years Next 10 years
Good products Good companies
+ 500 others
B Corporations * Impact Investing * Public Policy

22. What is a B Corporation?
• Meet independent, comprehensive and transparent
standards of social and environmental performance
• Meet higher standards of transparency
• Meet higher legal standards of accountability
B Corporations * Impact Investing * Public Policy

23. B Corporation – Performance Standards
B Impact Rating System
Free web-based tool for
positive impact assessment
(over 7000 users)
• Comprehensive
• Comparable
• Transparent
• Dynamic
• Independent
• Score 80 out of 200 points for
certification
B Corporations * Impact Investing * Public Policy

24. Certified B Corps – Accountability Standards
Certified B Corps amend their bylaws
giving shareholders additional rights requiring directors to:
“consider the impact of decisions
not only on shareholders,
but on all stakeholders”
B Corporations * Impact Investing * Public Policy

25. Initiative 1: Supporting a Movement
Leader of this movement are 500+ B Corps across 60 industries and 40 states
B Corporations * Impact Investing * Public Policy

26. Why Become a B Corporation?
1.Lend their Leadership to advance B Lab’s mission to help create a new corporate form.
2.Save money by taking advantage of the growing number of partnerships which deliver immediate financial
value. (>$2m in annual savings
1.Maintain mission by adopting the B Corp Legal Framework. As a B Corporation, founders and other
mission-driven minority shareholders can hold directors accountable to consider the impact of operating and
liquidity decisions not only on shareholders, but on all stakeholders.
2.Enhance brand equity by differentiating the company, not just
its products, through third party validation that company
has met higher performance and legal standards.
5. Enhance Brand Awareness, 300+ press hits in 2011,
national brand campaign.
B Corporations * Impact Investing * Public Policy

27. B Corporation – Benchmarking
Over 2000 companies have completed the assessment
B Corporations * Impact Investing * Public Policy

28. The Entrepreneur is The Engine of Change
Initiative 1:
Shine a light on the
Entrepreneur
Initiative 2: Initiative 3:
Remove legal Drive capital to the
impediments for the Entrepreneur
Entrepreneur
B Corporations * Impact Investing * Public Policy

29. Initiative 2: Advancing Supportive Public Policies
The community becomes a powerful constituency
• New corporate form > Benefit Corporations
• 7 states passed (MD, VT, HI, NJ, VA, CA, NY)
• 10 states moving forward
• Strong business support
B Corporations * Impact Investing * Public Policy

30. The Entrepreneur is The Engine of Change
Initiative 1:
Shine a light on the
Entrepreneur
Initiative 2: Initiative 3:
Remove legal Drive capital to the
impediments for the Entrepreneur
Entrepreneur
B Corporations * Impact Investing * Public Policy

31. Initiative 3: Drive Capital
Driving capital beyond SRI to Impact Investing
- Indpnt ratings agency based on B Ratings
System (S&P analog)
-Morningstar and Capital IQ for Impact
- Fund Ratings and Company Ratings
- Developed and Emerging Markets
-50 GIIRS Pioneer Funds; 300 Companies; 30
Countries
B Corporations * Impact Investing * Public Policy

32. 15 Pioneer Investors
B Corporations * Impact Investing * Public Policy

33. 200 Pioneer Companies
Pioneer Companies
by Industry:
Pioneer Companies
by Region:
B Corporations * Impact Investing * Public Policy

34. Beta Analytics & Benchmarking
B Corporations * Impact Investing * Public Policy

35. Seizing the Opportunity
Building a new sector of the economy
• Creates economic opportunity
• Strengthens communities
• Restores environment
• Alleviates poverty
Legal Clean Tech Food Hospitality
Private Equity Wealth Managemt Home Apparel Education
Building Industry Retail Architecture Restaurant Arts
Telecom Media PR Comm Consulting Developing World
www.bcorporation.net Banks Real Estate Footwear Marketing Renewable Energy IT
www.benefitcorp.net
Biotechnology Personal Care Pharmaceuticals B2B B2C
www.giirs.org
dermot@bcorporation.net
B Corporations * Impact Investing * Public Policy

36. JOSH BECKER
Partner
New Cycle Capital
Co-Founder & Board Chair
Full Circle Fund

37. Questions?
Thank you for attending!