Towards a Holistic Corporation: Considering Multi-Stakeholder Perspectives in the Business Bottom Line

In an increasingly transparent business environment, corporations are being rewarded for their commitments to causes that consider more than their bottom line.  From the positive attention received by Pepsi for their Refresh Project, and the motivation this endeavor has provided to competitors, including Coca-Cola, in aggressively marketing themselves as positive contributors to social change, the dawn of a new form of corporate personality may be upon us.

Particularly in saturated sectors of the economy where a competitive advantage is hard fought, the notion that corporate social responsibility can be used as a tool to buy increased market share is attractive to believers that, geared in the right direction, corporations have the power to make positive change.

With industry moving more toward a more holistic set of concerns, perhaps the regulatory system should adjust to accommodate.

One push towards this end is the evolution of the “Beneficial Corporation” or B-Corp. B-Corps are companies that create a corporate framework in their founding legal documents that explicitly recognize the interests of employees, community and the environment.  The idea behind becoming certified as a B-Corp is to provide comprehensive performance standards enabling “consumers to support businesses that align with their values, investors to drive capital to higher impact investments, and governments and multinational corporations to implement sustainable procurement policies. This recognition works to put shareholders on notice of the organizations’ social intentions and creates a legal means for managers to openly make stakeholder-friendly decisions.”

While this sounds well-intentioned, it could only work if the current regulatory systems accommodated such a class of corporation.  The planners behind the B-Corp hope that the IRS will create a class of tax laws for social enterprises, with unique tax benefits that incentivize the accounting for societal externalities.

Such a recognition by the IRS would serve a direct benefit to corporations eager to gain tax preferred status.  Additionally, the transparency requirements built into the founding documents of B-Corps would ground the corporate culture and decision making in holistic stake-holder centric approaches.

With industry evidencing an interest in serving the social good,  the B-Corp model seeks to address regulatory frameworks that are slow to recognize such advancements.  The Right Respect will continue to follow the mission and work of the B-Corp movement, and believes it could significantly contribute to reshaping corporate activity for the better.