By: Joseph W. Boucher and Danielle M. Johnson
Neider & Boucher, S.C.
On February 26, 2018, Wisconsin Statutes Chapter 204 became effective allowing benefit corporations in Wisconsin. A benefit corporation is a for-profit corporation (not a limited liability company, partnership, or cooperative) that relieves the directors and officers of the corporation from the obligation to maximize shareholder value and, instead, also consider the corporation’s effect on the community, employees, customers, the environment, and other socially-responsible matters. This means that a shareholder cannot bring an action against a director or officer for breach of a duty if he or she is further the specified benefit purpose it the corporation’s articles.
Becoming a benefit corporation is a way for a business to set itself apart from its competition and not only maximize profits, but also provide benefit to the world, a community, or a species. Not only talk the talk, but also walk the walk. An article published in Forbes on December 14, 2017 by David Hessekiel noted three “Social Impact” trends in 2018: 1) more brand gaffes, 2) brand as activist, and 3) walking the talk. Hessekiel outlines the different marketing strategies that will most impact consumers in 2018. As evidence of these statements, Hessekiel cites Cone Communication’s research study that “demonstrated that 87% of Americans would purchase a product because a company advocated for an issue they cared about and more than two-thirds will refuse to do so upon learning the company supported an issue contrary to their beliefs.”
In the society we live in today, consumers, employees and investors have started to demand more from companies and their executives: corporate social responsibility. This philanthropic ideal has been around for decades, but did not really find traction until the twenty-first century when Millennials started to enter the business world.
Neider & Boucher, S.C. was able to incorporate one of Wisconsin’s first benefit corporations by being first in line at the Wisconsin Department of Financial Institutions on Monday, February 26, 2018. Attorneys Danielle M. Johnson and Isreal R. Lopez arrived at 7:00 a.m. with articles of incorporation that were effective as of 12:00:01 a.m. on February 26, 2018 to ensure their clients spot in history. If you would like to read more about this event, please see the following articles in The Cap Times: http://host.madison.com/ct/business/new-law-opens-doors-for-corporations-to-balance-profit-with/article_e402539b-a805-559c-b0d9-a93d0270b0cb.html.
Note that a benefit corporation is to be distinguished from a “B Corp.” A B Corp is a for-profit business (including corporations, limited liability companies, partnerships, and cooperatives) that is certified as a B Corp by the nonprofit organization called B Lab. B Lab created a process by which a company that is chartered under the laws of any state (or any country) can obtain a B Lab certification. Inc. Magazine calls the B Lab certification “the highest standard in socially responsible business.” A B Corp is a certificate you get from B Labs while a benefit corporation is a corporation that originates by operation of state law (only states that have passed such legislation).