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Socially responsible capitalism introduced at legislature

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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This Article Is Not Accurate

In the very first paragraph, the author makes a completely untrue statement, to wit:

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.

If you read the legislation, there's nothing in it about one of these companies not working for a profit or "at the expense of their shareholders." It simply tries to create a new corporation that makes specific "purposes" part of its corporate charter -- and those purposes are not charitable. They can be just as much for profit as any other business, so long as they fit the ridiculously broad definition in this boilerplate legislation. Build some housing in an "underserved" neighborhood, for instance, and that qualifies as "public benefit" -- no matter how much money the B corporation made off the deal.

Another misleading statement comes in paragraph 2:

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.

Again, the legislation says nothing about "diverting company profits" or "humanitarian goals." Here's the list of what is considered a "public benefit" purpose according to this crony-capitalist bill:

Specific public benefit purpose. – A corporate purpose conferring any particular benefit on society or the environment, including, but not limited to, any of the following:

a.         Providing low-income or underserved individuals or communities with beneficial products or services.
b.         Promoting economic opportunity for individuals or communities beyond the creation of jobs in the normal course of business.
c.         Preserving or improving the environment.
d.         Improving human health.
e.         Promoting the arts, sciences, or advancement of knowledge.
f.          Increasing the flow of capital to entities with a public benefit purpose.

So if get a contract with a municipality to build some green-jobs boondoggle, that will qualify as "Preserving or improving the environemnt." And please note the last, section f: Increasing the flow of capital to entities with a public benefit purpose. So simply by doing business with another one of these sham corporations, you would be meeting the qualifications to operate as a B corporation.

So why become one? Because powerful lobbying interests (can you say "Rockefeller Foundation"?) are pushing to grant special tax privileges to these companies. From the B Corp Web site:

The community of B Corps is catalyzing policy efforts at the local and federal level to provide incentives for certified sustainable business. The first tax break for B Corporations was signed into law in Philadelphia in late 2009. B Lab has been approached about this work by several other cities as well as agencies in the federal government including Commerce and the General Services Administration.

Please note that the incentives aren't for businesses with "humanitarian purpose," but rather "certified sustainable businesses." Those would be the public-private partnerships that are the cornerstone of the United Nations' Agenda 21 plan. Also, please note that B Lab is being approached by cities and Feds "about this work." What does that mean, that cities and Feds are approaching B Lab to see how they can hand out incentives?

Last but not least: if a corporation doesn't have to worry about "profits," doesn't that mean they can undercut other companies when bidding for government contracts? Of course it does -- and the difference will likely be made up by those incentives.

This is very, very bad legislation.

 

 

 

Law to immunize corporations from fiduciary responsibility

So, the idea here is to protect hard-left coporate officers from being sued for failing in their fiduciary responsibility to their share holders.  Seems just like the kind of socialist concept the N&O would like.  Of course, as long as the share holders are made aware of the scam, I think it will merely work to reduce investment in these companies. 

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