Greening the Corporate Bottom Line

Companies are legally obligated to try to maximize profits. Some states are creating companies that can also factor employees, the community and the environment into financial decisions.

As this fall’s Occupy Wall Street protests showed, there’s a vocal slice of the population that’s dissatisfied with the nation’s current corporate culture. They’re tired of "corporate greed," they say. Tired of businesses pursuing financial gain above all else.

The problem is that most corporations are actually legally bound to act in their own fiscal self-interest. If a company doesn’t seek to maximize profits, it could be subject to lawsuits from shareholders. That can make it difficult for a corporation that wants to make decisions based on, say, what’s best for the environment, rather than what’s best for their own bottom line.

That could change. A small but growing number of states have passed legislation recognizing a new type of company, known as a "benefit corporation." Unlike traditional commercial firms, benefit corporations, or B Corps, must create a material positive impact on society. In other words, they must consider how their decisions affect employees, the community and the environment — not just the firm’s profit margin.

BY: Elizabeth Daigneau

Full Story: http://www.governing.com/topics/energy-env/greening-corporate-bottom-line.html