Board
Playbook

The Case and Process
for Adopting Benefit
Governance as aRequirement for
B Corp Certification.

February | 2021

“Everything we have seen during
the last several months [of a global
pandemic] suggests companies will
have even more stakeholders than theyfelt before, with government steppingin, health authorities stepping in,and so on. Whether you want to callthem stakeholders or not, they are...
Stakeholder capitalism is a fact.”
EMMANUEL FABER, CEO Danone (April, 2020)

Authored by:
HOLLY ENSIGN BARSTOWB Lab United States & Canada,
Director of Stakeholder
Governance and Policy

ANDY FYFEB Lab United States & Canada,
Growth Catalyst

With support from:

United States& Canada

The contents and views in this document are informational only, and are not intended to be, and may not be relied upon as legal advice.

A Look Inside
6 Introduction
8 A New System is Necessary
12 	Certified B Corporations

vs. Public Benefit Corporations

16 Who Are the Public Benefit Corporations?
21 The Case for Public Benefit Corporations
26 The Process
32 These are the Tough Questions
38

Final Thoughts

Letter to CEOs
and Directors
Fifty years ago, Milton Friedman published his famous essay in the New York Times stating thatthe role of the company is to “make as much profit as possible within the rules of the game.”
Since that time, not only has shareholder primacy, as the principles in the Friedman Doctrine have come tobe known, become the singular guiding light for corporations, but these same companies have also eroded
the rules of the game to allow companies to privatize profits while socializing their risks and externalities. Thisbias towards an unfettered version of capitalism has exacerbated inequality, hampered economic freedom forunderrepresented groups, and enabled systematic warming of our climate.
There is, however, an alternative. Benefit governance forces executives to consider stakeholders such as
the environment, employees, supply chain partners, communities where the business operates, and its
customers, rather than maintaining a myopic approach of creating wealth for shareholders. This is betterfor the world, and better for shareholders also. Traditionally, institutional investors are funded largely by
the pensions and retirement plans of working class people, yet these institutional investors have enabledcompanies to lobby for erosions to environmental, and employee- and community-friendly rights. They
are cutting off their noses to spite their face! A stakeholder mentality benefits the world, recognizingthat society helps to build businesses, and therefore obligates business to protect society. It is the right(economically and morally), and more balanced way to build a thriving and healthy society.
At Allbirds, we are incorporated as a Public Benefit Corporation (PBC) in Delaware, and have stated thatEnvironmental Conservation is the public benefit named in our charter. As a Certified B Corp, we take abroader set of stakeholders into consideration as we run the business; however, that is done on our own
volition and is not a requirement of our PBC designation, albeit, a complimentary one. We have establisheda robust set of principles and processes internally to manage our commitment to stakeholders.

We recertify as a B Corp every
three years. We also reportquarterly to our board andleadership team on a range of
employee, environmental, socialand governance (EESG) topics.
We have committed to be carbon
neutral as a company since 2019,and do so by measuring, labeling
our products with their carbon
impact, reducing emissions
through innovation and supply
chain strategies, and offsetting
any carbon equivalent pollution
created by our company’s
operations. Additionally, we’ve
structured our leadershipbonuses in such a way as toreward achievement of carbon
reduction targets.

Adopting this governanceframework has legal tradeoffs.
On one hand, it provides broader
latitude to executives to act onbehalf of public beneficiaries
in addition to shareholders.
On the other hand, it also
creates liabilities for companies
and its executives such thatinvestors can hold the company
accountable to achieving the
public benefits it has chartered inits governance documents. Thisis flexibility and accountability.
Great leaders should have both,but it takes courage and a senseof responsibility for what theexecutive’s role is in the world.

Finally, one might wonder
whether benefit governance isnecessary, and given the wide
latitude the business judgment
rule gives executives in Delaware
Corporations, it is a reasonable
doubt. In considering this question,
it is important to remember thatcompany leadership changes.
The only way to enshrine thisapproach into the genetic codeof a company is to put it in its
legal governance structures. This
ensures generations of leaders
uphold the obligation, not just to
shareholders, but to society more
broadly.

JOEY ZWILLINGER
Allbirds, Co-FounderIntroduction“Capitalism as we know it,is dead. That new kind of
capitalism that is going toemerge is not the Milton
Friedman capitalism,
that’s just about making
money. If your orientation
is just about making
money, I don’t think you’regoing to hang out very
long as a CEO or founder.
You have to be more thanthat in today’s world.”
MARC BENIOFF,CEO Salesforce.com

Capitalism is the most powerful economic system created.​
Yet, in its current form, it is failing to meet the aspirationsof billions and the needs of a warming planet. We stand at
the crossroads of crisis and also extraordinary opportunity:
capitalism is at a tipping point.
Global capital markets are awakening to the mounting pressures tosupport a new way of doing business. The scale of this opportunity
is unprecedented. Certified B Corps are a new model for businesses
that are tackling some of our most pressing global challenges andbuilding a new economy led by stakeholder capitalism.
Behind the Certified B Corp
movement is our nonprofit:
B Lab. Our vision is that one
day all companies compete not
only to be the best in the world,
but the best for the world. We
hope to transform the global
economy to benefit all people,
communities, and the planet.
A leader in economic systems
change, our global network
creates standards, policies, andtools for business, and we certify
B Corps who are leading theway. At the time of publishing
this guide, our community

includes over 3,500 B Corps in
74 countries and 150 industries,
and over 100,000 companies
that manage their impact with
the B Impact Assessment andthe SDG Action Manager. B
Corps — like Patagonia, Allbirds,
Beautycounter, Business
Development Bank of Canada,
Sundial Brands, Athleta, and Ben& Jerry’s, — are companies thatare leading the way in building anequitable and inclusive economy
that works for everyone.

6

The purpose of this guide is to help executives, investors,
and directors navigate the journeyto adopt Public Benefit
Corporation status as a requirement of B Corp Certification.
We hope this guide serves as a resource in preparing for the necessary
conversations, demystifying the risks, and presenting examples of how
the market has reacted to the idea of expanded fiduciary duty that is an
inherent component of stakeholder governance.

“B Corporation, this movement —some call it ‘stakeholder capitalism’or ‘compassionate capitalism’— has
the potential to change American
society. Now is the time for us to live
up to those commitments.”
NY TIMES | MARCH 2020 link

Certified B Corporations that have adopted benefit governance and paved the way forward:

7

Section 1
A New System
is Necessary

A New System
is Necessary

THERE’S A BETTER WAY.

The disconnect between the needs of human shareholders and the
behavior of corporate America has led to growing inequality andexclusion, declining dignity for the working and middle classes, andan existential ecological crisis. If more evidence were needed, the twincrises of the COVID-19 pandemic and the reckoning with racial injusticeprove that current business models provide neither the resilience nor
the fair opportunities we need for a prosperous, just society.
None of this has gone unnoticed by the leaders of business andfinance. The chairman of the world’s largest asset manager has called
for better corporate stewardship of the environment. The Business
Roundtable, composed of CEOs of the country’s largest corporations,issued a statement in 2019 declaring that statement declaring thatthe purpose of business is meant to deliver value to all stakeholders,
including customers, employees, suppliers, communities, andshareholders. However, not one of the 182 companies from theBusiness Roundtable have actually changed their legal form. As aresult, those companies continue to have fiduciary obligations only toshareholders, despite the high-minded rhetoric since the statement
was made public. We can no longer ask leaders to lead in a systemwith misaligned incentives and a culture with contrary norms. We thus
won’t see the systems change we seek without shifting culture andthe laws that govern the company.

THE BUSINESSROUNDTABLE
In August 2019, over 180 chief
executive officers signed theBusiness Roundtable (BRT)
statement regarding the purposeof a corporation. Signatories to the
BRT confirmed their commitment
to all their stakeholders by agreeing
to focus on (a) delivering value totheir customers, (b) investing intheir employees, (c) dealing fairly
and ethically with their suppliers,(d) supporting the communities inwhich they work and protecting
the environment and (e) generating
long-term value for shareholders.

In the last decade, benefit corporation statutes have been enacted in 39 states in the United States. The
movement is growing internationally as well: In 2020, the first Canadian benefit corporation law became
effective in British Columbia, adding to prior adoption in the United States, Italy, Colombia, Peru, andEcuador. Benefit corporations have raised more than $3 billion in outside capital.

AMALGAMATED BANK, a publicly
listed American company,
obtained the approval of its
shareholders to adopt benefit
governance in the spring of 2020
APPHARVEST, a Delaware benefit

corporation who has raised morethan $140M announced theywould go public by merging witha SPAC in late September 2020.
The resulting public company
intends to convert to benefit
corporation status in their proxyapproving the merger sometimein 2021.

AVEEVA SYSTEMS, a $44B
market cap cloud computing
company traded on the
NASDAQ, filed a preliminary
proxy in October 2020
asking investors to approvea conversion to PBC status.
In January 2021, 99% of thecompany’s shareholders voted

in approval of the transition.
As part of this change, Veeva
will also broaden its certificate
of incorporation to include
the public benefit purpose,“to help make the industries
it serves more productive andcreate high-quality employment
opportunities.” Read more about
this decision here, interview with
Christopher Marquis.
CITY FIRST BANK, a Washington

DC incorporated benefit
corporation, announced in
September 2020 a merger with
Broadway Federal, a publicly
traded bank.The surviving entityof the merger will become abenefit corporation, which will
require a vote of their public
shareholders.
DANONE, the multinational
consumer packaged goods
company and parent company
of many B Corp subsidiaries
adopted the French version of

benefit governance and became
the first publicly traded company
to do so.
LAUREATE EDUCATION was

the first to go public as a benefit
corporation and raised $490M
from investors in 2017.
LEMONADE, an innovative

insurance broker backed by
SoftBank, Sequoia and otherventure capital funds, completed
the most successful IPO of 2020,
raising 139% on its first day of
trading (after pricing above theunderwriters’ range).

NATURA, a Brazilian company

with benefit governance, issued
its shares to the shareholders of
Avon in its merger in 2019 which
are now traded on the NYSE.
VITAL FARMS followed suit witha IPO earning a market cap of$1.3B at close while receiving avaluation of $136M just two years
prior.

“Through greater appreciation of thereal motives that drive and excite people,
B Corporations provide a significant
new opportunity for investors. I thinkthey could make more profits than any
other types of companies.”
ROBERT SHILLER, Sterling Professor of
Economicsat Yale and 2013 Nobel Laureate

More than 10,000 benefit
corporations now exist. These
companies are literally changing
the purpose of business byleaving shareholder primacybehind. These leaders have now
demonstrated that responsible
business can be successful
business.

“We may find that the current corporate paradigm limits
how much directors can squeeze the square peg of benefiting‘other stakeholders’ into the round hole of a duty tomaximize shareholder value at every turn. We may find thata new paradigm is needed.
...The PBC model can provide a compelling alternative
framework for director duties and insulate them frompotential liability for certain decisions that may be lessdirectly in the best interests of the corporation and its
stockholders.”

WE NEED COLLECTIVE
ACTION TO COMPEL THE
MARKET TO FOLLOW.

11

Section 2
B Corp Certification
vs. Public Benefit Corporation

What is a
Public Benefit
Corporation?
Public Benefit Corporation (PBC) is a traditional for-profit corporation that enjoys all the same

protections and permissions of a traditional corporation. However, PBCs are opting into an expanded
purpose, realigned fiduciary duties and additional transparency regarding their impact. They represent a
profound change in corporate governance. Each company must balance the interests of all its stakeholders
in operating its business — it is designed to not focus exclusively on maximizing wealth for shareholders if that
imposes costs on others. However, at the same time, it gives directors flexibility to determine how to best
achieve that goal and does not create additional legal accountability to non-shareholders.
The intention of this guide is to lay out the process and demystify the risks of PBCs. Adopting thestructure also earns points in the B Impact Assessment. And in many states, including Delaware andCalifornia, using the structure is the only way to meet the legal requirement for B Corp Certification. See
the navigation tool here to see the requirement for your company. While many benefit corporations use the
B Impact Assessment to create a free benefit report, benefit corporations do not need to reach a particularscore, nor have their performance verified or audited by B Lab, or anyone else.

Certified B Corporation
A certification conferred by the nonprofit B Lab.
A company that (1) meets the standards of verified socialvs.

Benefit Corporation
A corporate status that has a higher level of transparency,
accountability, and purpose.

and environmental performances though the B Impact

Required to consider its impact on all stakeholders,

Assessment, (2) satisfies transpacery requirements, and (3)not just shareholders.

makes a legal commitment to consider all stakeholders.
Any for-profit company in any country can pursue
certifications (LLCs included).

Available in 39 states in the United States, Puerto Rico, Italy,
Colombia, Canada, Ecuador and Peru.
The path for most United States corporations to meet thelegal requirement for B Corp Certification.

Benefit corporation is the commonly accepted term for companies that have adopted a legal status that requires them to focus on a broader purposeto create general public benefit, consider the impact of their decisions on a wider group of stakeholders beyond just shareholders and to be transparent
about that impact. The exact requirements and naming conventions of benefit corporation statutes differ by jurisdiction. In this guide, we focus on
the Delaware Public Benefit Corporation as it is the most commonly used statute by later stage companies with large numbers of investors.

13

“We had activists come into our stock. ...
they wanted to force us into a sale. ...
Boy oh boy oh boy, did I wish we werea B Corp. ... I would have loved to havetested the idea of shareholder activists
versus the legal form of a B Corp.”
JOHN MACKEY, Founder | Whole Foods“We are calling for the
Stakeholders are the people, the environment, and groups orthings that influence or are materially impacted by a business and its
universal adoption of the
A multi-stakeholder approach to strategic management
PBC for large corporations. operations.
views the long-term success of a company as a function of its
We do so to save ourrelationships with its stakeholders, including employees, consumers,
governments, investors, suppliers, its ecological footprint, andcapitalist system andcommunities. In this view, the ultimate purpose of the firm is to create
corporations from theand deliver welfare or value to all of its stakeholders, including but
devastating consequences not limited to its shareholders, and the achievement of this purposeof their current
depends on the cooperation and support of these stakeholders, who
also provide critical resources to the business.
approaches, and for the
The various benefit corporation statutes that have been passed intosake of our children, ourlaw across the country and world define stakeholders differently. In
societies, and the naturalsome regions, the statute provides a list of stakeholders the company
world.”
should consider (employees, customers, society, local community,
LEO STRINE
Former Chief Justice of the Delaware
Supreme Court

the environment), but also gives the company flexibility to add in any
additional specific stakeholder groups. In Delaware, the statute defines
stakeholders as “those materially affected by the corporation’s conduct.”Thus, for each company, the specific list of stakeholders will be different
depending on its business model and operations.

14Key Elements of a Public Benefit Corporation

PurposeBeyond maximizing share value to explicitly operate in a responsible and sustainable manner.

Transparency
The statute requires transparency with respect to the expanded purpose in the form of a reportsubmitted to your shareholders every two years.

When isPublic Benefit
Corporationright for yourbusiness?
When you want to change
the world but not let theworld change your business.
Businesses that become benefit
corporations range from startups,
to fast growing unicorns withcomplex cap tables, to publiccompanies. The resounding
feedback: don’t wait.

“As the economy continues to shift from manufacturing andresource extraction to technology and services, intangible
assets are acquiring an increasingly important part ofbusiness valuation; it is the foolish executive who refuses
to explore ways to optimize intangible asset values. B Lab
quietly offers investors a pair of braided firsts: the first
toolbox to help management focus on the kind of patient,steady value creation that defines ‘the right way to dobusiness;’ and the first window into the DNA of a sustainablebusiness for analysts and diligence professionals who know
nothing about sustainable business.”
MATTHEW WEATHERLEY-WHITE,Managing Director and Owner of The Caprock Group15

Section 3
Who Are the
Public Benefit
Corporations?

Who are the
Public Benefit
Corporations?
TOTAL RAISED: $202M at $1.5B

TOTAL RAISED: $71.3M

INVESTORS: Tiger Global,

Fund, Jim Breyer, Arthur Patterson, Pat Ryanvaluation

Fidelity, T. Rowe Price“We founded Allbirds as a Public
Benefit Corporation. This injectionof capital will help us bring oursustainable products to more
people... demonstrating that
comfort, design and sustainability
don’t have to live exclusive of eachother.” Joey Zwillinger, Co-founder

INVESTORS: Shasta Ventures, Workday Ventures, Tech Pioneers“We actually founded data.world as a C Corporation in 2015 but then,after becoming educated on B Corporations, we quickly pivoted to turndata.world into a Public Benefit Corporation upon our launch on July 11,
2016. It was one of the best decisions we’ve made and has been a realdifference-maker with our customers, community, investors, employees,
and partners alike. Ten years from now, I’m confident people will ask,
‘Why are you not a B Corporation?’ vs. today’s ‘Why are you...?’ And
when they ask why we are today, it always becomes a golden opportunity
to tell them about how much we care about our mission and building ourcompany for the long-term.” Brett Hurt, CEO and Co-Founder17

TOTAL RAISED: $146M

INVESTORS: Euclidean Capital, Khosla Ventures,

Goldman Sachs, Collaborative Fund

“Most established firms are fully on board with, or exclusively investingin, companies that drive social and environmental good. They wantthose companies to be authentic — driving measurable results and beingtransparent about what they do and don’t do well and, most importantly,
building the capability of continuous improvement. I have never had apotential investor avoid making an investment in our company because
we are a benefit corporation.” Adam Lowry, CEOTOTAL RAISED: $72M, $30M post-conversion
INVESTORS: Obvious Ventures, Greylock, Slow

Ventures, Rethink Impact, Omidyar Ventures, Uprising Space Ventures“The legal conversion required alignment amongst a wide diversity ofpeople. When we had closed our most recent financing and went backto our existing investors, we found a real willingness for the conversion.
I think there’s a deep understanding amongst our stakeholders that wealready act in a way consistent with the mentality and requirements ofbenefit corporation governance, and that it is legally enshrining an existing
practice of behavior. And in fact, the previous structure was inconsistent
with the way we talk about our work and the way we act internally andexternally.” Ben Rattray, Founder
PROFILE: Lemonade shares skyrocketed
as much as 144% to hit an intraday highof $70.80, finished up 139% at $69.41
at the end of the day, following an IPO
pricing of $29 a share the day prior. That pricing was above an alreadyincreased IPO pricing to range of $26 to $28 a share. The company
sold 11 million shares, with up to 1.7 million available to underwriters
to cover over allotments. Taking into account those additional shares,
its day one close values the company at $3.93 billion and made it themost successful IPO of the year as of October 2020.
INVESTORS: Before the IPO, the company had already raised $480

million through several funding rounds, according to Crunchbase, witha $300 million round in April 2019 led by SoftBank Group Corp.

PROFILE: At the time of

converting to a Public Benefit
Corporation (PBC), Laureate
was the largest and first PBC
to go public on any stock
exchange in the world. Listedon the exchange as LAUR, thecompany raised $490 million frominstitutional investors by offering
35 million shares at a price of$14.

BANKERS: Credit Suisse, Morgan

Stanley, Barclays, J.P. Morgan,
Macquarie, BMO Capital Markets,
Citigroup, Goldman Sachs & Co.
LAWYERS: DLA Piper, Simpson

Thacher“In October 2015, we redomiciledin Delaware as a Public Benefit
Corporation as a demonstrationof our long-term commitment
to our mission to benefit ourstudents and society.” Laureate
Education, Inc. S1.
“As a Public Benefit Corporation,
our focus on a specific publicbenefit purpose and producing
a positive effect for society may
cause our board of directors tomake decisions that may not
be in the best interests of ourstockholders.” (p. 15 S1 and ‘Risk

Factors’ laid out on p. 72)

LAWYERS: Latham & Watkins

18

Photo: Lemonade executives ringing in the company’s IPO at the New York Stock Exchange. Photo by NYSE

“Establishing ourselves as a Public Benefit Corporation, as a B Corp, where a lot of under-writerings profits goesto nonprofits allowed us to reimagine the whole business model. In fact we live in a flat B Model. A lot like othertech companies and not like insurance companies where you pay me a buck I tell you in advance that I’m goingto keep 25 cents on the dollar and if there is money left over after paying claims and buy reinsurance then I’m
gouging to give it to a charity of your choosing. This isn’t just do good stuff it’s about aligning interests so I don’t
make money by denying your claims and you’ll think twice before embellishing your claims and hopefully we’ll
turn what is today a two player game, a conflicted relationship between two players, into a trilateral relationshipby involving nonprofits as well. It keeps you honest, it keeps us honest. And It’s allowed us to climb the ranks tobe the number one most trusted and loved brand in insurance and we’ve only been in the market for three
years.” Daniel Schreiber, CEO Lemonade
PROFILE: IPO August 2020, raised $200 million with a market cap of $1.3 billion at the close

Its shares rose 60%, closing at $35. Even before its public debut, it had to boost its opening
stock price, initially planned between $15 and $17, to $22. Vital Farms’ line of products,
including butter, ghee and hard-boiled eggs, brought in $140 million in sales in 2019, with
distribution in 13,000 grocery stores from Kroger to Whole Foods. Its network of family
farmers as of September 2020 top more than 200.
BANKERS: Goldman Sachs & Co. LLC, Morgan Stanley and Credit Suisse Securities (USA) LLC acted
as joint lead bookrunning managers for the offering with Jefferies, BMO Capital Markets Corp. and Stifel,
Nicolaus & Company, Incorporated acted as bookrunning managers for the offering.
LAWYERS: Cooley LLP“I was always looking for the exit. Instead of looking to get rich, I realized I could build a company where I was
focused on employees, customers, shareholders, and the environment. It’s so much more fun than focusing on
profit.” Matt O’Hayer, Founder, Vital Farms“For those seeking to pursue the B Corp Certification, my advice is to build a company centered on all
stakeholders from the beginning. This foundation will not only drive the long-term sustainability of your business,but also a more resilient economy for everyone.” Russell Diez-Canseco, President and CEO, Vital Farms

19

Some publicly Traded Companies have adopted Public Benefit Corporation Governance.

In June 2020, Danone became the first listed company to adopt French legal framework of “entreprise à
mission” to create and share sustainable value for all its stakeholders.
“Danone becomes the first listed company to adopt the Entreprise à Mission model created by French law in2019. This will embed the legal Entreprise à Mission framework within its articles of association (including apurpose) and apply a new governance arrangement to oversee the progress of its environmental, social andsocietal goals. By doing so, Danone adds to the trajectory that inspired its largest subsidiary, Danone North
America, to become the world’s largest Public Benefit Corporation. It also propels Danone further down thepath of achieving its ambition to become B Corp certified at global level.” (source)

In July 2020, Amalgamated Bank became the first public U.S. company to add environmental and societal
commitments basd on the model U.S. benefit corporation statute to its corporate organization certificate.
Its shareholders approved Amalgamated’s new business purpose clause, further committing the bank to
its B Corp values and ensuring business decisions consider social and environmental factors in-line withshareholder return. In December 2020, Amalgamated Bank announced that they would reorganize witha PBC holding company structure. In January 2021, Amalgamated Bank’s shareholders approved therestructure.
“Even more so, we are thrilled to see the groundswell of shareholder support in this movement, which is a true
testament to our long held belief that profits and purpose can, and should, go hand in hand.” Keith Mestrich,President and CEO of Amalgamated Bank. Board Decision Notes (pages 50 - 52)

Natura and Co amended its corporate articles in 2015, to include stakeholder governance language basedon the model U.S. benefit corporation statute. Natura’s institutional shareholders, including T.Rowe Price,
Lazard and Oppenheimer, voted in favor of this legal amendment. While certainly not causal, it is worth
noting that since adopting the benefit corporation model of stakeholder governance, in 2019 Natura’sshare price doubled from roughly $27 to $56. Natura’s acquisition of The Body Shop an Aesop in 2017 is
the first billion-dollar acquisition by a B Corp.

Veeva Systems (NYSE: VEEV), with $40B market cap, is the first publicly traded company to adopt PBC
status and received a 99% approval from its shareholders in January 2021.
“We met with our top 20 investors, other influencers, and proxy advisory firms. For a significant cross-sectionof investors — especially those that are more Environmental, Social, and Corporate Governance-focused, thathave been thinking about multi-stakeholder-ism or writing about the importance of purpose — I would describe
the reaction as almost pent-up demand. There was almost a sense of relief — finally someone’s doing this. That
was a pretty significant proportion of the shareholders that we spoke to.” (source)

20Section 4
The Case for Public
Benefit Corporations

The Case for
Public Benefit
Corporations
IN THE COMPETITION FOR TALENT AND CUSTOMERS,PURPOSE WINS.
BUILDING TRUST BYFORTIFYING A REPUTATIONFOR LEADERSHIP.

Public Benefit Corporations retain
all the virtues of the corporation
for aggregating and allocating
capital, but eliminate theexcesses of 20th century
practices that valued profits over
our shared future. It provides
a trust-enhancing operating
system. This shows investors andentrepreneurs from every industry
what the future Fortune 500 looks
and acts like. By registering asa PBC, businesses join highly
respected companies, and will
be at the forefront of a growing
movement of changing therules of the game.

Millennials will grow to 75% of the workforce by 2025, 77% say their“company’s purpose was part of the reason they chose to work
there.” (source) Unfortunately 79% of employees in North America do
not feel engaged at their work and the cost of disengaged employees
by percent of salary is 34% with lost value of $3.4M for every $10M
in payroll. (source) While consumer trust of companies’ claims aroundtheir social and environmental commitment is only 16%, and 52% of
the same skeptical consumers actually believe what employees of
those companies say instead. (source) Employees are an extended
sales team. Benefit corporation status gives prospective and current
employees confidence that affirms the company’s legacy and that it islegally committed to their mission for the long run.

“The benefit [corporation] model really allows people ina forthright way as a director to say, ‘We’re going to makesome trade-offs,’ and it may be frankly that this isn’t themost optimal just from the standpoint of stockholders,
but it’s the decent thing to do. That does not mean it’s not
wealth-creating for society because... we tend to use stock
market price, even though if you treat your workers well,and you pay them so they can live in dignity and send theirkids to college and have health insurance, that often is thegreatest contribution you can make to social wealth.”- LEO STRINE, former Delaware Chief Justice22

“The COVID-19 crisis brought the collective ‘stakeholder’ backin focus. Gone are the days of companies providing value
solely to shareholders. To borrow a phrase recently adopted
worldwide: we’re all in this together.”
BYRON LOFLIN,
Global Head of Board Engagement, Nasdaq

BENEFIT CORPORATION STATUS SIGNALS A LONG-TERM PERSPECTIVE.

Public companies are subject to short-term pressures not experienced by private companies. Benefit
governance is a way to address this issue directly, without affecting shareholder rights. PBC makes it
clear that directors will make decisions based on building shared and durable value for all stakeholders,rather than just trying to increase the current share price. This may attract shareholders with a longer term
perspective, and provide management with credibility when it does make decisions that favor the longterm over immediate share price.

“Becoming a Benefit Corporation helps codify and support our mission.
In [Altitude Learning’s] case, delivering a broad social impact goes hand-in-hand withcreating a large and thriving business.” – Max Ventilla, Founder of Altitude Learning
CONVENTIONAL CORPORATE GOVERNANCE AGGRAVATES THE PROBLEM.

Under current law, the ultimate goal of directors is shareholder return. Value maximization is strictly
enforced in exit transactions, and business strategies that require authentic commitment to stakeholders
are compromised. This legal requirement is the underpinning for many of capitalism’s greatest failings.

“Public and large private companies receiving bailouts or pandemic-related subsidies could
be required to become Public Benefit Corporations under state law, and others could be given
positive incentives to do the same. Institutional investors and socially important companies
could be required to disclose to the public how much weight they give to issues like worker
pay and safety, environmental responsibility and maintaining a strong balance sheet.”
New York Times
BENEFIT CORPORATIONS ARE RESILIENT.

Large companies and investors are finally noticing that a root cause of many systemwide challenges
that we face as a country is the unyielding focus of shareholder profits for individual companies to thedetriment of our society and planet, and thus, our economic system as a whole. We’ve seen examples ofthis focus highlighted in new headlines, including the opioid crisis, skyrocketing generic drug prices, wage
stagnation, the racial wealth gap, the Boeing 737 Max disaster, and our brittle supply chains’ inability torespond to the COVID-19 pandemic. Companies that are accountable to balancing their interests acrossall stakeholders, and not just one bottom line are flexible and better positioned to survive difficult times.
This promotes rapid and efficient transformation of organizational activities. Only a flexible structure allows
rapid implementation.

“In the first quarter of 2020, companies identified as having strong environmental, socialand corporate governance principles outperformed traditional offerings, in part due to theirlower exposure to the energy sector as oil prices crashed. The results come amid debatethat ‘shareholder primacy’ is nearing its end as ‘stakeholder capitalism,’ where equal value
to all stakeholders including customers, employees and suppliers takes hold.” Morningstar

23

BENEFIT CORPORATIONS REDUCE DIRECTOR LIABILITY

Benefit corporation status provides legal protection to balance financial and non-financial interests when
making decisions — even in a sale scenario or as a publicly traded company. Under traditional corporate
law, directors are obligated to focus on shareholder value as their only consideration, meaning that at thetime of sale or when a decision arises that might necessitate a tradeoff between stakeholder value andshareholder value, the directors are required to pick the shareholders. As a benefit corporation, when
faced with the same choices, the directors have the freedom to make a choice that does not necessarily
create value for shareholders. They can make tradeoffs that traditional corporations cannot.

“Since adopting stakeholder governance,
Natura has made two major acquisitions— first The Body Shop, now Avon — thatsuggest they are executing on a longterm plan, not reacting to short-term
market pressures. That is something
every CEO, every long-term investor,and everyone with a 401(k) should want
to see more of in other publicly traded
companies.”
JAY COEN GILBERT, Imperative 21

PCBS ARE BI-PARTISAN,
AND THAT IS A BREATH
OF FRESH AIR NOWADAYSPCBS MAINTAIN STOCKHOLDER RIGHTS AND MAY
INCREASE ACCESS TO PRIVATE INVESTMENT CAPITAL

Investing in a benefit corporation gives impact investors the assurance
they need that they will be able to hold a company accountable to its
mission in the future. Benefit corporations thus create an attractive
investment opportunity for the same conscious consumers that have
fueled organics, fair trade, and buy local movements, while enjoying
a form of inoculation from the short-termism that plagues public
equity markets. It also can make your company more attractive toinvestors as a company with increased legal protection, accountability
and transparency around its mission. This can potentially speed up
investor due diligence since benefit corporations produce an annual
benefit report, which describes their qualitative activities aimed at
producing general public benefit.
Shareholders retain all the protections that they have in a traditional
corporate model. First, they have all their corporate governance rights.
They elect the directors who vote on major corporate transactions
such as charter amendments or mergers. Conflict transactions will
still be subject to a fairness analysis whenever challenged, so that
directors cannot pursue their own interests ahead of the interest ofshareholders. Shareholders will retain the ability to bring the sametypes of lawsuits they can bring against a traditional corporation,
including demands to review the company’s books and records,
election review proceedings to make sure elections are being
conducted fairly, and derivative suits to pursue corporate claims
against directors for breach of fiduciary duty. The only change underthe benefit corporation model is the value proposition: the idea thattrue long-term value is built by aligning all stakeholder interests,
including the interests of shareholders.

Of the 39 jurisdictions in which
benefit corporation legislation
has passed, 18 were signed into
law by Republican governors,
including former Vice President
Mike Pence. In recent 2020 data
polled by Data for Progress, 73%of people support governancewith expanded fiduciary duty,
making it the most popular policy
reform. This tops: employee
ownership (70%), putting
workers on Boards (59%), andlimiting stock buybacks (55%).
This is true even for Americans
who describe themselves
as ‘conservative’ and ‘very
conservative,’ 62% of which
support it and there is a 6x higher
rate of support of expandedfiduciary duty among those samegroups compared to: ‘restating
corporate purpose.’“Shareholder primacy
theory has tilted businessdecision-making toward
delivering returns quickly
and predictably to investors,
rather than building longterm capabilities through“Because of the novelty, or perceived novelty, of the benefit
investment and production…
corporation structure, we were concerned that that would
does not properly understandbe a flag and a deterrent to investors. I think that is
how businesses invest
becoming less and less the case, and it might have been
in innovation… and has
more of a perception that we had than a reality. What we
resulted in a diminishedfound pleasantly surprising was the general amenability ofunderstanding of the role
our existing investors to support the transition to a benefit
workers play and the risk
corporation legal structure. We have a large investor base of
they undertake in the value
more than 50 individual investors, and so the legal conversion
creation process.”required alignment amongst a wide diversity of people.”
REPUBLICAN SENATOR
BEN RATTRAY, Change.org

MARCO RUBIO, American
Investment in the 21st Century

25Section 5
The Process

The Process
In partnership with Freshfields:

Phase 1: Preliminary Preparatory WorkThe decision to convert to a Public Benefit Corporation, for both private companies that may becontemplating an eventual IPO as well as for already public companies, should not be made lightly.
Before converting, a company must undertake careful preparatory steps to ensure that the process is as
rapid as possible and that risk of an unsuccessful outcome is minimized.
DELIBERATIONS, DILIGENCE AND DECISIONS

By pursuing B Corp Certification, a company commits its mission and brand reputation to usingbusiness as a force for good. Since the adoption of stakeholder governance is a requirement ofCertification, senior management must engage in the deliberate and thoughtful analysis to determine
whether it is strategically the right decision for the company. This discernment process involves
considering: the impact of conversion on the value of the company, the ability to continue conducting
its operations, the impact on its investors and other stakeholders, and reputational risks.

CONDUCTING A DUE DILIGENCE REVIEWManagement should engage the legal department to conduct a simultaneous review of:

1. The process to ensure there are

no legal or contractual impediments

2. Organizational and other relevant

3. The company’s organization

corporate documents to confirm

documents (including the certificate

whether any consents or amendments

of incorporation, any certificates ofassistance of outside counsel).

may be required.

designation and the bylaws).

4. All shareholders, investor

5. Any agreements pursuant to whichto converting to a PBC (with therights, rights of first refusal, cosale, registration rights and voting
agreements and any other agreementswith shareholders.

a person has a right to purchasesecurities of the company, including any
pre-emptive rights.

6. Any other agreements (including

leases, indebtedness agreements andlicenses) under which changes relating
to corporate form may trigger rights to
notice, termination or modification.

Note: as of August 2020 appraisal rights have been removed from DE Public Benefit Corporation statute and the required shareholder
approval vote was reduced from 67% to 51%.

27

ENGAGEMENT WITH DIRECTORS ANDINVESTOR NOMINEES ON THE BOARD

Once management has completed this preparatory work,
management can engage with the board on this topic, sharing its
balanced view/ recommendation with the board of the benefits, butalso the risks, of operating as a benefit corporation. The board ought
to be apprised of:•

The legal framework of benefit corporations.

•

The differences in their duties as directors of a PBC.

Management’s role is to socialize this with a few board members, prior
to a formal meeting, to better be able to speak to potential concerns.
This may require more than one board meeting to encourage andfacilitate a robust discussion among the board members, respondto all questions from directors, and take some time to continue theconversation until a consensus has been reached by the board
on the benefits of conversion. As part of this iterative process, it
is also critical for management to follow up on any requests for
additional information from the directors. For companies whose board
comprises representatives of key stockholders, their views will be
particularly informative as an early indication of the company’s ability
to obtain broader support from a sufficient number of stockholders tosatisfy the approval requirement for conversion.

REVIEW AND UPDATECHARTERS, POLICIESAND PROCEDURESAs the conversations withkey stockholders trend in the
direction of supportinga conversion, management,
ideally will also prepare:•

Revised versions of charters.

•

Internal guidelines.

•

Codes.

•

Policies and procedures toreflect the identification of
the public benefit.

•

Measurement and pursuitof the company’s publicbenefits and tripartitebalancing.

28

“The legal process of the conversion was not an impediment. Some of the reservation we had
as an organization was because the timing of converting to meet the [B Corp Certification]
deadline overlapped with when we were raising capital. Potential investors ask a lot ofquestions about business performance in doing their due diligence, and we wanted tominimize the number of potential flags that would deter them from committing capital.
Because of the novelty, or perceived novelty, of the benefit corporation structure, we wereconcerned that that would be a flag and a deterrent to investors.
I think that is becoming less and less the case, and it might have been more of a perceptionthat we had than a reality. What we found pleasantly surprising was the general amenabilityof our existing investors to support the transition to a benefit corporation legal structure. We
have a large investor base of more than 50 individual investors, and so the legal conversion
required alignment amongst a wide diversity of people.
When we had closed our most recent financing and went back to our existing investors,
we found a real willingness for the conversion. I think there’s a deep understanding
amongst our stakeholders that we already act in a way consistent with the mentality andrequirements of benefit corporation governance, and that it is legally enshrining an existing
practice of behavior. And in fact, the previous structure was inconsistent with the way wetalk about our work and the way we act internally and externally.”
BEN RATTRAY, Change.org. Full interview here
ENGAGEMENT WITH KEY INVESTORS

Once the board has completed its deliberative process and decided
to proceed with the conversion, management engages with key
investors that do not have representatives on the board. As with theboard:•

Several meetings will not only be necessary, but also beneficial tothe process.

•Enough time should be budgeted for completing this phase.

•Management will need to carefully review its stockholder base andspecifically schedule sessions with as many other stockholders
that are needed for attaining the requisite stockholder approvals
as possible.

29

.
Phase
2: Approvals and Notifications•

At this point the company is ready to make an amendment to the company’s certificate
of incorporation to expressly:(a) Specify that the company is a Public Benefit Corporation.
(b) Designate the public benefit(s) the company wishes to pursue.
(c) Include the additional exculpation provisions for directors.
BOARD APPROVAL

The first step in this process is to obtain board approval, whichshould be a formality given the significant amount of preparatory work
already undertaken. While the company’s organizational documents
will specify the approval threshold required for adoption of theamendments to the certificate of incorporation, at most companies amajority of the board will be required to approve the amendments.
To assure that directors and officers are positioned to take fulladvantage of the decision-making flexibility and related fiduciary
duty benefits that the PBC framework offers, the board minutes andresolutions should reflect the “tripartite balancing” principle as opposedto the typical “best interests of the corporation and its stockholders”
objective that characterizes the process at a traditional corporation.
For example, the recitals of resolutions should include clauses that:• Identifies the public benefit that the corporation has chosen to
pursue, and the stakeholders materially impacted by the publicbenefit.
• Describes the impact of the proposed action on the public benefits
and the stakeholders.
• Describes the impact of the proposed action on the company
and its stockholders.
• Describes the tripartite balancing process and that the board has
considered the impact of the corporate action on the public benefit,
the affected stakeholders and the company’s stockholders.

STOCKHOLDER APPROVALS

Once the board has approved
the amendment to thecertificate of incorporation, thestockholders must do the same.
Private companies: Delaware
law requires that information be
circulated to all stockholders
informing them of, among otherthings, the proposed charter
amendment and changes totheir rights under the new PBC
charter. This can be achievedby collecting written consents.
Public companies: the U.S.
federal securities laws require
the preparation and filing of aproxy statement that contains
similar information. Howevera written consent will not be afeasible option. The amendment
incorporation will need to besubmitted to a vote of thestockholders at the next annual
meeting, or a special meeting ofstockholders called specificallyfor this purpose.

30

Be prepared for: “Will this change result in a risk that the corporation
will cease to operate in my best interests as an equity investor and,instead, start to pursue pet projects of insiders?”

BENEFIT CORPORATION:
THE PATH.

Management will need to explain why a PBC structure is consistent
with the longstanding culture of the corporation and that, rather
than provoking a change in direction, the conversion to a PBC will
actually, over the long term, permit the corporation to continue with
its trademark efforts to take into account the best interests of not only
stockholders, but also employees, customers and public benefits– a formula that has worked well for equity investors to date. Many
publicly-traded companies will be able to cite back to statements intheir IPO prospectuses about the value-driven culture and aspirations
beyond merely profit that underpin the culture and business modeland how this conversion to a PBC is simply a way of permitting
the business to continue to flourish consistent with these historicalstatements. Posting on the corporate website and use of media, allwhile complying with filing requirements of the federal proxy rules, will
be advisable.

Prepare article amendment byadding required language “This
corporation is a benefit corporation”
and choosing a specific publicbenefit purpose that reflects themission of your company.
Obtain Board approval.
Conduct discussions withshareholders prior to seeking
approval to assure vote.
Obtain shareholder approval.

Section 6
These Are theTough Questions

These Are theTough Questions
In conversation with both a publicly traded Certified B Corporation DE PBC (Company A) and Mayer
Brown LLP*, a global law firm advising the world’s leading companies and financial institutions, including
public benefit companies on ESG and other socially-minded matters.

Activism and Stockholder Backlash
Even once a public company has converted, its ability to pursue its mission and take actions that benefit
other stakeholders will be vulnerable to the same forces that constrain traditional corporations. That
vulnerability stems from the ability of all stockholders to act at annual meetings (and sometimes, at special
meetings or through action by written consent) to replace directors.
When the company was in the registration process with the SEC did it get comments from thestaff about Certification or legal status?
A: “Yes, the SEC acknowledged that this is a new type of corporation which investors may not be familiar
with, and thus they asked us to expand our prospectus disclosure to explain how an investment in a Public
Benefit Corporation [PBC] differs from an investment in an entity that does not have that status. They noted
possible areas of disclosure to review as: rights of shareholders in a [PBC], dividends and distributions toshareholders, duties and obligations of directors and potential anti-takeover effects and considerations in asale of the company.”
How does the benefit corp form impact board operations currently and how do you think thismight change as a public company?
A: “The Board has to make decisions considering the company’s stated benefit.”
Did you see any trend in the type of investor that bought into your IPO (e.g. long-term investors etc.)
A: “We do not believe the PBC status had any positive or negative impact on our valuation. Rather, it wasa way to articulate our mission-driven focus as a newly minted public company. As the first ever [PBC] togo public, this was a new concept for many of the investors we met with on the roadshow, so we had totake time to educate them. Once we explained to them that the PBC status is simply a corporate structure,much like a C Corp or an S Corp, but one that commits itself to high standards of corporate purpose,
accountability and transparency, they understood why we chose to structure ourselves as a PBC.”*The contents and views in this document are informational only, and are not intended to be, and may not be relied upon as, legal advice.

33

How does this fit into the narrative/ terms of your S1?
A: “Our company is a mission-driven organization focused on making contributions to society througheducation. For a long time, we didn’t have an easy way to explain the idea of a for-profit company withsuch a deep commitment to benefiting society. So, we took notice when in 2010 the first state in the
U.S. passed legislation creating the concept of a Public Benefit Corporation. After extensive researchand consultation with our board, outside counsel and advisors, and the underwriters who were tasked tolead our IPO, we determined that the PBC structure aligned well with the mission of the organization andnarrative we wanted to tell as a newly minted public company.”

Risk

What is the highest risk from board/investors? Potential Increased Director Liability:
Mayer Brown: “While PBC directors may owe fiduciary duties to stakeholders in addition to shareholders,some state corporate statutes have limited the universe of parties that can bring a suit to enforce
compliance with the company’s public benefit purpose or the balancing undertaken by the directors ofshareholder/ other stakeholder interests (i.e., a benefit enforcement proceeding that is the loose equivalentof the shareholder derivative claim). As a practical matter, PBC directors should not automatically faceliability from shareholders and other stakeholders because, generally, only shareholders (and not, forexample, the vendor or employee group who may be a stakeholder benefiting from the stated public
purpose of a PBC) are permitted under the relevant statutes to bring a benefit enforcement proceeding.
Certain states (e.g., Delaware) impose share ownership thresholds, while other states (e.g., California)
permit companies to voluntarily expand the list of people entitled to bring a benefit enforcement
proceeding by expressly giving them that right in the company’s bylaws or articles of incorporation.
A benefit enforcement proceeding should generally not subject the company or a director
to monetary damages.
Did you have any problems with D&O insurance?
A: “No, we did not. As the first ever PBC to go public, it did require educating our broker and the market.
After that process was completed, we were able to secure the D&O coverage without any issues.”
Mayer Brown: “No, a PBC would not be expected to have problems obtaining D&O insurance solely as aresult of it being a PBC and in fact, PBCs may even expect a credit (i.e., premium discount) for providing asocial good (although we note that insurance companies have not in practice offered such credit). As such,
PBCs should normally expect to be issued D&O insurance policies with similar premiums to those offered
to traditional for-profit corporations.”

Did you encounter any opposition from outside counsel? If so, how did you overcome it?
A: “No, however we did engage with outside advisors as we evaluated the conversion to a PBC. Their
feedback was shared with our board before we undertook the vote to convert to a PBC.”
Mayer Brown: “A company should be prepared to initially encounter some hesitation or reluctance (andmaybe even in some cases, opposition) from outside counsel in connection with consideration of the
PBC legal structure and/or status as a Certified B Corp because some lawyers are not familiar with the
new structures, and these concepts tend still to be viewed as largely untested in the courts. As such,some outside counsel may be wary of promoting PBC structure or status, or believe it is unnecessary.
However, such reactions should reduce or even disappear over time as PBCs andCertified B Corps continue to become more mainstream and lawyers become more familiar with
their formation and governance processes.”34

Did you encounter any opposition from the underwriters? If so, how did you overcome it?
A: “The underwriters were very supportive. As the first ever PBC to go public, they needed to spend a lotof time coming up to speed and were very engaged with management, our board, outside counsel andour advisors. Upon conclusion they advised us that there were no valuation implications for the company
and were supportive of the PBC conversion.”
Mayer Brown: “Generally, underwriters are conservative when considering whether to bring unique or new
types of offerings to the market for fear that investors will not be as familiar with such offerings. Recently,
however, ESG-focused investing appears to have taken hold in the markets, and as such, opposition fromunderwriters would be expected to continually reduce.”

Preparation
Who are the right people to have in the room beyond your Board?
A: “Outside counsel and bankers/advisors, public relations team, and senior management.”
Mayer Brown: “As a general matter, the board should seek to benefit from a wide and diverse range of
inputs and expertise when determining the desirability of converting to the PBC legal structure (or seeking
B Corp Certification). It would be helpful to invite one or more of the company’s major shareholders to join
the discussion, as the decision to convert to a PBC would ultimately need a majority vote (and in somecases, supermajority) of the shareholders. It is also generally helpful to have investment bankers or otherfinancial advisers who are familiar with financing from an ESG perspective in the room to discuss trends,
considerations and investor appetite.”What was most useful/valuable for you all to refer to when showing market traction aroundstakeholder governance?
A: “Our own digital platforms which provided examples of our positive social impact, and our
B Corp Certification.”
Mayer Brown: “While there are many indications of market traction around stakeholder governance, one
only need to look at the news to see that ESG-focused investing and the ESG movement in general hastaken hold, as there is a new announcement relating to the ESG movement nearly every day.”Who is best to lead this conversation/champion with your Board?
A: “CEO with support from senior management, with input from trusted external advisors and subject
matter experts.”
Mayer Brown: “Ultimately the decision needs to be a Board decision, with majority (and in some casesmore) shareholder support. However, in getting there, a clear vision and a demonstrated commitment fromthe top with respect to the public benefit purpose are two keys to a successful transition from a traditional
for-profit corporation to a PBC. Such vision and commitment almost certainly requires buy-in from theCEO (or equivalent top manager) and other senior management at the company who will be tasked withconvincing the board (and in turn the shareholders) of the merits of PBC and/or Certified B Corp status. On
a related (but less direct) championing note, it is not just the CEO and C-Suite that are relevant to the PBC
conversion process. It is not unusual for younger generations of employees, especially at smaller or growthcompanies where hands-on involvement is encouraged and rewarded, to spearhead momentum towards
PBC status and gain buy-in from key officers of a company by demonstrating the benefits (including
marketing and branding) of the PBC form to the company.”
What were any unforeseen hurdles in terms of process you wish you could have prepared for?
A: “For us it was largely the newness of the structure as the first PBC to go public. It required educating themarket on what a PBC was, how it works, and why we chose that ownership structure.”
What reactions or (tough) questions did you get from investors during your roadshow?
A: “The first and main reaction from all investors was to question if this was a tax planning strategy by thecompany. Did somehow converting to a PBC lessen our tax expense? That question stemmed from theirlack of knowledge on what a PBC was.”36Perspectives
Don’t be defensive —it’s an asset.

Bring in support.

“One of the important things I’ve
learned is to not be defensive –as if the benefit corporation
structure is inconsistent with therest of the pitch you’re making
for the organization. Look at it as
an asset for the company that’s
reflective of the values of theorganization and will contributeto its value over time in attracting
talent and press, etc. Leaning
into it and articulating how
it’s contributing to building animmensely valuable business overtime has been most effective.

“The primary concern I hearis ‘Does this structure create
any new or additional liabilities
that a more traditional structure
does not?’ It helps to have atleast a cursory understandingof shareholder provisions. Whenthat is addressed, investors are
generally very comfortable. If
you need to go in depth, bringin a lawyer with expertise in thatarea. At times I have leaned
on an attorney familiar with
benefit corporation statute inorder to answer more technicalquestions.”

One thing we did which wasreally helpful was having term
sheets that shifted the voting
rights on the conversion to abenefit corporation to the board
to give investors comfort that theconversion will only be enacted
if it feels like it is right for theorganization and the organization
has developed further than theearly shoots of the startup. It wasalso incredibly helpful because
otherwise you have to literally get
everyone aligned, three, four, five
years after the initial investment.”

ADAM LOWRY, Co-FounderIt’s the future.
“Great companies are going tocome out and be PBCs and B
Corps, and that’s going to be acontributing factor for why they’resuch great companies.
I have an extremely positive viewon all of this. Investors havenever questioned for a moment
why we’re doing what we’re
doing, nor have they questioned
our benefit corporation legal
structure. Some companies have
had a challenge of making their B
Corp status as a publicly traded
company, but frankly I think this is
the way the world is headed.”
JOEY ZWILLINGER, CEO

BEN RATTRAY, Founder & CEO
Photo: allbirds.com

Finalthoughts
Purpose-driven businesses are increasingly regarded as conducive to increasing shareholder value. An
authentic commitment to purpose by becoming a benefit corporation creates value for all stakeholders
including shareholders. Shareholder primacy however is the legal doctrine and culture in business andfinance that drives companies, investors and their directors to maximize profits above all else. Republican
Senator Marco Rubio recently released a report, “American Investment in the 21st Century,” thatspecifically calls out shareholder primacy as the root cause of the virus of short-termism plaguing ourcapital markets, crowding out investments in innovation and undervaluing workers.
Our belief is that waiting for voluntary change simply will not get us where we need to go fast enough tosolve the challenges we face. To restore trust in capitalism — and for capitalism to be worthy of our trust —we must pull policy and regulatory levers to ensure that all companies and investors are responsible for the
impact of their decisions on all stakeholders and the economic system as a whole.
“This 50-page policy report released by B Lab and developed in partnership with The Shareholder
Commons, detail actions by Congress, the Securities and Exchange Commission, the Departmentof Justice, and the Federal Trade Commission that are necessary to transition the U.S. economy tostakeholder capitalism.
But we all know these theories don’t gain traction without demonstrated leaders. It begins with companies
like yours to adopt benefit governance to show not only a viable alternative, but one that is valuable for all
who benefit from your company’s mission and success. B Corps so far have led the way and proven thatthe sole duty of the corporation needs to change. But they can’t do it alone. Investors, other companies,
and policymakers need to be a part of the change. The time is right.
HOLLY ENSIGN BARSTOWB Lab United States & Canada,
Director of Stakeholder
Governance and Policy

ANDY FYFEB Lab United States & Canada,
Growth Catalyst

In gratitude to the companies featured in this guide for their invaluable perspectives
and demonstrated leadership, along with:

The contents and views in this document are informational only, and are not intended to be, and may not be relied upon as, legal advice.

38

Benefit Corporation Law and Governance:
Pursuing Profit with Purpose
The Public Benefit Corporation Guidebook
Examples of Specific Public Benefits
How to Pick a Specific Public Benefit

Further
Resources

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