Is There a Role for Benefit Corporations in the New Sustainable Governance Framework?
An edited version of this paper will be published in the Festschrift for Rolf Skog (forthcoming)
40 Pages Posted: 23 Jun 2021
Date Written: May 30, 2021
In this paper, we ask whether benefit corporations have a role to play in the emerging EU sustainable governance framework. In sec. 2, we briefly introduce the benefit corporation with regard to US law and to the laws of some EU member States, such as France and Italy, which have adopted this company form. In sec. 3, we focus on the benefit corporation’s purpose and function from a comparative law perspective, asking whether benefit corporations perform a useful function internationally. We argue that corporate purpose tends to be a flexible concept across countries and that benefit corporations are not the only way to reconcile profit and social values in business corporations. In sec. 4, we compare the critical features of the law relating to benefit corporations with the essential elements of the emerging sustainable governance framework. We show that the latter partially overlaps with the laws on benefit corporations and to some extent is a substitute for them, therefore reducing the potential interest in this corporate form. In sec. 5, we conclude that mainly firms which the new EU sustainable governance framework does not apply to, such as non-listed SMEs, will adopt the benefit corporation model when available in their jurisdiction, while other companies may still adopt it mostly for communicating their commitment to sustainability.
Keywords: Benefit corporation, corporate purpose, corporate governance, corporate social responsibility, shareholder primacy, shareholder value, shared value, social value, stakeholder governance, sustainability
JEL Classification: G30, G32, G38, K20, K32, L21, M14, P12
Suggested Citation: Suggested Citation