Winner’s Take All by Anand Giridharadas has a few chapters dedicated to B-corps. The issue isn’t that the b-corps themselves are bad, but that relying on a few good companies to fix the problems in the world isn’t going to work, because the bad actors will always more than make up for it.
Taking climate change as an example: 100 b-corps going carbon-neutral aren't going to offset the damage Exxon causes to the environment.
You can say we just need to wait until consumers change their behavior and let the market sort it out, but isn’t that exactly what we’ve been trying and failing to do? At this rate it’s all but certain that climate change won’t be solved via market solutions.
What’s better is forcing the bad actors to stop doing bad. Fighting to pass a carbon tax regulation or a green new deal is what we need, and bandaids like b-corps are often a distraction that tricks people into thinking we can consume our way out of the problem.
Sure but during the decades it will take to make generational change, why not support a B-Corp over one that hasn't made similar promises?
You are talking as if this is an either/or proposition. No, B-Corps won't solve our problems but if it moves the needle even a little, that's still a good thing, right?
I disagree that gaining support for and enacting a carbon tax would take decades. It won’t be easy, and maybe isn’t probable, but a mass movement could make it happen.
To your other point about private solutions being good because they move the needle a little:
In my personal life I shop sustainably (but I’m not perfect or obsessive about it). I do think it’s a little better as a consumer to make ethical choices than not to.
But: the rhetoric around climate change as something individual choices will fix is extremely dangerous. If you ask your average person about what we can do to fix climate change, I’d guess most would go straight to market solutions. Why is that? Could it be because that’s what the entire marketing and media establishment wants us to focus on, because a collective solution will cost them a shit-ton of money?
Yes in a different world it’s not either or and we’d have individual and collective solutions working together to save the planet. In this world, however, the powerful have a vested interest in market-based solutions being the only options on the table.
Basically, yes I agree that ethical companies are better than unethical companies. But on a macro level, propaganda around ethical consumption is so dangerous imo that I’m not interested in contributing to it just to move the needle an imperceptible amount.
Fighting to pass a carbon tax or green new deal is even less impactful than supporting b corps since those things will never get support from the corrupt political class rolling in what are essentially oil dollars.
That might be true! But there are many people working to unbalance that power dynamic as well.
It’s definitely not a guarantee, but mass movements can force change. Look at Bernie, he came pretty damn close to the nomination even with the entire upper class and media throwing their weight behind his opponents.
Basically people use B-Corps and similar concepts to make other people that are uncomfortable and skeptical of general capitalism feel comfortable by pretending there are safeguards built into the corporate structure preventing whatever they are uncomfortable with.
Charters can easily change, anything can be reincorporated at whim anywhere.
Also its typically just Shariah-Compliant investing rebranded for an Islamaphobic audience. S&P has a shariah index right across the border in Toronto Stock Exchanfe since forever while similar enterprisers push B-Corps and Public Benefit Corporations domestically as if they’ve “figured out” the code to sustainable for profit ventures through charter. Shariah in this context is very compatible with what these kind of investors and consumers are looking for, but they don't know it as they probably conflate it with human rights abuses.
People are just gullible, hope I unpacked that enough.
I see exactly one merit in B-corporations: the status makes it legal for management to to decide in favor of conscience over greed. It doesn't force them to decide conscience over greed, they can be just as profit-oriented as a regular corporation, but they can. At least management won't be sued by shareholders for rejecting a an unethical but legal profit opportunity. It's not the big difference some may expect, but it can be an important difference nonetheless (just like it can be no difference at all)
"Third, corporate directors are not required to maximize shareholder value. As the U.S. Supreme Court recently stated, "modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not do so." ( BURWELL v. HOBBY LOBBY STORES, INC. ) In nearly all legal jurisdictions, disinterested and informed directors have the discretion to act in what they believe to be the interest of the business corporate entity, even if this differs from maximizing profits for present shareholders. Usually maximizing shareholder value is not a legal obligation, but the product of the pressure that activist shareholders, stock-based compensation schemes and financial markets impose on corporate directors.
The Shareholder Value Myth , Eur. Fin. Rev. Lynn Stout (April 30, 2013)
The Ideology of Shareholder Value Maxim (Watch), Evonomics"
AFAIK, modern corporate law never required that, and the Supreme Court was affirming the existing state of things. The "Shareholder Theory" stems from an essay Milton Friedman published in 1970 asserting that corporations have no responsibility to do anything other than maximize shareholder value, but this was never enshrined in law or financial regulation -- it was just something a lot of corporations followed. It seems in the intervening decades it's become such an accepted "truth" that people assume that it's a legal requirement.
There has never been a legal requirement for corporations to maximize profit. This is one of the greatest misconceptions propagated in the past 40 years.
A company's management has to act in the interest of shareholders, but that can be very loosely defined. A company that says "When making business decisions, we prefer protecting the environment over short-term profits, because our shareholders are humans living on Earth and without a good environment, our business would fail in the long-term" is not doing anything illegal. But if other companies don't follow suit, the eco-conscious company is in danger of being outcompeted.
