Five months after unanimously passing both houses of the state Legislature, Gov. Andrew Cuomo last week signed a bill that allows for the creation of a new kind of business entity in New York state ”“ benefit corporations ”“ whose purpose is not just profit, but social responsibility to their communities.
Sponsors of the bill touted it as changing the way the state does business.
“Benefit corporations will unlock billions of dollars in new investments in New York while empowering companies to do well and do good,” said state Sen. Daniel Squadron, the Democratic sponsor in the Senate.
“We are showing that profit and social responsibility are not mutually exclusive,” Assembly Speaker Sheldon Silver said.
What Silver was referring to was the aspect of the bill that pushes socially responsible practices on the part of the corporation.
According to the law, “specific public benefit” includes:
Ӣ providing low-income or underserved individuals or communities with beneficial products or services;
Ӣ promoting economic opportunity for individuals or communities beyond the creation of jobs in the normal course of business;
Ӣ preserving the environment;
Ӣ improving human health;
Ӣ promoting the arts, sciences or advancement of knowledge;
Ӣ increasing the flow of capital to entities with a public benefit purpose; and
Ӣ the accomplishment of any other particular benefit for society or the environment.
The actions by the corporation to meet these guidelines will be assessed “against a third-party standard, from the business and operations of a benefit corporation.”
New York is the seventh state to sign into law benefit corporation legislation. It joins California, Hawaii, Maryland, New Jersey, Vermont and Virginia.
Silver said, “This law will continue our efforts to strengthen and diversify our economy while ensuring that New York remains a national leader in progressive policies that help our environment, protect consumers and bolster the rights of working men and women.”
Local supporters of the bill included Greyston Bakery in Yonkers and fashion designer and Irvington resident Eileen Fisher.
Another supporter was the American Sustainable Business Council, which said in a statement, “The new law addresses a long-time concern among entrepreneurs who need to raise growth capital but fear losing control of the social or environmental mission of their business. These entrepreneurs and other shareholders of benefit corporations now have additional rights to hold directors accountable for failure to create a material positive impact on society, to consider the impact of decisions on employees, community and the environment, or to inform the public about the company”™s overall social and environmental impact as assessed against a credible, independent third-party standard.”
The law takes effect in February, 60 days after its signing.
