There are now more than a thousand B corps in the U.S., including Patagonia, Etsy, and Seventh Generation. And in the past four years twenty-seven states have passed laws allowing companies to incorporate themselves as “benefit corporations”—which are similar to B corps but not identical. The commitments that these companies are making aren’t just rhetorical. Whereas a regular business can abandon altruistic policies when times get tough, a benefit corporation can’t. Shareholders can sue its directors for not carrying out the company’s social mission, just as they can sue directors of traditional companies for violating their fiduciary duty.
... Johnson & Johnson’s credo, written in 1943, stated that the company’s “first responsibility” was not to investors but to doctors, nurses, and patients. There were problems with this way of doing business: it was paternalistic and often inefficient. But what replaced it—the fetishization of shareholder value—has inflicted serious damage of its own, encouraging corporations to focus on short-term prospects and share price at the expense of everything else.Read more in the New Yorker.