What is a B Corp?
Public Benefit Corporate Structure
EnergyElective is a public benefit corporation designed for transparent operation as an exclusively clean-energy broker in order to eliminate the disconnect between the public’s interest and market incentives. That disconnect, and primitive technology, is what drove the need for much of the utility regulatory apparatus which now impedes the replacement of fossil fuels with clean energy.A benefit corporation is a new corporate structure designed for for-profit entities that want to consider society and the environment in addition to profit in their decision making process. Benefit corporations differ from a traditional corporation in regards to their purpose, accountability and transparency. The purpose of a benefit corporation is to create a public benefit while also making a profit. The benefit is defined as a material positive impact on society and/or the environment. A benefit corporation’s directors operate the business with the same authority as in a traditional corporation. But, in a public benefit corporation, the Directors are not bound to consider profit exclusively. They also take public benefit into account, and cannot be sued by shareholders solely on the basis of failing to maximize return on investment. Shareholders in a benefit corporation determine if the benefit corporation has achieved its stated material positive impact. Third party audits of the corporation look not only at its financial performance, but also at the metrics set forth to determine its public benefit. Through the issuance of an annual benefit report to the public, consumers are provided information to determine if they agree or disagree with the benefit corporation’s methods of achieving a material positive impact on society and/or the environment.
The additional accountability provisions found in a benefit corporation require the directors and officers to consider the impact of their decisions not only on shareholders’s ROI, but also on society and the environment. Benefit corporations also provide shareholders with a private right of action, called a benefit enforcement proceeding, that they can use to enforce the company’s mission when the business has failed to sufficiently pursue or create general public benefit.
The added transparency provisions of a benefit corporation require that the company produce an annual benefit report on its overall social and environmental performance using a comprehensive, credible, independent and transparent third- party standard. Benefit corporations utilize third party standards similarly to how the Generally Accepted Accounting Principles (GAAP) are applied during financial reporting, as a structured methodology the company uses to measure its own performance. A benefit corporation must also make the annual benefit report available to the public by posting it on the public portion of the company’s website; in some states the company must also submit the report to the Secretary of State. However, the Secretary of State has no governance over the annual benefit report. There are around twelve third party standards that meet the requirements of different states’ legislation.