Friday, November 20, 2015

A Few Thoughts on “Poverty, Inc.”


This past Sunday afternoon, I attended a screening of the film Poverty, Inc.

The trailer is available here.

I share a few, somewhat disconnected, thoughts on Poverty, Inc. under the page break.

Continue reading

November 20, 2015 in CSR, Current Affairs, Entrepreneurship, Ethics, Film, Haskell Murray, Human Rights, International Law, Nonprofits, Social Enterprise | Permalink | Comments (2)

Wednesday, November 4, 2015

DOL Warms to ESG Investments by ERISA-governed Funds

The Department of Labor issued new interpretive guidelines for pension investments governed by ERISA.  A thorny issue has been to what extent can ERISA fiduciaries invest in environmental, social and governance-focused (ESG) investments?  The DOL previously issued several guiding statements on this topic, the most recent one in 2008, IB 2001-01, and the acceptance of such investment has been lukewarm. The DOL previously cautioned that such investments were permissible if all other things (like risk and return) are equal.  In other words, ESG factors could be a tiebreaker but couldn't be a stand alone consideration. 

What was the consequence of this tepid reception for ESG investments?  Over $8.4 trillion in defined benefit and defined contribution plans covered by ERISA have been kept out of ESG investments, where non-ERISA investments in the space have exploded from "$202 billion in 2007 to $4.3 trillion in 2014.

In an effort to correct the misperceptions that have followed publication of IB 2008-01, the Department announced that it is withdrawing IB 2008-01 and is replacing it with IB 2015-01

The new guidance admits that previous interpretations may have

"unduly discouraged fiduciaries from considering ETIs and ESG factors. In particular, the Department is concerned that the 2008 guidance may be dissuading fiduciaries from (1) pursuing investment strategies that consider environmental, social, and governance factors, even where they are used solely to evaluate the economic benefits of investments and identify economically superior investments, and (2) investing in ETIs even where economically equivalent."

Under the new interpretive guidelines, the DOL takes a much more permissive stance regarding the economic value of ESG factors.

"Environmental, social, and governance issues may have a direct relationship to the economic value of the plan's investment. In these instances, such issues are not merely collateral considerations or tie-breakers, but rather are proper components of the fiduciary's primary analysis of the economic merits of competing investment choices. Similarly, if a fiduciary prudently determines that an investment is appropriate based solely on economic considerations, including those that may derive from environmental, social and governance factors, the fiduciary may make the investment without regard to any collateral benefits the investment may also promote. Fiduciaries need not treat commercially reasonable investments as inherently suspect or in need of special scrutiny merely because they take into consideration environmental, social, or other such factors."

In other words, ESG factors may be economic factors and such investments are not automatically suspect under ERISA fiduciary duty obligations.

-Anne Tucker

November 4, 2015 in Anne Tucker, Corporate Finance, CSR, Current Affairs, Securities Regulation, Shareholders, Social Enterprise | Permalink | Comments (2)

Thursday, October 29, 2015

Georgetown Law Graduate Clinical Teaching Fellowship

I recently received information about this social enterprise & nonprofit clinical teaching fellowship position at Georgetown University Law Center. My friend, Georgetown law professor Alicia Plerhoples, is the director of the clinic, and the fellowship sounds like an excellent opportunity.


Georgetown Law Graduate Clinical Teaching Fellowship

Description of the Clinic 

The Social Enterprise & Nonprofit Law Clinic at Georgetown University Law Center offers pro bono corporate and transactional legal services to social enterprises, nonprofit organizations, and select small businesses headquartered in Washington, D.C. and working locally or internationally. Through the Clinic, law students learn to translate theory into practice by engaging in the supervised practice of law for educational credit. The Clinic’s goals are consistent with Georgetown University's long tradition of public service. The Clinic’s goals are to:

  • Teach law students the materials, expectations, strategies, and methods of transactional lawyering, as well as an appreciation for how transactional law can be used in the public interest.
  • Represent social enterprises and nonprofit organizations in corporate and transactional legal matters.
  • Facilitate the growth of social enterprise in the D.C. area.

The clinic’s local focus not only allows the Clinic to give back to the community it calls home, but also gives students an opportunity to explore and understand the challenges and strengths of the D.C. community beyond the Georgetown Law campus. As D.C. experiences increasing income inequality, it becomes increasingly important for the Clinic to provide legal assistance to organizations that serve and empower vulnerable D.C. communities. Students are taught how to become partners in enterprise for their clients with the understanding that innovative transactional lawyers understand both the legal and non-legal incentive structures that drive business organizations.

Description of Fellowship

The two-year fellowship is an ideal position for a transactional lawyer interested in developing teaching and supervisory abilities in a setting that emphasizes a dual commitment—clinical education of law students and transactional law employed in the public interest. The fellow will have several areas of responsibility, with an increasing role as the fellowship progresses. Over the course of the fellowship, the fellow will: (i) supervise students in representing nonprofit organizations and social enterprises on transactional, operational, and corporate governance matters, (ii) share responsibility for teaching seminar sessions, and (iii) share in the administrative and case handling responsibilities of the Clinic. Fellows also participate in a clinical pedagogy seminar and other activities designed to support an interest in clinical teaching and legal education. Successful completion of the fellowship results in the award of an L.L.M. in Advocacy from Georgetown University. The fellowship start date is August 1, 2016, and the fellowship is for two years, ending July 31, 2018.


Applicants must have at least 3 years of post J.D. legal experience. Preference will be given to applicants with experience in a transactional area of practice such as nonprofit law and tax, corporate law, intellectual property, real estate, or finance. Applicants with a strong commitment to economic justice are encouraged to apply. Applicants must be admitted or willing to be admitted to the District of Columbia Bar. 

Application Process 

To apply, send a resume, an official or unofficial law school transcript, and a detailed letter of interest by December 15, 2015.  The letter should be no longer than two pages and address a) why you are interested in this fellowship; b) what you can contribute to the Clinic; c) your experience with transactional matters and/or corporate law; and d) anything else that you consider pertinent. Please address your application to Professor Alicia Plerhoples, Georgetown Law, 600 New Jersey Ave., NW, Suite 434, Washington, D.C. 20001, and email it to Emailed applications are preferred. More information about the clinic can be found at

Teaching fellows receive an annual stipend of approximately $53,500 (taxable), health and dental benefits, and all tuition and fees in the LL.M. program.  As full-time students, teaching fellows qualify for deferment of their student loans. In addition, teaching fellows may be eligible for loan repayment assistance from their law schools.

October 29, 2015 in Haskell Murray, Jobs, Social Enterprise, Teaching | Permalink | Comments (0)

Wednesday, October 14, 2015

Public Benefit Corporations: Take 2

Fellow BLPB editor Haskell Murray highlighted Laureate Education's IPO (here on BLPB) last week as the first publicly traded benefit corporation.  Steven Davidoff Solomon, the "Deal Professor" on Dealbook at NYT, focused on the interesting issues that can be raised by public benefit corporations in his article, Idealism That May Leave Shareholders Wishing for Pragmatism, which appeared yesterday.  Among the concerns he raised were the  vagueness of the "benefit"provided by the company, the potential laxity or at least untested waters of benefit auditing, and the potential for management rent seeking at the expense of shareholder profit in the new form.  Davidoff Solomon, who (deliciously and derisively) dubs benefit corporations the "hipster alternative to today’s modern company, which is seen as voracious in its appetite for profits," is certainly skeptical. But the concerns are valid and will have to be worked out successfully for this hybrid form to carve out a place in the securities market.  What I found particularly interesting was his focus on the role of institutional investors, who as fiduciaries for their individual investors, have fiduciary obligations to pursue profits which may be in conflict with or at least require greater monitoring when investing in these alternative firms.  The question of institutional investors' appetite for alternative purpose firms, like benefit corporations, is the focus of a recent article of mine, Institutional Investing When Shareholders Are Not Supreme, and a big question for the future success of these firms.

For those of you wanting to highlight alternative firms in a general corporations course or a seminar, this article would be a good introduction and an accessible summary of the issues on the forefront. I will be including this in my seminar reading next semester as it is surely to generate discussion.

-Anne Tucker


October 14, 2015 in Anne Tucker, Business Associations, Corporate Governance, Delaware, Haskell Murray, Securities Regulation, Shareholders, Social Enterprise | Permalink | Comments (1)

Monday, October 5, 2015

Laureate Education - First IPO for a Benefit Corporation

Alicia Plerhoples (Georgetown) has the details about the first benefit corporation IPO: Laureate Education.*

She promises more analysis on SocEntLaw (where I am also a co-editor) in the near future.

The link to Laureate Education's S-1 is here. Laureate Education has chosen the Delaware public benefit corporation statute to organize under, rather than one of the states that more closely follows the Model Benefit Corporation Legislation. I wrote about the differences between Delaware and the Model here.

Plum Organics (also a Delaware public benefit corporation) is a wholly-owned subsidiary of the publicly-traded Campbell's Soup, but it appears that Laureate Education will be the first stand-alone publicly traded benefit corporation.

*Remember that there are differences between certified B corporations and benefit corporations. Etsy, which IPO'd recently, is currently only a certified B corporation. Even Etsy's own PR folks confused the two terms in their initial announcement of their certification.

October 5, 2015 in Business Associations, Corporate Finance, Corporate Governance, Corporations, CSR, Delaware, Haskell Murray, Research/Scholarhip, Securities Regulation, Social Enterprise | Permalink | Comments (0)

Friday, October 2, 2015

Social Business and Scandal

Unfortunately, touting a business as socially-consious does not seem to lessen the chance of scandal.

Some companies known for their commitment to social causes have been in the news for all the wrong reasons. A few are noted below:

Predictably, the media latches onto these stories and claims of hypocrisy fly. See, e.g., Here's The Joke Of A Sustainability Report That VW Put Out Last Year and Whole Foods Sales Sour After Price Scandal and BP's Hypocrisy Problems.

No business is perfect, so what should social businesses do to limit the impact of these scandals? First, before a scandal hits, I think social businesses need to be candid about the fact that they are not perfect. Second, after the scandal, the social business needs to take responsibility and take significant corrective action beyond what is legally required. 

Patagonia's founder does a really nice job of admitting the imperfection of his company and the struggles they face in his book The Responsible Company. Whole Foods supposedly offered somewhat above-market severance packages to laid off employees and took some corrective action in the price scandal, but I wonder if they went far enough, especially given the lofty praise for the company's social initiatives by the Whole Food's co-CEO in his book Conscious Capitalism. Whole Foods quickly admitted mistakes in the pricing scandal, but then lost points in my mind when they backtracked and claimed they were a victim of the media.

Even if social businesses take the appropriate steps, I think scandals probably hit them harder than the average business because social businesses have more customer goodwill at risk. I would love to see some empirical work on impact of scandal on social business as compared to those that do not market themselves as such; please pass any such studies my way. 

Given this post, Marcia Narine's post, and Joan Heminway's post, it is turning out to be a very pessimistic week at BLPB, but I am sure there will be good news to report in coming weeks.

October 2, 2015 in Business Associations, CSR, Ethics, Haskell Murray, Social Enterprise | Permalink | Comments (2)

Wednesday, September 23, 2015

Crowdfunding Chattanooga Style

As I earlier noted, I participated in a continuing legal education program at The University of Tennessee College of Law last Friday on the basics of crowdfunding.  My partners in crime for the last hour of the event were two folks from Chattanooga, Tennessee (yes, home of the famous choo choo) who have been involved in crowdfunding efforts for local businesses.  One used crowdfunding to finance a change in the location of a business; the other used crowdfunding to gauge interest in his business concept and raise seed capital.  They described their businesses and financing efforts in the second segment of the program (after a foundational hour on crowdfunding from me). 

The business location change was for The Camp House, a coffeehouse owned and operated as part of The Mission Chattanooga, a local church.  Private events, including music performances, also take place at the venue.  The Camp House raised over $32,000 through a crowdfunding campaign on Causeway.  Matt Busby, Director of The Camp House, educated us on donation crowdfunding through a non-profit platform.

The new business concept and capital raise was for Treetop Hideaways (a/k/a, The Treehouse Project), a business that designed, built, and rents time in a luxury treehouse.  The principals raised over $34,000 on Kickstarter.  One of the two men behind this project, Enoch Elwell, offered us practical information about reward crowdfunding.  Enoch also told attendees about his work with local entrepreneurs through CO.LAB and CO.STARTERS.

In the last hour of the program, the three of us reflected on crowdfunding successes and failures and speculated about the future of crowdfunding (using their experiences and my research as touchstones).  It was a wide-ranging discussion, filled with disparate tidbits of information on business formation, finance, and governance, as well as professional responsibility and the provision of practical, cost-sensitive legal advice.  Both Matt and Enoch turned out to be great folks to talk to about business finance, choice of entity, and the role of lawyers in small business formation and operation.  Their observations were thoughtful and sensible.  I learned a lot from them, and participants (practitioners and students) also indicated that they learned a lot.  Everyone had fun.  It was pure business lawyer/law student joy on a Friday afternoon!  :>)

For those who were not at the program on Friday and would have liked to have been there, all is not lost.  We plan to post a recorded version of all three program segments here in a few weeks.  Continuing legal education credit will be available in Tennessee for viewing the online recording, upon completion of the test provided and payment of the applicable fee.

September 23, 2015 in Corporate Finance, Corporate Governance, Entrepreneurship, Joan Heminway, LLCs, Nonprofits, Social Enterprise | Permalink | Comments (4)

Thursday, September 10, 2015

Crowdfunding CLE in Knoxville

Transactions: The Tennessee Journal of Business Law is sponsoring a continuing legal education program on the afternoon of Friday, September 18 entitled "Crowdfunding: The Basics."  If you will be in or near Knoxville at the end of next week (maybe because you're arriving early for a certain football game on Saturday night versus Western Carolina . . . ), come on over and check it out.  I am presenting for the introductory session.  The second session will feature entrepreneurs from two local (Chattanooga-based) crowdfunded social enterprises, and the third session will be a discussion among the three of us about successful and unsuccessful crowdfunding efforts.  

I am excited to be able to participate in this program with local entrepreneurs and have the opportunity to talk to them about the future of crowdfunding.  I will post important out-takes from the program in the future. I assume there will be a number of them . . . .

September 10, 2015 in Corporate Finance, Entrepreneurship, Joan Heminway, Social Enterprise | Permalink | Comments (3)

Tuesday, August 4, 2015

More Summer Reading: The Henry Ford Legacy Beyond Dodge v. Ford

Readers of this blog know I am fond of writing about Henry Ford and the Dodge v. Ford case (PDF here).  This summer, I am still working my way through Fordlandia, by Greg Grandin.  It's a really interesting read.  

Henry Ford had plans to build a town in the Amazon that would run like an ideal American town.  The industry would be rubber for car tires, and he was sure he could make a town that produced rubber AND moral people.  He was wrong.  

The book provides more about Ford than just his Amazon city planning. It highlights all sorts of what I will call "interesting" ideas Ford had (many of the quite appalling), and it provides context for a person who was far more interesting and disruptive than many people appreciate.  A good summary of the book is available from NPR here, where the author explains:

"Ford basically tried to impose mass industrial production on the diversity of the jungle," Grandin says. But the Amazon is one of the most complex ecological systems in the world — and didn't fit into Ford's plan. "Nowhere was this more obvious and more acute than when it came to rubber production," Grandin says.

Ford was so distrustful of experts that he never even consulted one about rubber trees. If he had, Grandin says, he would have learned that plantation rubber can't be grown in the Amazon. "The pests and the fungi and the blight that feed off of rubber are native to the Amazon. Basically, when you put trees close together in the Amazon, what you in effect do is create an incubator — but Ford insisted."

As Grandin explains, Ford's plans are a lasting disaster: 

[T]he most profound irony is currently on display at the very site of Ford’s most ambitious attempt to realize his pastoralist vision. In the Tapajós valley, three prominent elements of Ford’s vision—lumber, which he hoped to profit from while at the same time finding ways to conserve nature; roads, which he believed would knit small towns together and create sustainable markets; and soybeans, in which he invested millions, hoping that the industrial crop would revive rural life—have become the primary agents of the Amazon’s ruin, not just of its flora and fauna but of many of its communities.

Despite my love of the business judgment rule, it's hardly surprising that Ford was one of the folks who didn't get its protection. Stories like this give us some idea why.  

August 4, 2015 in Corporate Governance, Corporations, Joshua P. Fershee, Social Enterprise | Permalink | Comments (0)

Tuesday, July 14, 2015

CALL FOR PAPERS: A Workshop on Vulnerability at the Intersection of the Changing Firm and the Changing Family (October 16-17, 2015 in Atlanta, GA)

UPDATE: The deadline for submissions has been extended to July 21.

[The following is a copy of the official workshop announcement.  I have moved the "Guiding Questions" to the top to highlight the business law aspects.  Registration and submission details can be found after the break.]

A Vulnerability and the Human Condition Initiative Workshop at Emory Law

Guiding Questions:

This workshop will use vulnerability theory to explore the implications of the changing structure of employment and business organizations in the new information age. In considering these changes, we ask:

• What kind of legal subject is the business organization?
• Are there relevant distinctions among business and corporate forms in regard to understanding both vulnerability and resilience?
• What, if any, should be the role of international and transnational organizations in a neoliberal era? What is their role in building both human and institutional resilience?
• Is corporate philanthropy an adequate response to the retraction of state regulation? What forms of resilience should be regulated and which should be left to the 'free market'?
• How might a conception of the vulnerable subject help our analysis of the changing nature of the firm? What relationships does it bring into relief?
• How have discussions about market vulnerability shifted over time?
• What forms of resilience are available for institutions to respond to new economic realities?
• How are business organizations vulnerable? How does this differ from the family?
• How does the changing structure of employment and business organization affect possibilities for transformation and reform of the family?
• What role should the responsive state take in directing shifting flows of capital and care?
• How does the changing relationship between employment and the family, and particularly the disappearance of the "sole breadwinner," affect our understanding of the family and its role in caretaking and dependency?
• How does the Supreme Court's willingness to assign rights to corporate persons (Citizen's United, Hobby Lobby), affect workers, customers and communities? The relationship between public and private arenas?
• Will Airbnb and Uber be the new model for the employment relationships of the future?

Continue reading

July 14, 2015 in Business Associations, Call for Papers, Constitutional Law, Corporate Governance, Corporate Personality, Corporations, CSR, Current Affairs, Ethics, Financial Markets, Law and Economics, Social Enterprise, Stefan J. Padfield | Permalink | Comments (0)

Friday, July 3, 2015

Amendments to Delaware PBC Law (“The Etsy Amendments”)

Among the DGCL amendments this year were a number of amendments to the Delaware Public Benefit Corporation (“PBC”) Law. 

I refer to the Delaware PBC amendments as “The Etsy Amendments” because I believe (without being sure) that a main motivation in passing these amendments was to make it easier for Etsy (among other companies) to become a Delaware PBC. These amendments are effective as of August 1, 2015.

As mentioned in a previous post, Etsy is a certified B corporation and a Delaware C-corporation. According to B Lab’s terms for certified B corporations, Etsy will have to convert to a Delaware PBC by August 1, 2017 or forfeit its certification. This assumes that B Lab will not change its requirements or make an exception for publicly-traded companies.

The amendments to the PBC law are summarized below:

  • Eliminates requirement of "PBC" or "Public Benefit Corporation" in the entity’s formal name. This amendment makes it easier and less costly for existing entities to convert, but the amendment also makes it more difficult for researchers (and the rest of the public) to track the PBCs. In addition to the cost of changing names, Rick Alexander notes in his article below that the previous naming requirement was causing issues when PBCs registered in other states because “[s]ome jurisdictions view the term as referring to nonprofit corporations. Other jurisdictions view the phrase ‘'PBC'’ as insufficient to signal corporate identity.”
  • Reduces amount of shareholders that must approve a conversion from a traditional corporation to a PBC from 90% to 2/3rds of shareholders. This amendment brings Delaware PBC law in line with most of the benefit corporation statutes and gives Etsy a more realistic shot at converting. The requirement in Delaware to convert from a PBC to a traditional corporation was already approval by 2/3rds of shareholders.
  • Provides a “market out” exception to appraisal rights when a corporation becomes a PBC. This amendment brings the Delaware PBC law in line with their general appraisal provision in DGCL 262. This amendment also means that Etsy shareholders would not receive appraisal rights if Etsy converts to a PBC.

Additional posts about the amendments are available below:

July 3, 2015 in Business Associations, Corporate Governance, Corporations, Delaware, Haskell Murray, Legislation, Social Enterprise | Permalink | Comments (0)

Friday, June 19, 2015

Summer Reading: Conscious Capitalism


Recently, I finished reading Conscious Capitalism, written by Whole Foods Market co-CEO John Mackey and Babson College professor Raj Sisodia.

The book is much more “popular press” than academic, as should be clear from the splashy subtitle “liberating the heroic spirit of business.” There is a bit of academic influence in the appendix and notes, but it is mostly social business advocacy and story telling. In fact, the authors state that the primary purpose of the book “is to inspire the creation of more conscious businesses: businesses galvanized by higher purposes that serve and align the interests of all their major stakeholders.” (pg. 8). The book is interesting, passionate, and may accomplish its primary purpose.

The authors paint a compelling picture of Whole Foods Market and similar companies like Trader Joe's, The Container Store, Costco, and Southwest Airlines. These companies appear to take a long-term view and consider what is best for all their stakeholders. I would have appreciated, however, more attention to the struggles the companies must have faced in attempting to satisfy all of their stakeholders. After finishing the book, I was left wishing the authors would have spent more time discussing how to make decisions in situations where certain stakeholder interests irreconcilably conflict. 

I may have more to say about this book in future posts, but as someone who has been researching in the social business area for a few years, I continue to be amazed at the proliferation of terms. The authors describe four tenants of their term “conscious capitalism”: (1) Higher Purpose (beyond just generating profits); (2) Stakeholder Integration (“optimizing value creation for all of them”); (3) Conscious Leadership (leaders “motivated primarily by service to the firm’s higher purpose and creating and creating value for all stakeholders.”); (4) Conscious Culture and Management (culture and management centering around traits like “trust, accountability, transparency, integrity, loyalty, egalitarianism, fairness, personal growth, and love and care.)  (pg. 32-35)

The authors try to differentiate their term of “conscious capitalism” from similar terms, as discussed below. While some of the distinctions make sense, I wish that these various social business movements would agree on a common vocabulary and work together more consistently. Unfortunately and ironically, many associated with the social business movements seem especially territorial. Perhaps, the lack of focus on financial returns causes some to seek personal returns in the form of recognition and influence. Quotes in the bullet points below come from pages 38, 291-97 in the book.  

  • Corporate social responsibility. The authors note that CSR is often “grafted onto traditional business model, usually as a separate department or part of public relations," but for Conscious Capitalism “[s]ocial responsibility is at the core of the business.” The authors are not the first to note this difference between CSR and the more recent social business movements, and I think it is a fair distinction, at least in some cases.
  • Natural Capitalism. According to the authors, “Conscious Capitalism included the valuable insights that natural capitalism offers about the environment and transcends them with a more comprehensive view of the entire business and economic system.” The authors seem to suggest that their term is more holistic, not merely focused on the environment, and more focused on human ingenuity than simply preserving the environment.
  • Triple Bottom Line. The authors seem to think that Conscious Capitalism has a more inclusive view of stakeholders than TBL’s “people, profit, planet.” I don’t think the authors make their case for this distinction, failing to note stakeholders that don’t fall in one of TBL’s three buckets. The authors then note that their theory pays more attention to “purpose, leadership, management, and culture.” I also think this is stretching for distinctions; most of the TBL proponents I know recognize the importance of “purpose, leadership, management, and culture.” The authors admit that the TBL movement is "a fellow traveler," but I think TBL and Conscious Capitalism are roughly synonymous. 
  • Shared-Value Capitalism. SVC, championed by Michael Porter and Mark Kramer, focuses on creating economic value for shareholders and all of society. Conscious Capitalism, the authors claim, does not only focus on economic value like SVC, but expands to human values and includes “emotional and spiritual motivators” lacking with SVC. 
  • Creative Capitalism. Bill Gates popularized this term in 2008 at the World Economic Forum, claiming that certain companies can use variable pricing to make products affordable to those at the “base of the pyramid” and still make a profit. The authors claim Creative Capitalism seems like an “add on” similar to CSR, only applies certain companies, and over-focuses on the reputational benefits, rather than changing the core business purpose. 
  • B Corporations. The authors do not seem optimistic about “[certified] B corporations” which they unfortunately use interchangeably with “benefit corporations,” even though the two terms are distinct. The main reason the authors offer for their pessimism toward B corporations is that “B corporations appear to violate the important principle that owners [shareholders] should ultimately control the corporation.” Most legal readers will notice problems with that statement. First, shareholders don’t control corporations, boards of directors do (see, e.g., DGCL 141(a)). Second, to the extent the authors are talking about aspects of corporate governance like the shareholders’ ability to elect the directors and bring derivative suits, those powers remain for shareholders of both certified B corporations and benefit corporations. Giving the authors (neither of whom are legally trained) the benefit of the doubt – perhaps they are talking about the deprioritization of shareholders in the benefit corporation statutes (shareholders are simply one of many stakeholders that the board must consider in its decision making). The authors seem concerned that shareholders, the most vulnerable of the stakeholders (according to them), will be relatively unprotected. This is a fairly common concern, but the Conscious Capitalism model seems to deprioritize shareholders as well, and even in traditional corporate law, the business judgment rule provides significant protection to the board of directors. Delaware law does give shareholders more power in the M&A context, but benefit corporations and corporations committed to Conscious Capitalism that are incorporated in a constituency statute state seem like they would operate similarly, even in the M&A context. In short, the authors do not clearly express a strong grasp of the benefit corporation statutes, and throughout the book the authors actually seem to advocate operating corporations in line with the benefit corporation statutes (considering all stakeholders in decisions). 

While I am a bit critical in some of my comments above, I did appreciate learning more about Whole Foods Market and similar companies. The companies discussed are some of my favorite companies and are certainly making the world better for many of their stakeholders. The book also made a number of claims that spurred additional thinking, for which I am grateful, and which made reading the book worthwhile.   

June 19, 2015 in Books, Business Associations, Corporate Governance, Corporations, CSR, Haskell Murray, Social Enterprise | Permalink | Comments (3)

Friday, June 12, 2015

Oregon Benefit Companies - Online List

Oregon has done those interested in social enterprise a great service by posting a list of their benefit companies online. Oregon also has a nice page about becoming an Oregon benefit company.

By my count, the version updated 6/3/15, lists the following number of entities (for a total of 500 benefit companies):

  • 1 professional benefit corporation 
  • 74 benefit corporations 
  • 425 benefit LLCs

Oregon is one of a very few states that provides for the formation of benefit LLCs, in addition to benefit corporations. As you can see, the benefit LLCs are a good bit more popular than the benefit corporations, likely because most social enterprises are small, closely-held entities that should probably be LLCs instead of corporations.  

LLC law is generally flexible enough to allow a social purpose and Oregon's corporation law expressly allows corporations to be formed for a social purpose, so the main draw seems to be branding/signaling based rather than law based.

These are still relatively small numbers in the grand scheme, but it was a fairly short time ago that there were fewer than 500 total benefit companies nationwide.    

June 12, 2015 in Business Associations, Haskell Murray, Social Enterprise | Permalink | Comments (0)

Wednesday, June 10, 2015

Random Thoughts on the Beneficiaries of Corporate Board Decision Making

Last week, I attended the National Business Law Scholars Conference at Seton Hall University School of Law in Newark, NJ.  It was a great conference, featuring (among others) BLPB co-blogger Josh Fershee (who presented a paper on the business judgment rule and moderated a panel on business entity design) and BLPB guest blogger Todd Haugh (who presented a paper on Sarbanes-Oxley and over criminalization).  I presented a paper on curation in crowdfunding intermediation and moderated a panel on insider trading.  It was a full two days of business law immersion.

The keynote lunch speaker the second day of the conference was Kent Greenfield.  He compellingly argued for the promotion of corporate personhood, following up on comments he has made elsewhere (including here and here) in recent years.  In his remarks, he causally mentioned B corporations and social enterprise more generally.  I want to pick up on that thread to make a limited point here that follows up somewhat on my post on shareholder primacy and wealth maximization from last week.

Continue reading

June 10, 2015 in Business Associations, Conferences, Corporate Governance, Corporate Personality, Corporations, CSR, Current Affairs, Delaware, Joan Heminway, Litigation, Social Enterprise | Permalink | Comments (6)

Friday, June 5, 2015

Anti-Consumerism as Corporate Strategy

The New Yorker recently ran an interesting article entitled Patagonia’s Anti-Growth Strategy. Patagonia is a certified B corporation and a California benefit corporation.

As a customer, Patagonia is my favorite company for casual/outdoor clothing, and one of my favorite companies in any industry. Initially, I thought Patagonia's clothes were insanely expensive, but their clothes have been much cheaper on a “cost-per-wear” basis than any other clothes I have bought. In an age of cheap products and rampant consumerism, Patagonia is striking a chord with those who wish to buy fewer, quality products.

A taste of the article follows, but go read the entire thing.

The company’s anti-materialistic stance ramped up on Black Friday, 2011, with a memorable full-page advertisement in the Times that read, “Don’t Buy This Jacket.” The ad’s text broke down the environmental costs of the company’s top-selling R2 fleece sweater and asked consumers to think twice before buying it or any other product. The attention the ad received helped to bump Patagonia’s 2012 sales significantly. . . . Patagonia is trying second-hand-clothing sales at its shop in Portland, Oregon, and has made product repair and recycling a growing part of its business model. It recently invested in Yerdle—a Web startup whose stated mission is to reduce new-product purchases by twenty-five per cent—as a way for people, and even the company itself, to swap or give away used Patagonia gear.

Despite being a customer for about two decades, I haven’t needed the Patagonia repair services yet, but I love the idea.  

As the article above mentions, “[a]ll of this would be jet fuel for the engines of modern cynicism, if not for the fact that Patagonia, a privately owned corporation now in its fifth decade, has a distinguished record of environmental philanthropy and investment.” Patagonia may eventually experience mission drift, but the trust they have created with their customers is invaluable. While Patagonia’s anti-consumerism stance may seem to be against the firm's self-interest, “anti-consumerism is clearly helping to build the Patagonia brand. Indeed, the company is seeing double-digit annual growth.”

Patagonia’s founder Yvon Chouinard has two books worth reading by those interested in social business: Let My People Go Surfing and The Responsible Company.

June 5, 2015 in Business Associations, Corporate Governance, Corporations, CSR, Haskell Murray, Social Enterprise | Permalink | Comments (2)

Wednesday, May 27, 2015

Social Enterprise, Brazilian Style

As a semi-closeted (now "out," I guess) foodie* and as a lover of "things Brazilian" (including Havaianas flip-flops and Veja sneakers, as well as churrascarias and caipirinhas), I read with interest a recent electronic newsletter headline about a thriving Brazilian chef.  I clicked through to the article.  I loved it even more than I had thought I would.

The article tells the story of an emergent Brazilian chef and restauranteur, Rodrigo Oliveira, and his flagship establishment (Mocotó), as promised.  That was great.  But that was not all.  The piece also told the story of a business run using a "holistic business model."

Today, Oliveira focuses on his employees as much as his customers. . . .  Oliveira pays for his employees’ part-time education. And their kids’ health care. And daily jiujitsu and yoga classes in the room he built upstairs. It’s a rarely encountered, holistic business model that contributes to his restaurant’s roaring success. . . .

 . . . 

Beneath the street level they’re boring out new dormitories for employees, for a quick nap and shower between jiujitsu, work and class. . . .

He also seems to be attentive to the greater local community beyond his customers and employees, preferring (to date) to expand his business locally rather than into larger metropolitan areas.  Good business?  Yes!  But it seems like more than that.  This business appears to have more than one bottom line!

Perhaps this is not a remarkable story, in the end.  Regardless, I wanted to share it.  Another Brazilian social enterprise, Ashoka, gets a lot of attention.**  But it's now clear to me that we can and should look beyond larger, storied examples of social entrepreneurship for other manifestations of social enterprise in action in Brazil.


*Yes, Steve Bainbridge, I do read  your wonderful posts on food and beverage pairings, including this one on my birthday earlier this month.

**Actually, much to my surprise, Ashoka is a U.S. organization that networks social enterprises across the globe.  So, it's not even Brazilian!  Having been in Rio teaching for a few summers and known of its presence there, I  assumed it was a Brazilian organization.  Please forgive the error.  Hat tip to co-blogger Haskell Murray for pointing it out to me.


May 27, 2015 in Entrepreneurship, Family Business, Food and Drink, Joan Heminway, Social Enterprise | Permalink | Comments (0)

Friday, May 15, 2015

Providing Low-Wage Earners with Predictable Schedules

Recently, I have seen a fair bit written about states, the federal government, and individual firms raising or potentially raising the minimum wage for the lowest paid workers.

Low pay, however, is only one of many problems facing low-wage earners.

After hearing Charlotte Alexander (Georgia State) present on this co-authored paper - Stabilizing Low-Wage Work: Legal Remedies for Unpredictable Work Hours and Income Instability – I have become convinced that unpredictable work hours is a significant issue. The article is well worth reading. 

Unpredictable work hours can be problematic for many people – attorneys in BigLaw for example – but low-wage earners do not have disposable income to throw at the problem. Childcare and transportation, for example, become even more of a challenge when work hours are not stable and not set in advance.  Unpredictable, inconsistent work hours also hamper economic mobility by making it difficult or impossible to take classes or get a second job.    

For more on this issue, listen to MIT Operations Management Professor Zeynep Ton’s talk at the Aspen Institute. Her discussion of Mercadona, a low-cost supermarket based in Spain (discussion starts at 14:50), and QuickTrip, a convenience store with gas stations (discussion starts at 17:30) was quite interesting. Corporate social responsibility often seems dominated by high-end companies like Patagonia and Whole Foods. It is easier to be socially responsible when you are charging $700 for a jacket or 39% more on certain food items (according to one study in Boston). Mercadona, however, offers some of the lowest prices in Spain. Mercadona employees receive their schedules one month in advance and have stable schedules.  Mercadona also pays almost double the minimum wage (plus a bonus). As a result, Mercadona’s turnover is an extremely low 3.4%.  Likewise, QuickTrip seems to compete well on price, but also appears to take relatively good care of its employees.

Individual firms could and should address this issue of unpredictable work hours voluntarily, but the market may prove ineffective in this area and legislative action may be needed.

May 15, 2015 in Business Associations, CSR, Haskell Murray, Social Enterprise | Permalink | Comments (1)

Friday, May 8, 2015

8th Annual Bridge to Excellence Nonprofit Conference │ May 12, 2015 │ Nashville, TN


On May 12, 2015, I will present at a breakout session of the Center for Nonprofit Management's 8th Annual Bridge to Excellence Nonprofit Conference. My talk will focus on the legal issues facing entities with multiple bottom lines. 

If interested, you can register here.

As you can tell from the conference description, this conference is designed for nonprofit and community leaders. From the conference schedule, it appears that I will be the only professor presenter. While I enjoy academic conferences, and find them useful, I also think it is important for professors to engage with practitioners. Professors should share the knowledge they have uncovered and should also listen to the current, practical concerns. 

May 8, 2015 in Business Associations, Conferences, Entrepreneurship, Haskell Murray, Social Enterprise | Permalink | Comments (0)

Thursday, May 7, 2015

Legal Issues in Impact Investing: At Home and Abroad │ May 11, 2015 │ Washington D.C.

This coming Monday, I will be presenting – virtually – at the above titled conference. My piece of the presentation will cover my recent research on benefit corporation reporting.

Further information is available here and reproduced below. Personally, I am looking forward to hearing from the many impressive speakers, including Sara Burgess, the Regulator of Community Interest Companies in the UK.

May 11, 2015

08:00 AM - 06:00 PM ET


Morgan Lewis, in conjunction with the Impact Investing Legal Working Group, invites you to join us for an exclusive all-day conference featuring panels of leading lawyers who work in the area of impact investing—in business, academia, government, multilateral development institutions, and nonprofit organizations and foundations.


Topics will include:

How are investors aggregating capital for impact investing?

What are the newest social finance innovations in impact investing?

How can we build a robust legal community of practice in impact investing?

How can we advance the development of regulatory regimes and government policies that promote impact investing?



8:00 - 8:30 AM | Registration

8:30 - 6:00 PM | Program

6:00 PM | Networking reception


View the agenda >>



CLE credit in CA (1.25 hours), FL, IL, MA, NY, NJ, PA, VA, and TX is currently pending approval.


For more information/registration

Please contact Gail Sobha Lynes at +1.617.951.8607 or


May 7, 2015 in Business Associations, Conferences, Entrepreneurship, Haskell Murray, International Business, Social Enterprise | Permalink | Comments (0)

Friday, May 1, 2015

For-Profit and Foundation-Owned

Almost three years ago, I helped organize a conference on social enterprise law. (The law review members, especially Rachel Bauer and Sam Moultrie, were responsible for most of the organizing and did an excellent job). 

My co-bloggers Joan Heminway and Marcia Narine were among the speakers.

Also joining us was Michael Pirron of Impact Makers, one of the first certified B corporations in Virginia. While Impact Makers was a certified B corporation at the time of the conference, it was organized as a Virginia nonstock corporation; now Impact Makers is organized as a benefit corporation. Michael did an excellent job serving as a panelist and the keynote speaker.

Recently, I saw Michael back in the news. He transferred ownership of his company (valued at approximately $11.5 million) to two foundations. As Michael mentioned to me over e-mail, this was not a radical departure from his previous business model for Impact Makers. Previously, Impact Makers donated 100% of its profits to area charities, so this move just formalized their previous commitment.  Impact Makers has given away approximately $1 million to date.

At the University of Connecticut social enterprise and entrepreneurship conference I attended and presented at last week, Mike Brady (Greyston Bakery) and Jeff Brown (Newman's Own) presented. Jeff called Newman's Own a "grandfather of social enterprise" Both companies started business in 1982, well before heavy use of the term "social enterprise."

Also, both Greyston Bakery and Newman's Own appear to have adopted a structure where a foundation owns the stock of their for-profit company. You can learn a bit more about the structure of Newman's Own here. Greyston Bakery's annual reports are here and you can view a video about Greyston Bakery (and their client Ben & Jerry's).

From a legal perspective, Greyston Bakery and Impact Makers are benefit corporations, under New York and Virginia law respectively (in addition to being certified B corporations.)  Newman's Own, however, is a traditional c-corporation. With foundations owning 100% of the stock, the benefits of using the benefit corporation form are likely limited. There still may be some branding value and most benefit corporation statutes require consideration of a broad group of stakeholders, which might prevent the foundation from focusing on a smaller subset of stakeholders.  That said, shareholders are the one expected to bring lawsuits to enforce this consideration requirement in the benefit corporation statutes, so as a practical matter, the benefit corporation and c-corporation forms may operate similarly when wholly-owned by one or more foundations. 

May 1, 2015 in Business Associations, Corporations, Entrepreneurship, Haskell Murray, Social Enterprise | Permalink | Comments (0)