“B” Companies: The “B” isn’t for Beer, but it could be….

Posted by Jeremy James, Cosgrave Attorney

 

On May 23, 2013, the Oregon legislature passed HB 2296, allowing new and existing businesses to designate themselves as “benefit companies.” 

What is a benefit company, you wonder, and what does this have to do with beer? 

Well, to answer the first question, a benefit company is a new kind of business entity that allows directors to pursue social and environmental goals while still turning (or trying to turn) a profit.  Under the traditional for-profit business model, the folks in charge have a primary obligation to the other owners or shareholders to maximize the economic interests of the business (i.e., to make money).  If, for example, a CEO wakes up one  morning and decides the company’s biggest widget factory ought to switch over to solar power, no matter the expense, she risks getting fired – and, in some circumstances, embroiling the company in a shareholder lawsuit – for letting environmental interests get in the way of the company’s bottom line. 

Under Oregon’s new law, that same business could designate itself a benefit company and write an environmentally-focused policy into its by-laws, enabling the CEO to take reasonable steps to improve the company’s carbon footprint without getting herself or the company into hot water (or, better yet, hot air).  As the Oregon legislature explains in the introduction to HB 2296, a benefit company is “a form of business entity the purpose of which is to create benefits for the public in addition to generating profit for the entity’s owners.” 

The idea has been around for a few years now, spearheaded by the advocacy organization B Lab, which certifies companies around the country as “Benefit Corporations” (and now boasts 763 certified companies in 20 countries).  But state legislation has been needed to clarify the multitude of legal issues facing benefit companies and their directors and owners.  With HB 2296, Oregon joins 12 other states (according to B Lab’s website) that have adopted some form of benefit company legislation.  And Oregon’s new law doesn’t just apply to corporations.  Limited Liability Companies (“LLC”) will also be able take advantage of the benefit company structure.    

So on to the second question: what do benefit companies have to do with beer?

Other than the not-insignificant coincidence of starting with the same letter, benefit companies and beer making seem a natural fit.  For people involved in the brewing industry, particularly those starting new breweries, social and environmental goals often go hand in hand (glass in hand?) with ideas about making good beer and someday running a thriving business.  For example, Colorado’s New Belgium Brewing Company, a very successful maker of very tasty beer, in this blogger’s humble opinion, recently earned “B” corporation certification from B Lab for, among other things, writing commitments to its workers, its community, and the environment into its corporate laws.

Here in Oregon, pristine ingredients and obsessively dedicated suppliers and entrepreneurs produce the best craft beer in the world.  The benefit company structure might provide business owners in the industry a means to ensure that their own commitment to the community and the environment remains a part of their business for as long as the beer keeps pouring.