6 - What about the Benefit Corporation?

Summary

The business corporation is just one of many types of corporations, each of which typically has its own statute. Since 2010, 35 states have adopted statutes creating a new form of corporation: the public benefit corporation (PBC). Although the details vary somewhat from state to state, in general PBC statutes are intended to provide a limited liability entity through which for-profit businesses could lawfully pursue stakeholder capitalism and ESG without running afoul of the shareholder value maximization rule. The availability of PBCs as an alternative to the traditional business corporation could alleviate the growing pressure on the latter to pursue ESG, since they provide an alternative by which social justice activists can pursue their ESG goals while still making a profit. In any case, the widespread adoption of PBC statutes confirms that Dodge is corporate law’s general rule. After all, if Dodge were not the law, PBCs would be unnecessary. Boards of business corporations would be free to pursue public benefits without violating their fiduciary duties. The perceived need for PBC statutes suggests that boards are not free to do so absent the statute.