Our Commitment to Using Business as a Force for Good
Although Gary Community Investment Company (GCIC) is already a certified B Corp, GCIC’s board of directors recently reaffirmed the company’s commitment to social impact by voting to change its legal status in Delaware to a public benefit corporation (PBC). With this move, GCIC joins PBCs like Patagonia, Plum Organics and Method that are dedicated to using business as a force for good and a driver of social change.
Designated as a legal status in 2010 and currently recognized by 33 states, PBC is a legal tool that creates a solid foundation for long-term mission alignment and value creation, and it’s being used by for-profit companies that consider additional stakeholders, morals or missions beyond making a profit. Because they have an expanded purpose beyond maximizing share value, PBCs are required to consider the impact of their decisions on society and the environment. In addition, they must assess and report their social and environmental performance to their shareholders on an annual or biannual basis. Some states require that PBCs use a third party performance metric to assess their performance, and some jurisdictions even require that the annual reports be made public.
Many different types of businesses are PBCs, from one-person service companies to large-scale international brands with many employees, and they come from a range of industries, including retail, manufacturing, tech, service, professional services, private education, and food and beverage production.
Why are PBCs important?
Under traditional U.S. corporate law, directors of for-profit companies are required to act for the ultimate purpose of maximizing financial returns to shareholders and all corporate decision-making must be justified in terms of creating shareholder value. But this inflexible legal framework constrains socially-conscious businesses, impact investors and social entrepreneurs whose mission and impact is central to their business model. By becoming a PBC, companies expand the obligations of their boards so they consider environmental and social factors alongside financial interests, giving directors the legal protection to pursue mission and consider the impact their business has on society and the environment.
What are the benefits of becoming a PBC?
Becoming a PBC has advantages for every stakeholder, from consumers and talent to shareholders and directors, including:
Reduced director liability: PBCs have legal protection to balance financial and nonfinancial interests--even if the company is sold or publicly traded.
Expanded stockholder rights: PBCs give investors assurance that they can hold a company accountable to its mission, which can help companies attract more impact investment capital.
Ability to attract & retain talent: PBC status gives prospective employees--who are increasingly attracted to mission-driven companies--confidence that their workplace is committed to its mission.
Demonstration effect: PBCs show investors and entrepreneurs from every industry what the future Fortune 500 looks and acts like.
Interested in becoming a PBC? More information, including how to apply as a new or existing company, is available here.