Measure Allows Businesses To Incorporate Social, Environmental Missions Into Charters
TRENTON – A bill sponsored by Senator M. Teresa Ruiz (D-Essex/Union) to create a new type of corporate structure in New Jersey that allows for-profit companies to organize in a way that promotes their social or environmental mission was approved today by the Senate Budget and Appropriations Committee.
“Many companies participate in philanthropic activities, but giving a business the ability to define itself as an entity with a specific mission of improving education or protecting the environment will give it a competitive edge,” said Senator Ruiz. “This allows businesses to boost their bottom line while at the same time working to promote the public good.”
The proposal (S-2170) would create a new corporate structure called a benefit corporation, or B corporation. Companies under this structure would be organized to advance a public benefit, such as preserving the environment, improving education, or promoting the arts or sciences. The purpose a company chooses to promote would be written into their corporate charter. The structure allows companies to consider the public benefit when making decisions, in addition to economic goals and the interests of their shareholders.
If passed, New Jersey could become the second state in the nation to implement such a program. Maryland is the only state with the benefit corporation structure in place; Vermont has approved legislation to permit B Corporations, however, the law does not take effect until July.
The committee approved the legislation by a vote of 8-0, with two abstentions. It now heads to the full Senate for consideration.