LANSING — Four lawmakers in the Michigan House of Representatives introduced benefit corporation legislation today to bring new entrepreneurship and investment opportunities to Michigan. A benefit corporation, also known as a B-corp, is a type of for-profit corporation that focuses on positive social and environmental impact in addition to more traditional goals, such as maximizing shareholder profits.
Democratic Floor Leader Christine Greig (D-Farmington Hills), along with state Reps. Hank Vaupel (R-Fowlerville), Sylvia Santana (D-Detroit), and Jason Sheppard (R-Temperance) sponsored the bipartisan package of bills, House Bills 5867, 5868, 5869 and 5872.
“B-corps have proven to be talent magnets in the 34 states plus the District of Columbia where these laws are already in effect,” Rep. Greig said. “Employees, especially women and millennials, prefer to work for companies that combine their social and environmental goals with potential profitability.”
While companies can go through a certification process to become a B-corp, the status isn’t yet legally recognized in Michigan. This means businesses could technically be found at fault for engaging in efforts to pursue social impact goals rather than existing solely to maximize shareholder profits. B-corp laws give businesses additional flexibility to pursue these combined goals.
“This legislation protects the foundation of social and environmental mission-driven businesses. This is a great message to mission-driven companies; Michigan’s economy is resurgent, and we want these businesses here,” Rep. Santana said.
Specifically, the package of bills would:
- Create the legal status for B-corps
- Require annual benefit reports from B-corps, outline content to be included and report access for shareholders
- Update the Business Corporation Act to include B-corps
- Update the Business Corporation Act to allow B-corps file its annual benefit report at the same time it files regular annual reports
“Benefit corporations are an innovative tool to attract new business and entrepreneurship to Michigan,” Rep. Vaupel said. “They provide an opportunity for business to use the markets, rather than traditional charity, to advance their philanthropic missions.”
“Corporations with full legal B-corp status can more easily access capital financing, partner with foundations for program-related investments, and secure venture capital,” Rep. Sheppard added.
There are currently more than 3,700 benefit corporations registered across the county. The Forum for Sustainable and Responsible Investment reports that over $8.72 trillion is currently invested in some form of socially responsible investment fund in the U.S.
Rob Fowler, president and CEO of the Small Business Association of Michigan, who serves on the Sense of Place Council, described the legislation as “smart public policy that will provide a stable economic platform for those businesses, their board of directors and their shareholders, who choose to add a social impact purpose to their articles of incorporation.”