Capitalism with a conscience: a new utah law protects corporations that give back.

• Author: Webb, Gaylen
• Position: Focus

There's a new corporate consciousness--call it "capitalism with a conscience"--sweeping across the globe. It officially arrived in Utah in May, and the power it carries with it could be enormous.

On May 13, Senate Bill 133 became law, creating a new class of Utah businesses called "benefit corporations" or B-corps. Utah was the 20th state to implement a B-corp law. Thirteen Utah businesses registered as B-corps on that day, receiving their certificates of registration from Lt. Gov. Spencer Cox during a ceremonial gathering of government and business leaders at the Utah State Capitol.

The bill's chief sponsor, Sen. John Valentine, says traditional C and S corporations have always had one obligation: maximize profits in order to maximize dividends for shareholders. "That's been their fiduciary duty, as determined by the courts, since about 1910," he explains. Not so for B-corps, which use their financial muscle to do more than just create wealth for shareholders. B-corps originated after a 2010 Delaware Supreme Court ruling in eBay v. Newmark upheld the notion that corporations are legally required to maximize profits. So states began passing B-corp laws to protect a corporation's officers and directors from being sued when the company expanded its fiduciary duty to include social or environmental responsibilities.

Valentine looked at the B-corp laws in other states and thought a statute was a good fit for Utah, which leads the nation in volunteerism and charitable giving. Further, the state has numerous corporations that do more than maximize the bottom line for shareholders. "They may have a social contract to assist a school or a little village in Africa. They may have a goal to operate with the least amount of impact on the environment," he says. "All of the social 1 agendas affect the bottom line, because the bottom line is used for purposes other than giving the final dime to the shareholder."

Steve Klass, executive director of P3 Utah, a nonprofit promoting business for people, planet and profit, says the original 13 Utah B-corps are companies that have made social 1110; and environmental responsibility part of their cost of doing business. "They define success by what is called the 'triple bottom line,' or the degree by which they can improve human existence for their employees and communities and the environment, while also making a profit," he explains. "It's doing good while doing well."

With the new statute in place, a Utah...