Organization Studies’s Updates

Companies with Benefits

Image courtesy of MorgueFile / mconnors

newyorker.com | Article Link | by James Surowiecki

In recent years, Warby Parker has become the eyeglass-maker of choice for hipsters. In a recent GQ taxonomy of the different varieties of nerd, all but one of the nerds were wearing a pair of Warby Parkers. The company’s approach—selling stylish specs at affordable prices—seems obvious, but, in an industry where brand-name glasses cost two or three hundred dollars a pair, it counts as revolutionary. The company has a similarly unconventional approach to its corporate identity. Soon after starting Warby, the founders made it a “B corporation.” B corporations are for-profit companies that pledge to achieve social goals as well as business ones. Their social and environmental performance must be regularly certified by a nonprofit called B Lab, much the way LEED buildings have to be certified by the U.S. Green Building Council. Many B corps are also committed to a specific social mission. Warby’s production and distribution is carbon-neutral, and, for every pair of glasses it sells, it distributes another in the developing world, in partnership with a nonprofit called VisionSpring.

There are now more than a thousand B corps in the U.S., including Patagonia, Etsy, and Seventh Generation. And in the past four years twenty-seven states have passed laws allowing companies to incorporate themselves as “benefit corporations”—which are similar to B corps but not identical. The commitments that these companies are making aren’t just rhetorical. Whereas a regular business can abandon altruistic policies when times get tough, a benefit corporation can’t. Shareholders can sue its directors for not carrying out the company’s social mission, just as they can sue directors of traditional companies for violating their fiduciary duty.

Why would any company tie its hands this way? Neil Blumenthal, one of Warby’s co-founders, told me, “We wanted to build a business that could make profits. But we also wanted to build a business that did good in the world.”

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