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HomeBusinessEthical Companies 101: A Look At Benefit Corporations

Ethical Companies 101: A Look At Benefit Corporations

There are many ways in which a company can organize its efforts and priorities. Traditional corporations often prioritize profit above all other factors, including the influence that company actions may have on society. Just as different companies hold different priorities, investors also have different focuses based on their own interests in investing. Both companies and investors aim to align with like-minded individuals. 

Businesses and investors know the necessity of working with people who share their values or otherwise benefit from a mutual approach to working together. To carry out similar interests successfully, different titles are introduced to let companies and investors know the framework and approach to business that a company follows. By understanding what each title means, you can gain a greater understanding of which titles to look out for and which to avoid in your business pursuits.

Here, we will focus on one title, Benefit Corporation. Understanding what benefits corporations are and what they stand for can help you determine where your values rest regarding business operations, investing, and sustainability. For more information on defining a benefit corporation as an ethical company, continue reading below. 

What Are Benefit Corporations? 

Benefit Corporations are companies with a profit focus that also want to include sustainability in their mission. By definition, a benefit corporation is a broadly ethical company that is still considerate of profits but is not purely profit-focused. A benefit corporation’s goal is to positively impact all involved, including stakeholders like employees, consumers, and the world.

Ethical Company Behaviors And Focus

In addition to caring for stakeholders, they also want to help their investors profit. With a corporate structure like a benefit corporation, the company maintains the freedom to profit while carrying out ethical efforts that showcase consideration for humankind. At the same time, a business does not have to make every effort to prioritize sustainability. 

Since the ethical involvement for benefit corporations is broad, this vagueness can sometimes get in the way of successful implementation. To ensure that the ethical company framework is working for the company, ethical analysis is performed to guide company decision-making. Using processes like quantification, and research, businesses can decide if corporate moves will result in detriment to humanity and, therefore, give reason to avoid taking actions that will negatively contribute to humanity. 

Benefit Corporation Vs. Pure Profit Companies 

For your further understanding, compare different companies and their top priorities. Consider benefit corporations as the middle-of-the-road approach to corporate sustainability. For example, a tobacco company is not a benefit corporation, as it has a pure-profit focus and creates significant detriment to humankind. However, an ethical company with a strategy for maximizing profit and protecting humanity can be considered a beneficial corporation. 

Some Companies Want The Best Of Both Worlds 

Ultimately, it is up to the investor and the company to consider whether values are shared and if working together makes sense. A benefit corporation looks to obtain the best of both worlds as an ethical company without neglecting humanity or the need to profit.  

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