Social Enterprise Law: Friend or Foe to Corporate Sustainability?
In Beate Sjåfjell and Christopher M. Bruner (eds), Cambridge Handbook of Corporate Law, Corporate Governance and Sustainability (Cambridge University Press, Forthcoming).
Posted: 8 May 2019 Last revised: 12 May 2019
Date Written: May 6, 2019
The international emergence of alternative corporate forms and certifications has given credence to a new strain of law developing within the corporate sustainability movement, known as social enterprise law. What are some of the trade-offs that accompany such laws? Upon canvassing the development of social enterprise lawmaking initiatives worldwide, two preliminary observations arise. First, the majority of social enterprise laws, particularly in Europe and Asia, are designed to address the targeted needs of special and/or marginalized populations. The minuscule number of these businesses formed to date suggests that concerns over the shrinking of public goods and services remain largely theoretical. Second, U.S. benefit corporation laws may only strengthen erroneous beliefs on existing corporate law and governance – thus creating impediments to broad-scale sustainability change. The aggressive pursuit of a global market by private U.S. entrepreneurs behind the B Corporation certification and benefit corporation laws contrasts starkly with state-led initiatives. Benefit entity statutes risk hollowing out public infrastructure in favour of the private Americanization of good governance standards in non U.S. countries.
Keywords: social purpose, social enterprise certification, benefit corporation, social cooperative, community interest company
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