Responsible and Sustainable Corporate Governance for the 21st Century

In my 30 years as a corporate lawyer, I have seen up close the deleterious effect of our current corporate governance rules. Those rules emphasize the financial interests of shareholders over all other interests, regardless of the effect that emphasis may have on vital economic, social and environmental interests.  This philosophy of governance is called “shareholder primacy,” and the costs and risks it creates for all of us are detailed in this article.  This website is a platform to talk about the remedies to the shareholder primacy, including, most importantly, benefit corporation governance.  I have written a new book on the subject that is now available.

Buy The BookSubscribe to the Blog or Ask a Question

What If Whole Foods Had Been a Benefit Corporation?

Read the Introduction to Benefit Corporation Law and Governance

Blog

See all prior posts

The Book

In October 2017, Berrett-Koehler published the first book on an entirely new form of corporate governance that just might save the world– the benefit corporation.

Buy The Book Read the Introduction

First Comprehensive Guide to the Benefit Corporation

Benefit corporations include positive impact on society, workers, the community, and the environment as part of their legally defined goals in addition to profit. This is the first authoritative guide for attorneys and executives to the statutes, rules, and requirements for this growing and radically different type of corporation: Benefit Corporation Law and Governance: Pursuing Profit with Purpose.

Benefit.300dpi.coverAn insightful, practical, enriching book for any attorney or executive  . . . .
Margaret M. Foran, Chief Governance Officer, Senior Vice President, and
Corporate Secretary, Prudential Inc.

Corporations today are embedded in a system of shareholder primacy. Nonfinancial concerns—like worker well-being, environmental impact, or community health—are secondary to the imperative to maximize share price. As a result, businesses can “succeed” while contributing to serious problems like climate risk, social instability, and economic decline. This sets us up for failure over the long term, as private enterprise continues to threaten vital resources.

Rick is a thoughtful and assiduous leader pushing the benefit corporation movement forward. With this book, he’s written an indispensable guide for anyone seeking to learn more about the benefit corporation form. Any entrepreneur or executive setting his or her company down a path in pursuit of purpose would do well to pick it up.

Michal Rosenn, General Counsel, Kickstarter

A New Form of Corporate Governance

But there is a new form of governance—the benefit corporation—that reorients corporations so that they work for the interests of all stakeholders, not just shareholders. There are already 5,000 benefit corporations in the United States, and venture capitalists, private equity firms, and institutions are beginning to invest. This is the first authoritative guide to the rules that govern this new and expanding form of governance.

This book is an excellent study of the evolution of corporate governance and the emerging role of the corporation as a public benefit entity. I highly recommend it to those who want to understand the challenges of corporate governance as well as the opportunities for the corporation to have a meaningful social impact in the global economy.
—Larry Sonsini, Chairman, Wilson Sonsini Goodrich & Rosati

This book describes the stranglehold that shareholder primacy has on our current legal and financial systems. It also provides a comprehensive description of the alternative. Benefit corporations expand corporate purpose and extend the obligations of corporate managers to include the interests of all stakeholders. Alexander describes the two existing benefit corporation models and details how current relations are transformed when organizations adopt stakeholder governance. He also looks at some unsuccessful precursors to benefit corporations and why they failed.

As the CEO of a public benefit corporation, I really appreciate having a readily accessible, easily understood resource. This book explains both the ‘how’ and the ‘why’ of this new corporate form that will help us transform business and create long-term value for all our stakeholders. I am proud to endorse it.
Lorna Davis, CEO, DanoneWave, and Chief Manifesto Catalyst, Danone

It’s Not Just for Lawyers

The book is an invaluable guide for legal and financial professionals, as well as interested entrepreneurs and investors who want to understand how purposeful corporate governance can be put into practice.

Read the Epilogue

Important new ideas that can change the world are both misunderstood and fragile. Understanding makes them stronger but alone doesn’t guarantee that they will make the difference they could and should. Benefit corporations are one of those new ideas and one sorely needed if the capital markets are going to contribute to, rather than detract from, sustainable development. Rick’s book elegantly explains this idea to a wide range of audiences, thereby making it stronger. The work he and B Lab are doing makes it stronger still. Thanks to them, I am hopeful that the benefit corporation can be for the 21st century what the traditional corporation was for the 20th.Robert Eccles, Founding Chairman, Sustainability Accounting Standards Board

This book is the most important book about corporate law in decades, if not ever.
John Montgomery, Founder, Lex Ultima

The magnitude of the crises impacting our world, and particularly our country, is certainly not disputed—by liberals or conservatives, men or women, African Americans or White Anglo-Saxon Protestants, members of the 1 percent or the working poor. The nature of such crises is also not in doubt—the fact that the climate is changing and negatively impacting the environment, the fact that there is a wider gap between rich and poor in this country than at any time since 1929, the fact that there is a sweeping tide of gun violence, and the fact that the Black Lives Matter movement is needed to address continuing overt and covert discrimination. Rick Alexander clearly articulates the need for a new corporate form to effect the signifi cant change that we so desperately need.
Suz Mac Cormac, Chair, Social Enterprise and Impact Investing Group, and
Cochair, Energy and Clean Technology Groups, Morrison & Foerster

Alexander’s new book covers both the theory and the practice of benefit corporation law in a practical guide that anyone interested in the subject should own.
Janine Guillot, Director of Capital Markets Policy and Outreach, Sustainability
Accounting Standards Board

Rick Alexander’s new book takes us through a review of the corporation and its role in society, pointing out some of the structural gaps implicated in the traditional form and making a case for the development of the benefit corporation.  As one of the creators of this structure, Alexander is uniquely suited to write this book, and he does so effectively, concisely, and with intelligence.
Hillary A. Sale, Sullivan & Cromwell Visiting Professor, Harvard Law School

Rick Alexander has written a book that is of great importance to the field of responsible business and the benefit corporation movement. Not only does it succeed in explaining the basis and practical implementation of benefit corporations in lucid and engaging terms, but it also places them in the context of existing corporate law and theories of the fi rm. It does all this in a form that is both accessible to the general interested reader and relevant to the most knowledgeable legal expert. It is therefore a triumph of clear thinking and precise exposition from which we will all benefit immensely.
Colin Mayer, Peter Moores Professor of Management Studies, Saïd Business
School, University of Oxford

AltSchool was created to advance innovation in education and to improve access to quality schooling. Becoming a certified B Corporation and a public benefit corporation helps codify and support our mission. In AltSchool’s case, delivering a broad social impact goes hand-in-hand with creating a large and thriving business. This book should be a valuable resource for organizations interested in pursuing a more socially responsible way to do business now and in the future.
Max Ventilla, Founder and CEO, AltSchool

Resources

  • B Lab’s Benefit Corporation Website. Loads of useful information for attorneys, businesses and investors
  • Benefit Company Bar Association Website.
  • Social Enterprise Law Tracker. State-by-state information about legal forms available to operate businesses free of shareholder primacy.
  • Seattle University Law Review Symposium Issue: Benefit Corporations and the Firm Commitment Universe.  Articles from academics around the world about B Lab and benefit corporations.
  • ABA Benefit Corporation White Paper (registration required). Analysis of the relevant issues and history from the prestigious Committee on Corporate Laws
  • The Public Benefit Corporation Guidebook: Understanding and Optimizing Delaware’s Benefit Corporation Model (registration required).  Free guide for lawyers advising Delaware corporations on benefit corporation issues.

Create a Benefit Corp with Clerky

  • Additional  articles by Frederick Alexander:

Activism, Etsy, Whole Foods and Benefit CorporationsWestlaw Journal Corporate Officers and Directors Liability (August 7, 2017)

How Investors Really Feel about B CorpsB the Change (May 24, 2017)

Liquid Investment; Lasting ValueB The Change (February 9, 2017)
 
Moving Beyond Shareholder PrimacyHarvard Law School Forum on Corporate Governance and Financial Regulation (January 9, 2017)
 
 
The Capital Markets and Benefit CorporationsBusiness Law Today (July 2016)
 

About Me

I am a frequent writer and speaker on corporate law, particularly on matters of stakeholder governance.

Following law school at Georgetown University, I practiced law for 26 years at Morris, Nichols, Arsht & Tunnell LLP, including four years as managing partner.  I am still counsel to the firm. During that time, I was selected as one of the ten most highly regarded corporate governance lawyers worldwide, as Delaware Mergers & Acquisitions Lawyer of the Year, as Delaware Corporate Law Lawyer of the Year, and as one of the 500 leading lawyers in the United States.Rick

In 2015, I became the Head of Legal Policy at B Lab, a non-profit organization dedicated to enabling people to use business as a force for good.  In that position, I work with lawyers, companies, investors, legislators and regulators around the world, seeking to create corporate governance structures that lead corporations to contribute to a healthy and stable society and planet.

I prepared the initial drafts of both the Delaware public benefit corporation legislation and the American Bar Association’s Benefit Corporation White Paper, and serves as Special Consultant to the ABA’s Corporate Laws Committee.  I am also a member of the Delaware Access to Justice Commission, co-chair the Content Committee of the American College of Governance Counsel, and am a member of the Commonwealth Climate and Law Initiative Advisory Board.  I also serve as a board member of the Transgender Legal Defense and Education Fund.

I live in Wilmington, Delaware.