So is that why executives are obsessed with “maximizing return to shareholders”? Because they’re legally obligated to? Huh.
The Patagonia CEO was first in line. :)
A company that files as a Benefit Corporation, as opposed to an LLC, C Corp, or other existing type of company, must consider the impact of business decisions on the environment, employees, and the community as well as the financial return to shareholders. It’s the legal way to enshrine a holistic view of the purpose of a business. As a company grows, investors can’t force the founders to sell, or sell out, against their values. Traditional corporate law requires a company to maximize return to shareholders, so an investor could legally order the founders to choose profit over people or planet if push comes to shove.
New York recently passed a similar bill that will take effect next month. Five other states have already done the same.