Landmark Legislation Passed in Maryland Creating Benefit Corporations

Yesterday, the state of Maryland became the first in the country to sign legislation into law creating Benefit Corporations, a new class of corporations after the B Lab model that are required to create benefit for society as well as shareholders. Unlike traditional corporations, Benefit Corporations must by law create a material positive impact on society; consider how decisions affect employees, community, and the environment; and publicly report their social and environmental performance using established third-party standards. One of the exciting aspects of the bill is the new protection it will provide to entrepreneurs who are seeking growth capital and previously might have feared losing control over the social and environmental goals of their mission. Both entrepreneurs and shareholders of Benefit Corporations will now be able to hold directors accountable for failure to create a positive  impact on society or to consider the impact of decisions on employees, community, and the environment. Andrew Kassoy, a co-founder of B Lab who helped draft model legislation for the bill, stated that “Milton Friedman would have loved this… For the first time, we have a market-based solution supporting investors and entrepreneurs who want to make money and make a difference.”

RSF Capital Management, Inc., the subsidiary of RSF that was created to house our lending to for-profit social enterprises, is a certified B Corporation through B Lab, which is also an RSF borrower. We are thrilled about this momentous occasion for social enterprises and the news that several other states may soon be following in Maryland’s footsteps.

To read the official press release from B Lab,  click here. To read an article about how the Maryland legislation works and how it is different from B Corp certification through B Lab, click here.

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