If you own a business with interests other than just sheer pecuniary profit – say of social or environmental worth – then you may have a new option available that can not only protect those interests, but also lure customers and employees.

A new corporate charter, available in a handful of states and being introduced in several others, allows businesses to incorporate as “benefit corporations.” Under this organization, businesses can put social or environmental gains ahead of or alongside profit when making decisions.

Critics of the law say that the business decision to move to the new structure is a bad one from the perspective of an investor, as it ultimately creates a lack of accountability for management. If a company’s decisions do not garner profit for its investors, then what investors are going to stick around? And, as one commenter in the WSJ writeup points out, shouldn’t the market speak for itself? Meaning, if a company chooses to be pro-social or environmental in its mission and gains success because of it, then why do we need the interference of legislation?

Assuming that all shareholders understand marketing and customer loyalty, we don’t. But, as the lawsuit brought against Craigslist can exhibit, success with a pro-social business model doesn’t protect you legally. Continue reading…