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US trade: The rise of benefit corporations and stakeholder - capitalism businesses

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Companies focused on broader public benefits and ESG principles face unique issues in international trade disputes


By Walter Spak and Jessica Lynd

*Gregory Spak, Jay Campbell and Allison Kepkay contributed to the creation of this report.

Increasingly, companies worldwide are expanding the focus of their business models beyond maximizing shareholder profits to include other stakeholder values, such as: 

  • Operating in a more sustainable and responsible way to minimize harmful business effects on the natural environment, individuals and communities 
  • Incorporating objectives that benefit society and deliver value to a broader set of stakeholders (workers, community members and others) 
  • Providing environmental, social and governance (ESG) and other public benefits beyond their primary products and services

This movement has implications for companies, shareholders, workers and the public at large.

The impact of this movement on the international trading system and the ability of existing trade laws and agreements to account for it has not received much attention yet. But it should.

The agreements and laws that regulate international trade largely presume that companies operate only to make a profit. For example, US trade remedy laws focus on practices such as "dumping": selling at prices below production cost and a reasonable profit. Imports can be considered to 'injure" a domestic industry if that industry’s profit margins are sagging. Companies that receive inducements to achieve economic or social goals could be penalized for receiving "subsidies." Key terms like "dumping," "injury," and "subsidy" all presume a free market orientation in which companies act with the primary focus of achieving and maintaining profits.

Our current notions of fair/unfair competition and fair/unfair trade derive from the power of the free market. According to free market theory, every company should have its chance to compete in a marketplace governed by rules, including the need to sell above the cost of production and to avoid "dumping" into foreign markets, unfair government subsidization and other activities that thwart competition.

But what happens when "benefit corporations" commit themselves to taking on additional costs in order to comply with enhanced environmental or labor standards? Should they be disadvantaged or conversely required to compete with imports that do not assume these additional costs?  Should governments push companies to achieve broader societal goals? If so, then we may need to re-think the current agreements, laws and regulations that define fair and unfair trade.

Under current trade rules, US importers could be at risk of paying higher duties and other trade remedies, due to differences in how foreign benefit corporations produce goods and conduct their businesses—or could potentially leverage an ESG business model to eliminate or reduce trade remedies against them. Similarly, US benefit corporations could be forced to compete against foreign corporations exporting to the US that do not abide by stakeholder-capitalism values.  

Until trade laws in the US or at the World Trade Organization (WTO) adapt to account for the unique role that benefit corporations play in international competition, those businesses should be mindful of how their socially conscious business model could be bolstered or hampered by existing trade laws.

This report examines challenges and opportunities that may arise as companies pursuing societal benefit motives engage in international trade. We provide an overview of what board members, general counsel and other leaders of benefit corporations should consider when addressing allegations or pursuing their own petitions in US trade disputes in order to maintain competitiveness while pursuing ESG objectives, as well as suggestions for how the trade laws could change to accommodate the rise in stakeholder capitalism.

“Benefit corporations should be mindful of how their socially conscious business model could be bolstered or hampered by trade laws”

The rise of stakeholder capitalism

Amid a growing movement towards corporations that "do good while doing well," many countries and US states are creating legal structures that allow businesses to establish themselves as different types of benefit corporations and stakeholder-capitalism companies.

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Opportunities and risks for benefit corporations in US trade proceedings

Stakeholder-capitalism businesses and benefit corporations need to pay special attention to certain key considerations in US international trade remedy cases, to ensure that their unique missions are not overlooked or considered "unfair" trading practices. 

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Q&A: The case for a market-wide approach to sustainable business

The CEO and founder of the Shareholder Commons—a nonprofit focused on structures for a sustainable, just economy— discusses with us how systemic changes can help companies create value, while prioritizing the long-term health of capital markets and shareholder profits.

lettuce farm

Q&A: A global movement to use business as a "force for good"

The Director of Stakeholder Governance and Policy for B Lab—a nonprofit that certifies companies as B Corporations—discusses with us the benefits added when a company’s operations and business model include its entire social and environmental performance.

pedestrians walking in the street of New York


As businesses increasingly adapt to a new stakeholder-capitalism approach and seek to add value through benefit corporation registration and similar certifications, they should craft trade law arguments that support their approach and protect their vulnerabilities.

buildings and garden
pedestrians walking in the street of New York

Q&A: A global movement to use business as a "force for good"

4 min read

Holly Ensign-Barstow, the Director of Stakeholder Governance and Policy for B Lab, a nonprofit that certifies companies as B Corporations, describes the benefits of making sure a company's operations and business model include its entire social and environmental performance. 

Q: What does B Lab's certification process entail for companies?

Ensign-Barstow: To fulfill the performance requirements for B Lab's B Corporation Certification, a company must first complete our B Impact Assessment (BIA), which is a free, confidential platform designed to help measure and manage a company's positive impact on its workers, community, customers and the environment. A company seeking B Corporation Certification must receive a minimum verified total score of 80 across all impact areas on the BIA. B Lab's verification process in order for a company to earn an overall reviewed score on the BIA includes sampling practices through a combination of phone interviews, documentation and onsite reviews. Each company must also meet legal requirements by adopting specific stakeholder governance criteria, which vary depending on where the company is incorporated and its legal entity type. 

Q: What societal and stakeholder values do Certified B Corporations support?

Ensign-Barstow: Certified B Corporations can provide positive social and environmental impacts in many different areas. Here are a few examples of Certified B Corporations that focus on different impacts:

  • Cascade, an industrial manufacturer based in Grand Rapids, Michigan, is committed to hiring people who have been incarcerated and has convinced more than 100 local companies to adopt their own prisoner reentry programs
  • Aerofarms is addressing our global food crisis by building, owning and operating indoor vertical farms to grow safe, healthy food in a sustainable and socially responsible way
  • Allbirds, dedicated to making sustainable footwear, has pledged that 100 percent of its wool will come from regenerative sources and all of its annual on-farm emissions from wool will be reduced or sequestered by the end of 2025
  • RECIRC, a Black-owned, sustainable packaging company, aims to extend the life of packaging with a utility patented zero-waste, refillable, reusable and last-resort-recyclable packaging to preserve cosmetics, condiments and home care products, while reducing the use of plastic packaging 

Q: What should multinational companies know about B Corporation certification?

Ensign-Barstow: For companies that are the most committed, like Danone, we have rebuilt B Lab's certification standards in order to allow large multinational companies to become Certified B Corporations. We are also helping a small number of multinational companies become certified. For other multinational companies, it will be a longer journey, especially because the change in fiduciary is a long process that includes educating investors. Last year, we launched a program called B Movement Builders, specifically created for multinational companies that are on this journey and know it will take a few years, but would like to start engaging with us now. We are working on both public policy and capital markets strategies that will allow us to engage with policy makers and investors in removing impediments for all multinational companies to become Certified B Corporations.

Q: What value do consumers receive from Certified B Corporations and other benefit corporations?

Ensign-Barstow: When purchasing goods from these companies, consumers can have a level of assurance that the companies are not using "purpose" as just a marketing tool. Instead, they are actually committed to treating their workers well, are contributing to the economic and social well-being of the communities in which they operate and put their impacts on air, climate, water, land and biodiversity first in their business practices. 

Q: How can the Biden-Harris administration support Certified B Corporations and other benefit corporations? 

Ensign-Barstow: The administration could centralize the process of setting new policies and regulation agendas for this business population in a central hub, like at the National Economic Council (NEC). B Lab, in partnership with the US Impact Investing Alliance, has been helping to lead an effort that proposes this idea with a coalition representing more than 50 businesses, investors and civil society organizations. The idea is that a White House Initiative on Inclusive Economic Growth housed at the NEC could serve as a forum within the White House to engage corporations and investors alongside the government to achieve shared goals. B Lab also shares the same policy goals as The Shareholder Commons.



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This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.

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