Profit, People, Planet, and Perversion: The Need for Attorney General Enforcement in Benefit Corporation Legislation

Abstract

For-profit, social entrepreneurship is a growing movement. As a result, in recent years, legislation authorizing the incorporation of a new form of for-profit business corporation known as a “benefit corporation” has been signed into law in numerous states. In addition to generating profit for shareholders, benefit corporations must “create” a “public benefit.” The requirement that a corporation support a humanitarian cause in addition to turning a profit is a significant departure from shareholder primacy — the idea that the sole purpose of a corporation is to make money. While this legislation is a progressive and needed evolution in U.S. corporate law, the current benefit corporation form includes only limited, toothless accountability and enforcement mechanisms. The current legislation does little to deter bad actors from taking advantage of socially conscious consumers willing to pay a premium for ethically sourced goods and services. This Note argues for the addition of attorney general oversight and enforcement in benefit corporation legislation in order to root out and deter the incorporation and marketing of sham benefit corporations.