Patagonia, Ben & Jerry’s Challenge Dimon-Led Roundtable
Patagonia, Ben & Jerry’s Issue Challenge to Dimon-Led Roundtable
(Bloomberg) -- Outdoor-apparel retailer Patagonia Inc. and 29 other firms challenged multinational companies in a New York Times advertisement Sunday to “walk the walk” and change their legal incorporation status if they are serious about a new way of doing business that treats all stakeholders equally.
The full-page letter was a response to last week’s pledge by 181 members of the Business Roundtable to endorse a philosophical redrawing of the purpose of a corporation to serve all constituents in society, not just investors. JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon is the chairman of the Roundtable.
Companies that are serious should enshrine those goals by reforming as a so-called benefit corporation, according to the Sunday letter that in addition to Patagonia included Ben & Jerry’s ice cream and insurance company Lemonade. That legal structure makes it clear to investors that long-term goals, often including support for environmental and social causes, are on par with, or in some cases ahead of, other goals such as a short-term return for stockholders.
“It also ensures that the purpose of capitalism is to work for everyone and for the long term,” the companies stated in the letter.
The Business Roundtable pledge requires both the cultural shift and the changes in the rules of the game, said Andrew Kassoy, co-founder of B Lab, the nonprofit group that has pushed states to allow benefit corporations. More than 9,000 companies, most of them small and none of them members of the Roundtable, have incorporated as B corporations, he said in an interview last week. Some 3,000 are designated as “Certified B Corporations.”
Those who signed the Business Roundtable statement last week vowed to serve five distinct constituencies: Customers, employees, suppliers, communities and shareholders. The revision came more than 20 years after the group said its members’ primary goal was to increase shareholder value.
Delaware, where many of the largest companies are already incorporated, is one of 35 states plus the District of Columbia that currently allow companies to incorporate under the benefit corporation status. Five more states are considering such changes, according to data compiled by Kassoy’s B Lab.
“The opportunity is there for them to take the next step,” Kassoy said.
In a statement Sunday, the Business Roundtable said it’s “gratified by the number of nonprofits,” including B Lab and the Just Capital foundation, that have reached out to enage the organization on such issues. “We look forward to working with all of them on next steps.”
To contact the reporter on this story: Jeff Green in Southfield, Michigan at jgreen16@bloomberg.net
To contact the editors responsible for this story: Janet Paskin at jpaskin@bloomberg.net, Kevin Miller, Linus Chua
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