ESG Considerations and Public Benefit Corporations

There appears to be an international demand among investors for for-profit enterprises that commit to a social or environmental purpose and consider environmental, social and governance (ESG) aspects. Inspired by U.S. legislation, EU and other state legislators have enacted statutes with new legal forms of business organizations – so-called benefit corporations – or are considering to do so in order to meet this demand. Might the ESG movement induce more companies to (re)organize as public benefit corporations? If so, should other jurisdictions be guided by U.S. benefit corporation legislation where this concept emanated from when considering whether to establish a statutory framework? This article challenges the common approach of copying the U.S. model for benefit corporations as such. It concludes by stating that, first, the implementation of a separate legal form for hybrid organizations is not necessary, unless corporate law is strict in not allowing mixed commercial and non…