D.C., Maryland and Virginia candidates make the final turn and head down the home stretch toward Election Day.
Maryland is the first state in the nation to designate a new category of business, “B-corp,” or “benefit corporation,” which allows companies to incorporate social goals into their missions. It’s the next step in the trend toward “corporate social responsibility” that’s sweeping business schools and board rooms. We’ll explore how the new law can help companies do well by doing good.
- Julie Paez Co-owner, The Big Bad Woof: Essentials for the Socially Conscious Pet
- Melissa Carrier Executive Director,Center for Social Value Creation, Robert H. Smith School of Business of the University of Maryland
- Jamin Raskin Member, Maryland State Senate (D- Dist. 20 Montgomery County); and Professor of Law, American University's Washington College of Law
MR. KOJO NNAMDIFrom WAMU 88.5 at American University in Washington, welcome to "The Kojo Nnamdi Show," connecting your neighborhood with the world. It's a central tenet of American business, companies sink or swim based one factor and one factor alone, whether or not they make money. But a half dozen businesses in Maryland want to be judged not just on one bottom line, but rather on a triple bottom line, where social, environmental and economic performance count.
MR. KOJO NNAMDIA new kind of company in Maryland called Benefit Corporations put social responsibility on a par with profits. Supporters hope that socially conscious investors will flock to these new entities. Maryland was the pioneer in creating this corporate status. But states across the country are considering similar legislation. We'll learn more about companies that want to do well and do good because joining us in studio is Julie Paez, co-owner of the Big Bad Woof. That's a sustainable pet supply store based in Takoma, whose tagline is "essentials for the socially conscious pet." Julie Paez, thank you for joining us.
MS. JULIE PAEZPleasure to be here.
NNAMDIAlso with us in studio is Melissa Carrier. She is the executive director of the Center for Social Value Creation at the University of Maryland Smith School of Business. Melissa Carrier, thank you for joining us.
MS. MELISSA CARRIERThank you.
NNAMDIAnd joining us by telephone is Jamin Raskin. He's a Maryland state senator representing District 20 in Montgomery County. He's also a professor of law at American University's Washington College of Law. Jamin Raskin, how are you?
MR. JAMIN RASKINI'm terrific, Kojo. Thank you so much for having us on.
NNAMDIGlad to hear that you're terrific. Jamin, you pushed for creation of the benefit corporations or B-corps in Maryland. What's the idea?
RASKINWell, the idea was there was so much bad news about, you know, big companies like, you know, Massey coal in West Virginia and BP oil and so on. And they seem to be able to take care of themselves in the political process, but we got a lot of small business, the green business, progressive businesses that want to be able both to make money for themselves and their investors, but also to render a consistent public good to the community in terms of environment service or working on housing or animal welfare or what have you.
RASKINAnd this allows them to do that. It gives them a kind of state brand, which says that they're a corporation -- they're in it to make money, but they're also in it for public interest as well. And they're able to find investors and employees and consumers who are interested in businesses that are invested in the community in that way.
NNAMDISo companies with this designation build social goals into their mission. What kinds of things count?
RASKINWell, the statute is written very broadly, so almost any kind of public benefit can count as long as it's not specifically what the business is already doing. In other words, you know, you can't sell health supplies and say we're contributing to health care by selling health supplies. In other words, you got to do something additional. So you could sell health supplies and say -- and we're also going out and providing free medical check-ups on the weekends to people in the community who are, you know, otherwise underserved. So it can be of an environment nature. It can be taking care of a river. It can be literacy training, what have you.
RASKINBut what we found amazingly since the legislation passed and went into effect last October, is there are lots of businesses that want to incorporate this way. We have had a number who've gotten in touch with us to say that they're incorporating in Maryland just so they can be designated as a benefit companies. And we have lots of people who want to flock to them. So, you know, the original idea was to give benefit companies legal protection so they couldn't be sued for pursuing something other than just the profit bottom line. But it's turned actually into something much bigger, which is it's helped to unleash kind of a subculture of businesses that want to identify with their communities in this way.
NNAMDIYou're saying that this designation was needed, otherwise these companies could be sued for not pursuing profit as the -- for not pursuing maximum profit as their objective?
RASKINWell, you know, originally it came to me from some business people in my district who said, look at the case of Ben & Jerry's, which got a, you know, a very handsome candor offer for a takeover and basically they felt they had to accept it because it was going to double the value of the stock. And then, you know, whether or not Ben & Jerry's discontinued the prior public mission of the company is debatable, but what they said the incident pointed out was that businesses basically always have to pursue the value of the shares over other objectives unless we change the law to do it. So, you know, in that case, we would be able to say they could accept an offer if they felt it was going to -- that the new acquirer was going to continue to vindicate the public mission, but they can also reject it if they felt that it was -- that they were a takeover target for the wrong reasons.
RASKINAnd so this does give them legal protection from being sued in derivative litigation by shareholder saying, you could have made us more money by doing something different. And it sends the signal upfront to the shareholders that we're in for the bottom line and we want to make money for everybody, but not just the bottom line. We also want to contribute concrete public goods to the community that we're part of.
NNAMDIJamin Raskin is a Maryland state senator representing District 20 in Montgomery County. He's also a professor law at American University's Washington College of Law. We'll soon also be talking with Julie Paez and Melissa Carrier. But before you go, Jamin Raskin, measuring profits is fairly straightforward, but how do you measure social and environmental performance? I guess what I'm getting at is how will the state know if companies are meeting these less quantifiable goals of social good?
RASKINWell, that's a great something. That was something we wrestled with in the drafting of the law. But what we ended up with a provision, which says that every benefit company has to create an annual benefits report. So, Julie from the Big Bad Woof, which happens to be my pet store in Takoma Park, is going to have to not just report what her bottom line is, but also report what it is concretely they're doing to advance animal welfare or provide for animal adoptions. She'll tell you the different kinds of things that they're involved in.
RASKINAnd in fact, remember, I was telling you about the shareholder liability that we have sort of taken care of in terms of being afraid of being sued for not pursuing the bottom line. There is a new form of liability, which is if you say you're a benefit corporation, but you're not actually doing the things that you're saying that you want to do, you could be sued by your shareholders, in that case saying that we're not actually providing the public benefit that we promised.
NNAMDILet me bring our listeners in on this conversation. Do you think benefit corporations are a good idea? You can call us at 800-433-8850. Do you think business and social goals can mix? 800-433-8850 or go to our website, kojoshow.org. Jamin Raskin, Maryland is out front on this, the first state in the country to do this. The law passed last spring and registration opened in October. How many companies have signed up so far?
RASKINWell, I can't give you a specific number because the idea is so new that the State Assessment and Taxation Office was not set up to record precisely which ones were registering as benefit corporations and which not. We know a dozen registered that way the very first day. And so we're certainly in the territory of several dozen of them and we've heard from a number of them and you'll hear from some of them today. You know, it's starting out small.
RASKINAnd if you compare it to the number of corporations that are not benefit corporations, obviously it's tiny. But something very big is starting to happen in Maryland and we know that states around the country are taking notice and it's -- you know, it passed the New York State Senate unanimously several weeks ago, I think. Vermont has followed us and has passed the law. So it's an idea -- I think the time has come and people are looking for business, right into the DNA of the company, a social ethos along with the money-making ethos.
NNAMDIAnd since you've been public about your illness and overcoming it, the best part of this discussion is hearing you say that you're feeling well, Senator Raskin.
RASKINOh, well, Kojo, thank you very much. I've got two more sessions of chemotherapy left. I can't wait to be done with them and to get back to my real life. But I very much thank you for all the support that you and, you know, your audience has rendered to me anytime that it's mentioned in the air. It means a lot to me.
NNAMDII never called you Senator Raskin before. You must be getting old, Jamin.
RASKINWell, I do think I'm getting old, but I'm going to be born again in a few weeks.
NNAMDIThanks a lot. Jamin Raskin is the Maryland state senator representing District 20 in Montgomery County. He's also a professor of law at American University's Washington College of Law. Thank you so much for joining us. Please continue to get well. Julie Paez, you started your sustainable pet supply store back in 2005 as a regular company in the district, but you jumped at the chance to incorporate in Maryland as a B-corp. In fact, it's my understanding that you were the very first company to sign up on the very first day.
PAEZYes, we were the very first company to sign up in Baltimore. The...
NNAMDIYou can tell our listening audience exactly what you sell at the Big Bad Woof.
PAEZWell, we sell holistic and organic foods, supplements, merchandise that is sustainably made. We focus on items that are made in the United States. We look for products that are made by companies that are minority, women-owned companies, fair trade companies and we look at things like, what's the packaging? How is it made? Where is it made? How far does it travel to get to our store?
NNAMDIFor the socially conscious pet. Melissa Carrier, how do benefit corporations differ legally from a regular company?
CARRIERWell, effectively, it's a distinct corporate identity built into their charter. It's a provision that allows directors or managers of the company to make decisions that not only have a financial impact but can take into account a social or environment issue. They can make tradeoffs in terms of maybe an investment, an expensive piece of equipment that might, over time, reduce, say, their energy usage.
NNAMDIIf a regular company is judged by whether or not it makes a profit, how do you judge a B-corp's success?
CARRIERIt's a really interesting question and one I think that we're still trying to figure out. So, benefit corporations are not only offering an investment return to their shareholders, but they are really specifically articulating a social or environmental objective, which I think is distinct from traditional corporations who may have a philanthropic program or work in the corporate social responsibility field, but don't necessarily link that directly to their strategy or to their customers or to their employees.
CARRIERSo what you're looking for when you're evaluating a benefit corporation is do they have unique offerings for their employees, say, around their compensation or their benefits. Do they have distinct ways in which they purchase products or think about their customer base that makes them unique and different? And it's really part of the core essence of that corporation.
NNAMDIHere's a question that I think members of our listening audience would want to answer. Would you make a point of shopping at a local business if you knew it was a benefit corporation? Would you maybe even invest in one? Call us at 800-433-8850. Here's Zina in Gaithersburg, Md. Zina, you're on the air. Go ahead, please.
ZINAYeah, I actually had a question about these benefit corporation. I just actually found out about it. And my question is -- actually I did a little bit of research and I called a person that was at a benefit slab which is associated with the benefits corporation. And they suggested that I needed to be in business for at least six months, generating revenue, before I can apply as a benefit corporation in order to get certified as a benefit corporation. So I just wanted to get some clarification on that.
NNAMDIYour turn, Melissa.
CARRIERSure. So to apply for a benefits corporation status in the state of Maryland, you can do that as if you were filing to become an operational LLC or C- Corp. What's distinct -- so Benefits Lab -- this is where this gets really fun and interesting, is a non-profit organization that certifies companies to become benefit corporations. And in some cases, their certification is for companies that are still structured outside of the benefit corporation charter.
NNAMDIWorks for you, Zina?
ZINASo that means that I do -- so do I get certified through the Benefits Lab or are there other means of getting certification?
CARRIERRight, so you -- this is really interesting, you can be certified by Benefits Lab, the non-profit that provides a certification standard and will audit your company under any corporate structure, or you can go to the state house at -- in the state of Maryland and register your corporate charter as a distinct benefit corporation, which is the actual entity in which your business will operate. They're two distinct and separate charters.
ZINA...I have one more question. So which would you say would be an easier process? Is it through the Benefits Lab or through the state?
CARRIERWell, it depends on what your objectives are for your business. With both, you need to be able to verify and certify your social or environmental impact. You'll need to go through an audit process and a certification process either way.
NNAMDIThank you very much for your call, Zina and good luck to you. Julie, you were already running your business is a socially conscious way. Why did you want this designation? Why did you go to Baltimore so quickly?
PAEZWell, we're opening up a second store, The Big Bad Woof in Hyattsville. And when the opportunity came along to open it up as a benefits corporation, it fit in perfectly with our mission, with what we stand for. And it gives an extra certification, a yard stick that a consumer can measure against. Nowadays, everybody's jumping up on green washing. Everybody's green, putting the word green into their names.
NNAMDIYeah, I was going to get to that, yeah.
PAEZNatural, but you need to read the fine print because not everything is green and not everything is natural. And this gives very specific standards and measurements that you need to reach.
NNAMDII was really about to ask that because a lot of businesses today claim they're environmentally friendly or that they're being run as an organic operations. So benefit corporations help to define the standards that those companies, too, have to accord to, right, Melissa?
CARRIERRight, that's correct.
NNAMDIOkay, that's how it works. Then here is Amy, in Takoma Park, Md. Amy, your turn.
AMYHi, thanks for taking my call. I'm a consultant with social enterprises and socially responsible business. Hi, everybody.
AMYMy companies name is Change Matters and we've been convening a bunch of information sessions and workshops on this new law and trying to figure out how to make sure that it works for these kinds of, you know, good for community, progressive businesses. And so I've got a question. And this might go especially to Melissa, but I'm really very interested in how companies are going to implement this law and how -- you know, Kojo, your first question about how are we going to measure environmental impact and community benefits.
AMYWhat are the standards? How will this be accountable? I'm interested in what Melissa thinks, maybe, about investors and how impact investors might be -- what she sees as how they might engage with these kinds of companies.
NNAMDIWell, a lot of people are already involved in what they call Socially Responsible Investing. It seems to me that these companies would be like a magnet for people who have that interest. Melissa?
CARRIERRight, absolutely. So there is a growing community of impact investors. They're still small and they're very disorganized compared to more traditional assets management and the public stock markets, of course. Today, these investors manage, you know, less than probably half percent of all assets in the country. But in terms of the benefit corporation, what it does is it does provide a third-party certification of a firms actions specifically.
CARRIERSo it allows investors, venture capital investors pension funds, asset managers who are interested in investing these kinds of business, a way to identify firms that they might consider putting their money in. And one thing to mention, as you think about the impact investing community, there's really two prongs to this community. One, of course, our investors, who are focused on impact first and the second group that are focused on the financial return first, but really have set a floor in terms of what they're acceptable in terms of social and environmental and governance contributions of the firms that they invest in.
NNAMDII mean -- go ahead.
CARRIER...as I was going to say, as I would, you know, counsel businesses who are looking to become big corporations, I mean, to be thinking about the investor community and these two contexts, I think, is very important. Are you talking to somebody who's focused primarily on an impact first or someone who's focused on a financial return?
NNAMDIAmy, thank you so much for your call.
AMYYeah, thanks for taking it, I appreciate. Oh, be sure to ask Julie about the wild dash to be the first benefit corporation...
NNAMDIJulie, please tell us there was a wild dash to be the first...
NNAMDI...and you happened to make it. How did that work out?
PAEZNo, I did not. My co-partner, Penny Jones, now PA and our lawyer, our attorney who drew up our incorporation paperwork, Laura Jordan, met at the Takoma Park Metro Station and, I think, 5:00 in the morning to drive up to Baltimore and showed up there. And the guards were very startled to find, you know, two people up there at 6:00 in the morning and said, well, we don't open until 9:00.
NNAMDIThey were, like, this is not an Apple store. It's not an iPhone coming out today.
PAEZBut, you know, we were determined to be the first and we got there and we were the first.
NNAMDIJulie Paez is the co-owner of the Big Bad Woof. That's a sustainable pet supply store based in Takoma. We're talking about benefit corporations. Here now is Eric in Rockville, Md. Eric, you're on the air. Go ahead, please.
ERICHi, Kojo, thank you for taking my call.
ERICI actually -- I work at Clean Currents and we were also one of the first corporations companies in Montgomery County. I...
NNAMDIHey, close only works in horseshoes, but go ahead. Julie was the first.
ERIC...and we actually pursued the non-profit B-corp certification, you know, sort of to achieve a central pillar of our company which is, you know, we like to think of ourselves as a for-profit company with a non-profit mission. And we found that this B-corp certification, you know, helps legitimize that claim in a sense that, you know, we're putting -- we're putting forth the focus beyond just bottom line, also focusing on effect to the community and the environment as well.
NNAMDIEric, thank you so much for your call. It allows me to ask Melissa, what about non-profits? Don’t non-profits fill the role of accomplishing social goals? Why do we need B-corps?
CARRIERWell, I mean, non-profits specifically in their mission is a societal benefit, a public good and they are held to that standard. Whereas a benefit corporation is really bouncing, what we call, triple bottom line, which is the economic return of a company, it's financial viability with a social or environmental benefit. And so, yes, non-profits fill a goal and we're seeing, of course, non-profits interesting in looking at the benefit corporation, perhaps those that operate is what we called Social Enterprises, non-profits that run businesses that create income to help support their social mission.
NNAMDIWe've got to take a short break. But when we come back after our winter membership campaign pitches, we'll be continuing this conversation about benefit corporations. Do you know of a business that has a social mission that you would like to tell us about? Call us at 800-433-8850. Send us an e-mail at email@example.com, a tweet at kojoshow or go to our website, kojoshow.org, to join this conversation about benefit corporations. Eric, thank you very much for your call, I'm Kojo Nnamdi.
NNAMDIWelcome back to our conversation on benefit corporations. We're talking with Melissa Carrier, executive director of the Center for Social Value Creation at the University of Maryland's Smith School of Business and Julie Paez, co-owner of The Big Bad Woof, which is a sustainable pet supply store based in Takoma. We're taking your calls at 800-433-8850. Would you make a point of shopping at a local business if you knew it was a benefit corporation? Maybe even invest in one? Do you think business and social goals can mix? Call us at 800-433-8850.
NNAMDIJulie Paez, does anyone question whether you can run a business well and be socially responsible?
PAEZWe're always asked that question. And we're entering our 6th year in business. We're opening up a second store in, hopefully, in June. And for us, these are principles that are engrained in our personal lives. We put them into the business and we're successful. We have very low employee turnover, we provide benefits, we provide health care benefits. Our customers appreciate the fact that we're vetting products coming into the store, that we're purchasing things that are made in the United States.
PAEZThat we look to purchase local, we support local businesses. So these are all things that are very important. And although they might be a little bit more expensive in the beginning, they do come back and reward us with customers and with profits.
NNAMDIHere now is David in Rockville, Md. David, you're on the air. Go ahead, please.
DAVIDI was wondering if your guests were familiar with Chemonics. It's a Washington D.C. company, which is like a small private version of the World Bank or USAID, and how that would fit into the new model.
NNAMDIAny understanding of that, Melissa?
CARRIERI do know Chemonics as an organization and, you know, their mission, or their work that they do, of course, is in international development working with the State Department and USAID. So your question if, you know, would that fit in, I mean, I think -- I think the important thing to think about, in terms of benefit corporations is, is there an explicit statement of a social or environment objective versus, as I think Jamin Raskin said earlier, you know, a health care company that provides health supplies therefore is doing good for public health.
CARRIERAnd I think that's a distinction that has to be made. And one of the things you're going to be looking for at a benefit corporation is are they doing things that traditional businesses aren't willing to make that investment. So for Julie's example in providing health benefits for her employees as a small business owner is quite unique among small and medium businesses.
NNAMDIAnd Julie, that's because you have a personal interest in that because of your previous job experience.
PAEZYes. When we started the company, it was one of the main things that we looked at was to be able to provide health insurance. For many years I was a freelance designer, or treated as an independent contractor, and did not have health insurance. So when we opened up the Big Bad Woof six years ago, it was top on our list of priorities to have health insurance.
NNAMDIWe got a post on our website from Change Matters, who says that it's organizing more info sessions, webinars on the Maryland benefit corporation law, social enterprise, and socially responsible businesses. They say they're happy to include interested folks in these sessions. You can find a link at our website, kojoshow.org. Melissa, are there any other states that are looking at legislation like Maryland's?
CARRIERYes, there are. There are about seven to eight states that are in the process of bringing legislation on. Vermont has indeed signed. New Jersey has actually passed the legislature. It's just waiting for the governor's signature. So indeed there are states that are interested in this, some taking a very pro-job strategy around implementing the B-Corporation, the Benefit Corporation in their state.
NNAMDIIt's my understanding Virginia is also looking at it?
CARRIERVirginia is also looking at it, correct. North Carolina, Colorado, Hawaii, New York, Pennsylvania, Oregon. I'm probably missing a few. But what's also interesting, it's not just at the state level, but what's happening at the city level. And if you think about Benefit Corporation as a charter around a state function, cities are starting to get into this game by offering the next step, which are things like procurement benefits to sustainable businesses. That might be offered to women owner minority businesses.
CARRIEROr they might be offering tax incentives and that's occurring in Philadelphia. They're doing tax incentives beginning in 2012 for certified corporations. Cleveland, for example, is issuing benefits on city contracts, a procurement benefit.
NNAMDIBut states are exploring several new types of hybrid corporate structures, it's my understanding, to account for companies that want to include social mission, things like L3Cs, low profit limited liability companies. Can you tell us about some of the ideas out there?
CARRIERRight. There are a whole bunch of ideas, which is what makes this such an interesting time for new business owners, as well as for companies that already have much of these ideals built into their mission. The LC3, which is actually going back up to the state legislature today in Annapolis, is a unique and different corporate structure under the LLC that allows an organization, more like a social enterprise, a business for example that might be operating in conjunction with a non-profit, to be able to accept grants, and to participate in diverse funding models that are beneficial to non-profits that traditional businesses can't participate in.
NNAMDIYou can join this conversation by calling 800-433-8850. Do you think benefit corporations are a good idea? 800-433-8850. Julie, do you ever question your decision to be a socially responsible company as you navigate in what this past couple of years has been a pretty tough economic climate?
PAEZNo. We have never ever, ever questioned our decisions. Last year we became aware that a couple of lines of food that we carried had a questionable preservative in it, and we did our due diligence, we looked at the pros and cons, and it was pretty basically split yes, it could be carcinogenic, no it could not, it was absolutely safe. And we made a decision that we weren't going to take chance and we pulled it off the shelves.
PAEZIn the middle of a recession, we took merchandise off our shelves that accounted for a fair amount of our sales. We did take a temporary hit, but sales picked up again and we garnered a very strong consumer customer support because of that decision.
NNAMDIMelissa, can't regular companies do good at the same time as they're doing well, they can start foundations for example?
CARRIERAbsolutely, and they do. Bless you. The traditional models of corporate social responsibility from the '80s and '90s has been very much about being a part of your community. I mean, every business is given a license to operate in the community that they exist and philanthropic giving and employee volunteerism are a key part of that. So that's absolutely true.
CARRIERI think, you know, what is unique about the Benefit Corporation is that it allows managers and directors to integrate their values into their specific strategic business decisions, and I think that's the unique distinction here.
NNAMDIYou, too, can join us, 800-433-8850. Do you shop at stores or buy particular products because you feel they have good corporate values, because you feel that they are performing a significant social service? 800-433-8850. Melissa, corporate responsibility or corporate social responsibility is the latest buzz in business schools. Is that a part of this wave?
CARRIERMost definitely. And I would say, you know, what we experienced ten years ago with Enron created a first wave of discussions around integrity and ethics and responsible leadership. And then with the financial crisis happening, your students and faculty likely -- and society, in fact, really began to start questioning what is the purpose of business. And so we're seeing across business schools in the country, and really around the globe, participating and finding new ways to create new classes, to integrate these ideas into their core curriculum, to really give students some perspective about how this can be linked to a strategy of a firm.
NNAMDIJulie, you mentioned having to take some stuff off the shelves. What kinds of decisions are the toughest when you're trying to balance being sustainable on the one hand and making a living and a profit on the other?
PAEZWell, what we found when we first opened up the store six years ago, we bought whatever we could to put on the shelves, and then each year we started to hone our criteria for what we were going to carry. So we will look at things now, such as where's it made, who makes it, how far does it travel to get to us. We're now really focusing on foods that are made locally. We have half a dozen or so manufacturers that are within 150 miles of the store, and if there's ever an issue, we can pick up the phone and call.
PAEZAnd if there's ever an issue, we can pick up the phone and call. And last week I had a customer that questioned an ingredient in a particular food, and I called the owner, got the answer for that person immediately, and this was a manufacturer that was based out of Virginia.
NNAMDIWe got a post on our website from Kelly. "As a locally based ethical dog treat company whose product is available at the Big Bad Woof, as a business owner, I personally think that it is crucial to supply to companies that actively give back to our community. Hopefully the Commonwealth of Virginia will get on board," says Kelly. But Melissa, economist Milton Friedman famously argued that a company benefits society most when it does well profit wise and it should not muddy its mission in any other way. Has that thinking changed? Is it changing?
CARRIERI think that thinking is definitely changing and it's a conversation that happens in the hallways of the Smith School on a daily basis. But what I think is happening really, is that, you know, in the last, you know, 10 to 20 years, this evolution of technology, how we as a society are becoming more globally linked, how firm's actions have repercussion that something can happen in a far away country, and we can immediately know it through Twitter and through the social media tools.
CARRIERAll of these things are changing the way business operates and what our expectations are as a society of business. So when Milton Friedman famously put those words to paper, it was a different time we were operating under, under a different paradigm.
NNAMDIHe should have had a pencil with an eraser. Melissa Carrier is the executive director of the Center for Social Value Creation at the University of Maryland Smith School of business. She joins us in studio with Julie Paez, co-owner of the Big Bad Woof, which is a sustainable pet store based in Takoma. We move onto Hazel in Sterling, Va. Hi, Hazel. You're on the air. Go ahead, please.
HAZELHi. I was just listening to you make the statement that a company should not muddy its waters by trying to be ethical and environmentally sensitive...
HAZEL...and I thought...
HAZELOh, no. I just -- it's sad that that statement can be made even at this day and time and people would say it is valid. I'm just shocked that that would happen. Well, I'm not shocked...
NNAMDIWell, consider the source.
NNAMDIThe source was economist Milton Friedman in 1971. We are now 40 years later.
HAZELTrue. And it's still the attitude that, well, I can't make money if I have to consider the economic impact I'm going to make on, you know, on society and on the earth. I have to think about my bottom line. That is a sad statement to say at this day and time.
NNAMDIBecause you think that -- you think that corporations today should have social responsibility near the top of their agendas?
HAZELAt the very top because it costs us so much in the long run.
NNAMDIHazel, thank you very much for your call. We got this e-mail from Judy in Potomac. "Is there a mutual fund that invests solely or even in part in benefits corporations?"
PAEZOh, that is a good question.
NNAMDIGood question for research, yeah.
CARRIERI don't know.
PAEZGiven how the Benefit Corporation's charter is, I don't know. But there is, of course, a local company, Bethesda (word?) Funds that invest in firms based on criteria around social, environmental and governance impact. So there are mutual funds out there that are investing in traditional companies using a set of measurements and standards to make their decisions. But I will take that to look at.
NNAMDIYeah. That's an interesting research question. Here's Dianna in Montgomery County. Dianna, you're on the air. Go ahead, please.
DIANNAOh, hi. Thanks for taking my call, Kojo. Great show as always, and I'm hoping that your guests -- because I just tuned in -- haven't already covered this, but there's a terrific local company, locally grown and locally franchised called MOM, My Organic Market.
DIANNAWhich is now sort of my primary food source, even though I live on the other side...
NNAMDIWere you listening two weeks ago? You would have heard the proprietor of MOMs on this very broadcast, two Wednesdays ago. But go ahead, please.
DIANNAAnd, you know, I literally do not go to Giant, Safeway or Wegmans anymore, because I object to so much of their corporate culture. They don't have recycling in the stores, they sell everything in the smallest to highest packaging possible containers, they have very low availability of organic or locally grown produce. And here we are in Montgomery County with the ag reserve, you know. Thirty some -- or 93,000 acres of country full of farmers who want nothing more than to deliver their stuff locally and need outlets.
DIANNAAnd so I encourage people to get out of the Giant, get out of the Safeway, get out of the great big box stores and go to a local place, local farmer's market and support your local good guys.
NNAMDIDianna, thank you very much for your call. I'm sure we'll be hearing from Giant and Safeway after your comment. But thank you very much for your call. I kept the best for last, Melissa Carrier. This is an e-mail we got from Nick in Bethesda. "Allow me to play devil's advocate. Why is taxpayer money being wasted on this? If a business wants to have a good social impact, that's fabulous, but it's hard to stomach the government subsidizing failing businesses that can't turn a profit. One could argue that this is exactly the kind of discretionary spending that needs to be cut in our current fiscal environment." Is the government subsidizing these companies?
CARRIERCurrently, no. The Benefit Corporation is a charter in which a firm can organize under. There is currently no tax incentives or procurement benefits for firms that organize under the Benefit Corporation.
PAEZAnd I would also like to say that many of the things that we do are aimed at social and environmental responsibility, good stewardship. So in the end, buying products that are environmentally sustainably made helps the environment, helps clean the environment and cuts costs at the other end.
NNAMDIAnd Nick, I don't think we would have invited Julie Paez here if she was the proprietor of a failing business. Julie Paez is the co-owner of the Big Bad Woof. It's a sustainable pet supply store based in Takoma, tagline, "essentials for the socially conscious pet." Julie Paez, thank you so much for joining us.
PAEZThank you very much.
NNAMDIMelissa Carrier is the executive director of the Center for Social Value Creation at the University of Maryland Smith School of Business. Melissa, thank you for joining us.
NNAMDIAnd thank you all for listening. I'm Kojo Nnamdi.
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