Espen Eckbo and Markus Lithell have received funding from the Norwegian Research Council for their project on benefit corporations.
The main purpose of this research project is to analyze the growing use of so-called benefit corporations (B Corps) in funding environmental, social, and governance (ESG) investments globally and with a particular focus on Scandinavia. In the classical for-profit corporation, the corporate charter – the legal document stating the company’s founding purpose and allocation of control rights – cements the principle of shareholder value maximization as a guiding principle for the firm’s investment activities. This principle works well when a company's profits and social objectives are separable. However, this is not always the case: Firms may be more efficient advocates for social reforms on behalf of its shareholders than individual shareholders themselves. In the B Corp, the corporate charter explicitly authorizes its board of directors to consider social issues in addition to the objective of maximizing the shareholder value. It includes a positive impact on society and the environment in addition to profit as its legally defined goals. Rather than simply allowing management to take other considerations (e.g., ethical ones) into account, the B Corp requires them to take particular ones into account. Such social issues may benefit not just shareholders but also other of the firm’s stakeholders, such as employees, customers, community members, and the environment. Under this new charter, the firm may legally direct funds away from dividends and towards ESG investments, while still maintaining its core duty toward shareholders. On the other hand, precisely because the charter allows the firm to divert profits to social causes. Capital market participants may be reluctant to fund the firm. The project will analyze these offsetting benefits and costs, with the objective of determining the prospect for B Corps to fund projects with significant societal value, particularly in the development of green technology, and within the Scandinavian political system.