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The Surprising Legal Reason Warby Parker, Etsy Have to Do Good

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Image by Driely S. for Racked.
Image by Driely S. for Racked.

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For Warby Parker, Patagonia, Etsy, and Seventh Generation, doing good isn't something that can be tossed aside in a bad quarter. These companies are "B Corporations," a new type of for-profit business that's certified by the nonprofit B Lab to achieve social goals as well as financial goals. The commitments made to charity aren't just hype. If a legal benefit corporation's social mission is abandoned, The New Yorker reports, shareholders can sue its directors for not delivering on their do-gooding promise.

Besides appealing to both employees and consumers, The New Yorker theorizes that the social pledges of B corps are a departure from corporate America's focus on maximizing shareholder value above all else, and a return to the idea of purpose as well as profit. "We wanted to build a business that could make profits. But we also wanted to build a business that did good in the world," Warby Parker co-founder Neil Blumenthal told The New Yorker.
· Companies with Benefits [New Yorker]
· Etsy Reveals Its Plan for World Domination [Racked]