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Home Archive Volume 64 Volume 64, Issue 1 NOTE: Beyond Puffery: Providing Shareholder Assurance of Societal Good Will in Crowdfunded Benefit Corporations
NOTE: Beyond Puffery: Providing Shareholder Assurance of Societal Good Will in Crowdfunded Benefit Corporations

By Kevin Ercoline | 64 Am. U. L. Rev.  169 (2014)

Going “green” has become a very big business.  Companies are filling the store shelves with environmentally conscious, eco-friendly alternatives.  The organic food market has shown the strongest “green” growth with revenue increasing 238% from 2002 to 2011 as compared with an overall food market revenue growth of only 33% during the same period.  Whole Foods, a leader in organic products, saw its stock price rise from $4.27 in late 2008 to $51.55 as of the first quarter of 2014.  This surging growth, coupled with consumers’ admitted willingness to pay a premium for “green” products, naturally explains why big corporate players are trying to establish market share in the “green” market. 

Conglomerates have expressed concern though because, despite consumers’ claims that they are willing to pay more for “green” products, well intentions have not translated into sales.  A recent study, however, has shown that where a “high trust relationship” exists between the business and consumer, consumers’ environmental concerns do translate into higher sales for “green” alternatives. Although larger corporations may have found difficulties establishing a foothold in the “green” market, the Small Business Sustainability Report, which was based on the responses from 1305 small businesses, found that 75% of small businesses saw an increase in sales of “green” products during the Recession years of 2008–2011.  As small businesses seem to grow more dominant in the “green” market and the traditional players attempt to establish a stronger market share, the potential threat (or windfall profit) of takeovers and acquisitions of these small businesses becomes very real.

To provide a safeguard against those potential takeovers, several states have enacted new statutes allowing businesses to focus on social issues as much as, or more than, profit maximization.   

 This Note seeks to address the rights that shareholders in a benefit corporation can exercise to ensure that Boards of Directors consider and properly value the societal importance of a shareholder’s investment when deciding whether or not to approve an acquisition.

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