Steward Ownership and Benefit Corporations

A comparison

The Benefit Corporation is a for-profit legal entity in the United States and some other countries that has a legally defined corporate goal of having a positive impact on society, employees, the community, and the environment. While Benefit Corporations may distribute profits to their shareholders, they are also subject to transparency obligations regarding their ESG performance. In some US-states, the status of a Benefit Corporation may be revoked; also, a Benefit Corporation may convert back to another corporate form.

Italy has also introduced its own version of the Benefit Corporation as a legal form, following the U.S. model.

In comparison to steward ownership, the benefit corporation depends on defining the pursuit of purposes beyond shareholder value, such as public welfare, as a legal corporate purpose. Steward ownership, on the other hand, takes a different approach by changing the ownership structure at the core of the corporation for other incentives and motivation of decision-making. Shareholder value and profits are not the goal of the company anymore but a means to a purpose.

Steward ownership is a legally binding commitment for the long term, while it is possible to change out of benefit corporation status.