The new Legal Requirement for B Corps in Aotearoa NZ
Wednesday 20 October 2021
A core commitment of B Corps is to strive to create public benefit alongside profits, and to consider the impact of their decisions on all stakeholders, not just shareholders. For the past eight years, B Corps in Australia and Aotearoa New Zealand have signed the B Corp Agreement, in which you commit to these principles to meet the certification’s ‘legal requirement’. Throughout this time, our ambition was to create a formal legal pathway that brought shareholders to the table for business decision-making.
In September 2020, we announced this new pathway in Australia, where the legal requirement is met through amending a company’s constitution. In the last year we have sought guidance from lawyers and experts, and we’re excited to introduce the same legal pathway for Aotearoa New Zealand B Corps as well.
What is stakeholder governance?
Stakeholder governance is a commitment to operating a business with more than profit in mind. It means decisions are made not only to deliver returns for shareholders, but also to create positive outcomes for people, communities, and the planet. Adopting the B Corp certification legal requirement ensures this by embedding stakeholder governance into your company’s foundational documents. This is part of what makes B Corps leaders in the growing global movement to operate stakeholder-driven business.
What do B Corps in Aotearoa New Zealand need to do?
To meet the requirement in Aotearoa New Zealand, businesses must update their constitution to include two clauses: the purpose statement and the stakeholder clause. You can find the exact provisions here.
Head to our legal requirement page to learn more and access our how-to guide, which offers in-depth information on the legal requirement and how to implement it.
Meeting the requirement will also allow you to gain up to 7.5 points towards your B Impact score in the Governance section (unless you’ve already obtained full Mission Lock IBM points in your assessment).
An important conversation happening now in Aotearoa New Zealand
This announcement comes at an opportune moment: with the introduction of a bill to parliament this month to amend the Companies Act. The amendment makes it clear that directors can choose to take environmental, social, and other matters into account when acting in the best interests of the company. We would love to rally the B Corp community’s support for a submission in response to the legislation, bringing the B Corp perspective. If you are interested in being part of this, head to our online community to join the discussion.
Earlier this year, the Institute of Directors and MinterEllisonRuddWatts issued a whitepaper outlining the evolving corporate governance landscape in relation to stakeholders. It includes significant developments and trends around the world and in New Zealand, relevant law in New Zealand and also provides guidance for boards. It concludes with a call for the Government to review the framework for directors’ duties in the Companies Act 1993. This paper has energised the important conversation on the evolution of directors duties and is well worth a read.