The green credentials of benefit corporations and sociétés à mission: Property rights and the prevention of greenwashing

This research inquires whether the property rights templates of US benefit corporations (BCs) and French sociétés à mission (SaMs) are credible protections against greenwashing. By dissecting their unique legal structures (dubbed their “legal DNA” by B Lab), we aim to find whether these firms' environmental and social claims are truly backed by robust corporate governance. The importance of this lies in the “credence” nature of environmental and social claims, which makes their verification difficult while increasing the likelihood of fraud. This vulnerability is further exacerbated by ambiguous missions and third-party assessments weakened by the freedom BCs and SaMs have to select and pay auditors. Rooted in the tradition of institutional ecological economics, this research emphasizes institutional realism by leveraging a mechanism-based methodology. Qualitative institutional data, derived from the model benefit corporation legislation, société à mission legal status, case law, and company filings, are then analyzed through manifest coding using the Basic Formal Ontology (BFO), which adheres to the ISO/IEC 21838–1 standard. Findings reveal a fundamental bargaining power imbalance favoring shareholders in BCs and SaMs, leaving non-equity stakeholders with limited countervailing powers (e.g., costly exit, no voting, ineffective legal recourse). Formal stakeholder protection proves ineffective, leading to weak practical accountability and heavy reliance on owner altruism for mission fulfillment. The implications are that ensuring credible protection against greenwashing necessitates a fundamental structural redesign of BCs and SaMs. This involves shifting bargaining power towards stakeholders and establishing governance independent of selfless owners, thereby creating imperative credible commitments.