To B or not to B: Etsy’s decision whether to re-incorporate as a public benefit corporation and maintain its B Lab certification

Abstract

Theoretical basis

As the regulatory system begins to recognize the role of social responsibility reporting, reliable disclosure measures will be required. Issues of transparency, reliability and assurance are likely to arise as securities regulators consider whether and how to require disclosure of non-financial information. Various reporting models are presented in the case to illustrate different ways that these issues can be addressed by privately held and publicly traded corporations.

Research methodology

The case uses the company, Etsy, Inc., which has established itself as a publicly traded, socially responsible corporation. Etsy must decide whether it will re-incorporate as a benefit corporation in order to maintain its B Lab certification. This decision introduces students to the various measures of corporate social responsibility, the interests of the stakeholders of a corporation and the regulatory environment in which socially responsible, publicly traded corporations operate. The case uses only publicly available information.

Case overview/synopsis

This teaching case addresses the decision faced by Etsy, Inc. when it became a publicly traded corporation. In order to maintain its certification as a socially responsible corporation by B Lab, it would have to re-incorporate as a Delaware Benefit Corporation. In making this decision, the company had to consider various measures used for corporate social responsibility reporting and transparency and how these might affect Etsy’s stakeholders.

Complexity academic level

Undergraduate or masters level case that could be used in a business law, commercial law, legal environment or auditing course.

Citation

Lingenfelter, G. and Cohen, R. (2019), "To B or not to B: Etsy’s decision whether to re-incorporate as a public benefit corporation and maintain its B Lab certification", , Vol. 15 No. 6, pp. 510-527. https://doi.org/10.1108/TCJ-06-2018-0069