October 8, 2020

American Sustainable Business Council Urges More Broad-Based Employee Ownership

In its 128-page report “Creating an Economic System That Works for All,” the American Sustainable Business Council (ASBC) urges a variety of steps to promote broad-based employee ownership.

The report notes that “twenty-eight million Americans belong to the nearly 7,000 employee stock ownership plans in the U.S. This isn’t enough.” (This appears to conflate all forms of broad-based plans, including ESPPs, with ESOPs, which have about 14 million participants). The report states that “we need to examine current ESOP incentives as every major corporation should have an ESOP—and we need to examine how part-time workers can earn stock as they are often excluded from this form of compensation.” The report urges adoption of the “Promotion and Expansion of Private Employee Ownership Act” (S. 2258), which allows ESOPs to qualify for small business set-aside status, allows owners of S corporations to get the same tax deferral available to owners of C corporations when selling to an ESOP, allows banks to deduct 50% of the interest income they make on ESOP loans, and creates an office of technical assistance in the Treasury Department for ESOPs.

The report recommends tax policy parity for other forms of broad-based ownership plans, most notably worker cooperatives and perpetual trusts, so that they get the same benefits ESOPs do. Finally, it also urges employee ownership companies to develop “enlightened” or “democratic” metrics to help companies move their plans beyond being mostly retirement plans to being more fully developed ownership culture plans.

The ASBC was cofounded by Jeffrey Hollender, the cofounder of Seventh Generation. The ASBC describes itself as “the leading business organization serving the public policy interests of responsible companies, their customers and other stakeholders. Founded in 2009, its membership represents over 250,000 businesses in a wide range of industries.”