sustainable business

Benefit corporation bill goes to governor

Sandra Stewart | August 30, 2011

The California benefit corporation bill, AB 361, has passed through both houses of the state Legislature and is now on Governor Jerry Brown’s desk. He has 12 days to sign or veto it.

As I said in my previous post on this groundbreaking bill, AB 361 is important because as sustainable businesses grow, they often find themselves under pressure from investors to back off on elements of their mission, and if they go public, the fear of shareholder lawsuits may compel them to take actions that compromise their sustainability orientation, such as accepting a buyout offer from a suitor that doesn’t share their commitments. AB 361 has three key components that address this issue:

  • Businesses that choose to incorporate as benefit corporations must include as part of their mission creating a material positive impact on society and the environment.
  • The fiduciary duty for benefit corporations includes considering public benefits when making decisions.
  • Benefit corporations must report annually on their overall social and environmental performance using recognized third-party standards.

What would that mean, ultimately? Assemblymember Jared Huffman (D-San Rafael), who introduced the bill, put it this way:

“Socially responsible businesses, investors and consumers all over California are calling for this type of legislation. They believe this bill is the start of something transformational, that it embodies their forward thinking and entrepreneurship. But most importantly, this bill sends a message to socially minded companies and entrepreneurs that California is open for this emerging form of business.”

Thinkshift has written to the governor urging him to sign the bill. Want to send a message yourself? Get contact info and a sample letter on the Green Chamber of Commerce website.

  1. […] than repeating my previous post, I’ll give the bill’s author, Assemblymember Jared Huffman (D-San Rafael), the […]


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