sustainable business

California gets benefit corporations

Sandra Stewart | October 11, 2011

Sunday marked a real milestone for sustainable business: California Governor Jerry Brown signed AB 361, making benefit corporations a legal form in the nation’s largest economy.

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

Under AB 361, he noted in announcing the signing, “businesses can choose to incorporate as benefit corporations and enjoy these significant advantages:

  • Greater access to social impact and venture capital investments;
  • Legal protection for directors and officers in their more broadly defined fiduciary roles of maximizing profits as well as ensuring social and environmental considerations; and
  • Marketing opportunities that will allow consumers to distinguish, in a very real and ascertainable fashion, between a business that claims to be socially responsible, and one that is responsible.”

What’s not to like? And there’s another aspect of this that doesn’t get enough attention: As B Lab co-founder Jay Coen Gilbert told the Los Angeles Times, traditional corporations “have one fiduciary duty: to maximize value to shareholders even if that comes at the expense of workers or the community or the environment. It’s a system that’s set up to externalize costs to society.” In other words, when corporate decisions cause environmental and social harms, the rest of us are on the hook to clean up the mess. Benefit corporations, though voluntary, are one important step toward changing all that.

Thinkshift was thrilled to support this bill, in our own name and through our work with the Green Chamber of Commerce.

  1. […] Those were Patagonia founder and CEO Yvon Chouinard’s closing words as he led a parade of companies up the steps of the Secretary of State’s office to become California’s first benefit corporations. He captured the spirit of the moment perfectly—many of us got up long before dawn to be in Sacramento when the office opened so that we could become benefit corporations at the first possible moment. (What’s a benefit corporation? See this previous post.) […]


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