Businesses Support Benefit Corporation Legislation
To the editor:
Businesses and organizations from all over California strongly support AB 361 (Huffman) Benefit Corporation legislation.
Benefit Corporation Legislation enables the development of a growing sector of the economy comprised of innovative businesses that seek to create benefit for society in addition to profit for shareholders. Business leaders in this new economy want the legal protection, currently not afforded under the California corporate code, to pursue a higher corporate purpose than simply maximizing shareholder value.
Importantly, companies seek to do far more than simply pick a single charity or environmental task to improve their image (often called “green washing”), but rather seek to improve the world we work in by creating high quality jobs that improve quality of life in our communities. Benefit Corporation Legislation contains the general public benefit provisions that ensure that consumers, investors, and policy makers can clearly distinguish companies who are pursuing a higher corporate purpose from those that are doing something more narrow for marketing purposes.
Benefit Corporation Legislation also provides additional accountability to shareholders by redefining the fiduciary duty of directors, requiring them to consider the impact of their decisions on the long term interests of society, not just the short term interests of shareholders, even when considering a sale of the business. To ensure increased transparency to shareholders and the public, Benefit Corporations are also required to assess their overall social and environmental performance against a third party standard.
By doing so, the company and all its stakeholders are made aware of how well the Benefit Corporation is doing relative to independent, credible, transparent, and comparable standards. Markets thrive on clarity and transparency, and these third party standards provisions create a level playing field and a more efficient and effective marketplace. They prevent the bad actors from simply cherry picking a few facts that are favorable for their image.
Benefit Corporation Legislation is now law in Maryland, Vermont, Virginia and New Jersey. Benefit Corporation Legislation has been introduced and is progressing rapidly in New York, Pennsylvania, Michigan, North Carolina, and Hawaii. It has attracted strong bipartisan support in every state, because it is entirely voluntary and has no budget impact
for more information and a short list of some companies supporting AB361 visit http://www.hansonbridgett.com/docs/practices_industries/Support_CA_Benefit_Corp_Legislation.pdf.
Join me and my friends. Let Gov. Jerry Brown and your Ca. Senator know you are in favor of AB361. I’m not often involved in state politics on this level. but this could bring about a paradigm shift in all of our quality of life. I believe in this!
Bob Driskell
Re: SUPPORT FOR AB361
If you would like to know how to get in touch with the Governor’s office (where the bil, AB361l sits awaiting his signature), please fax or email letters of support as follows:
YES… PLEASE SIGN AB 361 INTO LAW!
Office of Governor Brown
Office of Legislative Affairs
Brian Putler, Deputy Legislative Secretary
Brian.putler@gov.ca.gov
Fax: 916-558-3177
It was signed into law.
SACRAMENTO – California companies now have a new way of doing business, thanks to the Governor’s signature yesterday on Assembly Bill 361, introduced by Assemblymember Jared Huffman (D-San Rafael).
Huffman’s law, which received overwhelming bipartisan support as it worked through both chambers of the California Legislature, creates a new, fully voluntary class of corporation in California called “benefit corporations,” which allows businesses to pursue a material positive impact on the environment and community in addition to maximizing profits. Current law requires corporations to prioritize financial interests and shareholder profits.
“California must be a leader in attracting socially-responsible companies, investors and consumers,” said Assemblymember Huffman. “Thanks to the Governor’s action, we now have a new law that sends a strong message to entrepreneurs that California is open for this emerging form of business.”
Under AB 361, 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.
“Benefit corporations are companies that understand the power of money to help achieve positive changes,” said Jeff Kletter, CEO & Co-founder of KINeSYS Inc., based in San Rafael. “We are happy to be affiliated with a community that knows we need to all work together to help take our country and the economy to the next level.”
“We have to keep California competitive and moving forward in a positive direction in order to ensure the success of our young people,” said Jason Greenwald, a math teacher from Petaluma and supporter of this bill.
“Benefit corporations value profits, people and our planet equally,” said Stuart Rudick, Partner of Mindful Investors LLC, based in Mill Valley. “AB 361 provides a sustainable model for California business to achieve economic success while also creating social good.”
AB 361 was proposed by several of Assemblymember Huffman’s constituents who participated in his annual “There Oughta Be a Law…or Not” contest. The bill is supported by over 200 California-based businesses and associations. California now joins Hawaii, Maryland, New Jersey, New York, Vermont and Virginia where benefit corporation legislation already has passed with bipartisan support.
Assemblymember Jared Huffman (D-San Rafael) represents the 6th Assembly District, which encompasses southern Sonoma County and all of Marin County. First elected in 2006, Huffman chairs the Assembly Water, Parks and Wildlife Committee and also serves as Co-Chair of the Legislative Environmental Caucus.
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