California is on the edge of emerging corporate change. Assembly Bill 361, which allows for the creation of a new class of corporations -“Benefit Corporations”, has passed the Senate Floor and is on the Governor desk. More than 50 companies have weighed in showing their support for this bill, but opposition exists.
Current law requires that California companies exist to conduct business in a way that maximizes shareholder wealth. This new corporate form would provide legal protection for mission-minded companies wishing to pursue the triple bottom line of people, planet and profit. The bill will help California continue as a leader in the growing green and sustainable business economy while helping to expand a new sector of the economy which uses the power of business to solve social and environmental problems.
AB-361 is modeled after successful legislation in Hawaii, Maryland, New Jersey, New York, Vermont and Virginia. Similar legislation has been introduced in Colorado, Michigan, North Carolina, and Pennsylvania. The B-Corp movement is well under way and represents a forward looking response to the underlying problems in our current financial crisis.
B Corporations create material positive impact on society and the environment by working for the good of all stakeholders, not just shareholders, and by meeting rigorous and independent standards of social and environmental performance, accountability, and transparency. The B Corporation status will help consumers recognize and support responsible businesses that are aligned with their values. Through partnerships with the GIIRS rating system, impact investors will be able to measure impact and build standards towards best practices as this exciting asset class emerges to serve the worlds leading social entrepreneurs.