SACRAMENTO - Assemblymember Jared Huffman (D-San Rafael) announced that 18 sustainable businesses registered today to become the first benefit corporations in California - a change made possible by Assembly Bill 361, authored by Huffman.
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.
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.
"This is California at its best, showing there is a way to create jobs and grow the economy while raising the bar for social and environmental responsibility," said Assemblymember Huffman. "With this new law, we are attracting new socially-conscious companies, investors and consumers - we're sending a strong message that California is open for this emerging form of business."
Patagonia, an outdoor apparel and equipment company, named by Fortune magazine as the "Coolest Company on the Planet" in 2007, was first in line and becomes the first business in California to elect benefit corporation status. Patagonia's founder Yvon Chouinard was joined by other leading sustainable business leaders to file papers at the California Secretary of State Office and celebrate the availability of this new class of corporation.
"Patagonia is trying to build a company that could last 100 years," said Patagonia Founder Yvon Chouinard. "Benefit corporation legislation creates the legal framework to enable mission-driven companies like Patagonia to stay mission-driven through succession, capital raises, and even changes in ownership, but institutionalizing the values, culture, processes, and high standards put in place by founding entrepreneurs."
California became the sixth state to enact benefit corporation legislation when Gov. Jerry Brown signed AB 361 in October 2011. The bill was supported by more than 250 businesses, including Give Something Back Office Supplies, Solar Works, Sun Light & Power, Thinkshift Communications, Green Retirement Plans, Scientific Certification Systems, Rimon Law, Dharma Merchant Services, and Terrassure Sustainable Land & Resource Development. Dozens of other businesses have committed to electing this new status in the next few months.
"I think it is safe to declare a successful end to the ‘beta test' phase of socially responsible business," said Mike Hannigan, President and Co-Founder of Give Something Back Office Supplies. "Some of the businesses converting to the benefit corporation today - including us - have been giving customers their money's worth and a whole lot more for more than 20 successful years. This important legal framework marks another giant step of mission driven business towards the mainstream."
"Benefit corporation legislation is critical to creating a more just and environmentally responsible business climate, so we rushed our own incorporation process to be in Sacramento today," said Sandra Stewart, principal of Thinkshift Communications. "It's what people are demanding. It's not just a trend—ingraining values into a legal corporate structure is key to a sustainable future."
CONTACT: Dan Okenfuss, (916) 319-2006
