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Businesses seek California’s new ‘benefit corporation’ status
"There is a way to create jobs and grow the economy while raising the bar for social and environmental responsibility. With this new law, we are attracting new socially conscious companies, investors and consumers."
- ssemblyman Jared Huffman
On the first business day after a state law took effect, a dozen companies committed to social and environmental causes file papers to legally put those efforts on par with their goal of making profits.
Chief executives, led by Yvon Chouinard, founder of Patagonia Inc., a maker and seller of outdoor apparel and equipment, marched into the secretary of state's office in Sacramento shortly after it opened Tuesday morning.
It was the first business day they could register under a recently approved state law that gives companies a way to legally structure their businesses to consider social and environmental efforts as part of their missions.
While that may sound like marketing hype, it's important from a legal standpoint because it helps shield benefit corporations from lawsuits brought by shareholders who say that company do-gooding has diluted the value of their stock.
California's new category allows corporations to officially adopt policies "that create a material positive impact on society and the environment" as an integral part their legal charter. The Huffman legislation also expands the fiduciary duty of executives and board members to include the interests of workers and the community.