By Risa De Ferrari, Green Chamber of Commerce
Certified Benefit Corporations and B Corps are a new classification of business joining the ranks of certifications such as: sole proprietorships, standard incorporations (C Corps or S Corps), and limited liability corporations (LLCs) to name a few. Benefit Corporations are unique in that they build upon the legal framework of an organization the opportunity to legally consider the impact decisions will have on the triple bottom line: business, society, and the environment. This differs from current corporate structures, which legally restrict the focus of the company to maximizing shareholder value. Benefit Corporations facilitate this triple-bottom-line mission by aiding organizations in reframing their usual business practices by incorporating commitments to greater accountability, transparency, sustainable business practices, and socially responsible initiatives into the bylaws of the company.
There are many long-term potential benefits to becoming a B Corp certified organization. For starters, the certification may lead to uncovering opportunities for cost savings in waste, water, and energy. In relation, the sustainable & clean tech business sectors are the only area of the economy growing consistently and a major incentive for this kind of certification is to attract more of the billions of dollars that are being invested, which has the added benefit of promoting job creation. As companies become B Corp certified through B Lab (an independent third-party verification) for their sustainable practices, major investment can be attracted because sustainable and clean tech investors are using the B Corp status recognition as a way to vet companies to invest in.
Additionally, as more states legally recognize B Corp certifications there is potential for creating tax incentives. Philadelphia is the first city in the nation to create a pilot tax incentive program for certified B Corps and if it proves successful, other cities and states may follow. Ultimately, the B Corp certification will provide an avenue for aligning employee, community, and corporate values, and uphold these commitments in the case of a merger/acquisition and when seeking investment; in this way the holistic mission of the company will remain intact.
Today, we stand on the brink of a sweeping movement for B Corporations across the US that represents a vital step in transforming the commerce of today into the thriving green economy of tomorrow. States throughout the country including Virginia, Maryland, Vermont, and New Jersey, have already successfully passed Benefit Corporation legislation into law. Additionally, a number of other states including Colorado, Hawaii, New York, North Carolina, Pennsylvania, and Michigan introduced and hope to pass forthcoming Benefit Corporation legislation into law by the end of this year. We’re excited that California is one of them.
The California Benefit Corporation bill AB 361, introduced by Marin County, California Assemblymember Jared Huffman in February of this year, has had a great deal of attention and support from its beginning. Major support from organizations such as: the American Sustainable Business Council, Green America, the Green Chamber of Commerce, Silicon Valley Leadership Group, Social Venture Network, and the US Green Business Council, in addition to the passage of B Corp laws in other states previous to California have made for a very convincing argument. AB 361 sailed past the first round of state assembly committee hearings, recently passed through the State Assembly itself, and is now expected to go to the state senate for review before going before California State Governor Jerry Brown.
For California, AB 361 represents a major tipping point in the US economy and may one day redefine what it means to do business as usual in this country. As Adam Lowry, Co-Founder and Chief Greenskeeper of Method Inc., a rapidly developing consumer products company based in San Francisco put it, “Benefit Corporations represent the corporate model of the future, and AB 361 will allow California to establish leadership in developing this new economy.”
AB 361 has only taken its first few steps in the long walk to the final vote in November but the amount of enthusiasm and support shown at this early stage demonstrates that the timing is right for this transformational bill to pass into law.
Written by Risa De Ferrari, an intern for the Green Chamber of Commerce with review by Alexia Marcous, Vice President of the Board of Directors for the Green Chamber of Commerce
This post originally appeared in American Sustainable Business Council‘s Blog
