In mid December a groundbreaking law was quietly approved in Albany, NY. Not even a month later the same exciting law went into effect in Sacramento, CA, with people in line to sign up. So what could this new innovative law be? It is the beginning of a new era in responsible companies! Both California and New York were the first to enact a law that would include conscious corporations as a type of business. Not only will these new laws benefit the corporations who are certified, but society.
Companies who will be classified as “Benefit Corporations” will be held accountable for how their business impact the environment, their workers, and their community. They will be required to publicly publish environmental and social performance which will be monitored by third parties. Basically, this is going to provide a new frontier of transparency for the consumer and a new era of corporate responsibility. The New York law was largely written and sponsored by B-Corp, which has spearheaded the idea of the benefit corporation for a while now. Their co-founder, Andrew Kassay, urged the importance of this law taking effect, “The benefit corporation bill will unlock billions of dollars in impact investment capital and enable entrepreneurs across [NY] to start businesses that solve some of society’s greatest challenges.”
The real question is, will corporations and businesses make this move? Will they want to become a Benefit Corp? It seems likely, especially in the wake of California’s inauguration of the bill. Classification of Benefit Corporation began on January 3rd, 2012, with twelve eager companies ready to sign up! The first and possibly the largest to sign up was the clothing company, Patagonia, which has long lead the way in environmental outdoor clothing. They had championed the bill and wanted to show their support by being the first company to file in 2012. Founder and CEO, Yvon Chouinard, released a statement about the historic day: “Patagonia is trying to build a company that could last 100 years. 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.” Some other companies who signed up this year were Give Something Back Office Supplies, Green Retirement Plans, and Thinkshift Communication to name a few.
Major corporations such as Patagonia and smaller green/socially conscious businesses signing up means good news for the consumer and new Benefit Corporation classification. This could also mean good news for states like NY and CA who adopt this legislation. With the economy causing businesses to flee these states due to high taxes, bureaucracy, and expensive property, this could be a useful for drawing in new business or keeping other socially conscious businesses in state.
A new way of business has begun and we are happy to see it happen. Even better news, in both NY and CA, the bills were able to pass without much object. This means the political and social climate is accepting of transparent business tactics and changes like these could take hold in other states. Now if only more states could come on board, Benefit corporations could flourish in our nation.