New socially responsible corporate structure made possible by new laws in US states

[Sheila]

The sustainable boardroom

Santa Rosa Press Democrat
by Cathy Bussewitz
25 Aug 11


A bill that would allow companies to incorporate in a way that demonstrates their commitment to social and environmental goals is close to passage in the Legislature.

The bill, AB 361 by Assemblyman Jared Huffman, D-San Rafael, would create a new class of companies called “Benefit Corporations.” Companies under the umbrella could focus on implementing social and environmental ideals, in addition to generating a profit.

Each company would be required to create an annual report on its positive impacts on society and the environment.

“Many companies want to do more for social responsibility, for the environment, but they don't want to get sued for their decisions,” Huffman said.

Under current law, California companies exist to conduct business in a manner that maximizes shareholder value. Companies that make decisions to prioritize environmental or social values over profit are at risk of lawsuits from shareholders.

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The bill was modeled after similar legislation in Hawaii, Maryland, New Jersey, New York, Vermont and Virginia….


http://www.pressdemocrat.com/article...NESS/110829718

[Sheila]

Op-ed piece by California Assemblyman

Santa Rosa Press Democrat
by Jared Huffman, Assemblyman
25 Aug 11

We are at the cusp of major positive change in corporate governance and corporate responsibility in California.

Behind us is the old way, the only way corporations in California and most other states have operated: Start a business and try to maximize profits for shareholders. Under this model, any notion of broad corporate social responsibility is subordinated — and legally trumped — by a fiduciary duty to make as much money as possible.

In front of us is a new way: Start a business and do more than just maximize profits. Make positive contributions to the community, improve the environment and show a commitment to your employees and customers.

In states that provide legal support for this new model of corporate governance, corporate social responsibility actually means something — and companies that choose to embrace it will be able to do good and do well. Socially minded entrepreneurs and business leaders will have a corporate form that reflects their values.

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Unlike existing corporate structures in California that must focus on maximizing profits at the exclusion of other socially advantageous and desirable benefits, this new class of corporation would be required to create a material positive impact on society and the environment, and in so doing, would need to meet higher standards of accountability and transparency.

Hawaii, Maryland, New Jersey, New York, Vermont and Virginia have passed benefit corporation laws. More states, including Michigan, Pennsylvania and North Carolina, are considering similar legislation.

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Already, 214 California businesses are voluntarily — and at some legal risk — meeting the standards of a benefit corporation. Even with the current restrictive corporate governance laws, California leads the nation in clean technology investment and businesses creating green jobs. It is reasonable to expect that hundreds - perhaps thousands - of California companies will choose to adopt this new corporate form, putting our state on the leading edge of corporate social responsibility.


http://www.pressdemocrat.com/article...t-to-give-back