“I hope that five years from now, ten years from now, we’ll look back and say this was the start of the revolution. The existing paradigm isn’t working anymore—this is the future.”

Those were Patagonia founder and CEO Yvon Chouinard’s closing words as he led a parade of companies up the steps of the Secretary of State’s office this morning to become California’s first benefit corporations. He captured the spirit of the moment perfectly—many of us got up long before dawn to be in Sacramento when the office opened so that we could become benefit corporations at the first possible moment. (What’s a benefit corporation? See this previous post.)

For Thinkshift, and I think for the other newly minted benefit corporations as well (Give Something Back Office Supplies, Dharma Merchant Services, Sun Light & Power, Opticos Design and many others), it felt like we took a significant first step in support of the kind of business culture that can build a sustainable, responsible and vibrant economy.

B Lab co-founder Jay Coen Gilbert, whose organization has been leading the push for benefit corporation legislation across the country, described California’s law as the “most rigorous” yet and “on its way to becoming the most used.”

Why is this important? Benefit corporation status ensures that mission-oriented buisnesses can honor their social and environmental commitments as they grow (and take on investors) without fear of shareholder lawsuits. Chouinard compared it to a conservation easement on a property. “It’s a conservation easement on a business, and I’m pretty excited about that,” he said. It also gives clients and customers a way to separate companies that are walking sustainability from those that are just talking it.

We’re a bit dazed here in the Thinkshift studios, since we also just became a corporation (moving up from a partnership) in conjunction with becoming a benefit corporation (benefit status relates to governance; we also needed to elect a standard corporate structure). The fact that we were able to do it all, in less than a month and over the holidays, is thanks to our lawyer Donald Simon of Wendel Rosen Black & Dean, who helped write the benefit corporation law and is a rock star.

A great start to 2012!
 

The California benefit corporation bill, AB 361, has passed through both houses of the state Legislature and is now on Governor Jerry Brown’s desk. He has 12 days to sign or veto it.

As I said in my previous post on this groundbreaking bill, AB 361 is important because as sustainable businesses grow, they often find themselves under pressure from investors to back off on elements of their mission, and if they go public, the fear of shareholder lawsuits may compel them to take actions that compromise their sustainability orientation, such as accepting a buyout offer from a suitor that doesn’t share their commitments. AB 361 has three key components that address this issue:

• Businesses that choose to incorporate as benefit corporations must include as part of their mission creating a material positive impact on society and the environment.
• The fiduciary duty for benefit corporations includes considering public benefits when making decisions.
• Benefit corporations must report annually on their overall social and environmental performance using recognized third-party standards.

What would that mean, ultimately? Assemblymember Jared Huffman (D-San Rafael), who introduced the bill, put it this way:

“Socially responsible businesses, investors and consumers all over California are calling for this type of legislation. They believe this bill is the start of something transformational, that it embodies their forward thinking and entrepreneurship. But most importantly, this bill sends a message to socially minded companies and entrepreneurs that California is open for this emerging form of business.”

Thinkshift has written to the governor urging him to sign the bill. Want to send a message yourself? Get contact info and a sample letter on the Green Chamber of Commerce website.