Thinkshift Joins Patagonia and Other Sustainability Leaders in Becoming California’s First Benefit Corporations

“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!
 

California Gets Benefit Corporations

Sunday marked a real milestone for sustainable business: California Governor Jerry Brown signed AB 361, making benefit corporations a legal form in the nation’s largest economy.

Rather than repeating my previous post, I’ll give the bill’s author, Assemblymember Jared Huffman (D-San Rafael), the floor.

Under AB 361, he noted in announcing the signing, “businesses can choose to incorporate as benefit corporations and enjoy these significant advantages:

  • Greater access to social impact and venture capital investments;
  • Legal protection for directors and officers in their more broadly defined fiduciary roles of maximizing profits as well as ensuring social and environmental considerations; and
  • Marketing opportunities that will allow consumers to distinguish, in a very real and ascertainable fashion, between a business that claims to be socially responsible, and one that is responsible.”

What’s not to like? And there’s another aspect of this that doesn’t get enough attention: As B Lab co-founder Jay Coen Gilbert told the Los Angeles Times, traditional corporations “have one fiduciary duty: to maximize value to shareholders even if that comes at the expense of workers or the community or the environment. It’s a system that’s set up to externalize costs to society.” In other words, when corporate decisions cause environmental and social harms, the rest of us are on the hook to clean up the mess. Benefit corporations, though voluntary, are one important step toward changing all that.

Thinkshift was thrilled to support this bill, in our own name and through our work with the Green Chamber of Commerce.

Sustainability gains from gaming

The Business Council on Climate Change presented a program last week on how games are inspiring ways to get people on board with sustainable behavior change. The presenters, from Blue Shield, Sabre Holdings, SunPower and RideSpring, all had great stories to tell about how their interactive contests are inspiring people to increase their environmental efforts, get healthier, carpool more, or boost their store of knowledge about solar power.

Goals for these programs vary: improve employee and customer health (Blue Shield), boost employees’ sustainability behavior and knowledge (Sabre), increase market awareness and sales (SunPower), and expand knowledge and use of alternative transit and ridesharing among commuters (RideShare). (More info and links to programs are at the BC3 site.)

The experiences of all four reinforce what research has been telling us all along about getting people to act more responsibly in all kinds of arenas.

Make it relevant. Sabre’s Leilani Latimer noted that employees didn’t care about environmental actions at home—they wanted to know what they could do at work. Blue Shield’s Bryce Williams had similar experiences with his program.

Don’t chastise. Admonishing people for bad behavior or not fulfilling a goal almost never gets results, at least in the long term.

Go team. Competition gets intense in the Sabre and Blue Shield programs, in which participant teams compete by performing environmentally friendly or healthy behaviors. The actions are recorded and tracked online.

Peer pressure works, even if you’re not in high school. Team members pulled their own weight, and everyone reported that knowing what everyone else was doing meant people weren’t likely to cheat. Several people noted that fame—for instance, seeing your name in a company e-mail announcing winners—is a motivator.

Prizes work (if they’re coveted). Paul McGrath of RideSpring swore by regular prizes (his programs provide them via random drawings), as long as they’re good ones.

Prizes don’t work (if they’re eh). Sabre’s program offers prizes to workgroups, but they’re so small that they’re not the main motivator, said Latimer.

Make it easy. No one will do anything if it’s too complicated, time consuming or difficult. All these programs feature easy online access and simple steps.

California Considers Benefit Corporations

Sustainability-oriented businesses based in California may soon be able to choose a corporate form that bakes their social and environmental commitments into their legal business structure.

AB 361, introduced by North Bay Assemblymember Jared Huffman, would establish benefit corporations as a legal corporate form. The bill is scheduled for a hearing August 15 in the state Senate Appropriations Committee—its last stop before a floor vote and, if all goes well, the governor’s desk.

The bill is sponsored by B Lab, the certifier of B Corporations. If it passes and Gov. Jerry Brown signs it, AB 361 will be a milestone in B Lab’s campaign to establish the benefit corporation as a recognized legal form in all 50 states. Several states have already passed benefit corporation legislation, but given California’s size and influence, a win here would be huge.

Some people wonder why this is necessary—can’t businesses just contribute to the public good as much as they want to? Not always. As they grow, businesses that pursue social and environmental results as well as profits 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. (See this New York Times piece for cautionary tales and more on B Corporations.)

AB 361 gives businesses a way to protect their mission. It provides legal recognition for businesses that adopt higher standards of corporate purpose, accountability, and transparency—and assures that the designation means something by requiring benefit corporations to publish an annual Benefit Report following recognized third-party standards for defining, reporting, and assessing social and environmental performance. It allows directors and officers to safely consider the nonfinancial interests of the workforce, community, and environment when making decisions. Overall, B Lab says, it creates “a platform for innovative entrepreneurs to build great companies that generate high-quality jobs and economic development for communities.”

Who wouldn’t want that?

Express your support to Assemblymember Huffman. Read the bill and track its progress here (bonus: you’ll get a time-machine view of the web as it was in the beginning).

Motivation and Green Marketing: We’ve Got It Half Right

A friend recently alerted me to this great video presentation about motivation based on a presentation by Daniel Pink, whose new book is Drive: The Surprising Truth About What Motivates Us. It got me thinking about how we make assumptions when we’re communicating about sustainability and marketing green initiatives.

Pink points out that research on what motivates people to excel at their work flies in the face of common assumptions when the work involves cognitive skill and critical thinking. Monetary rewards actually backfire; studies show that motivation comes from self-direction, mastery, and  making a contribution. I’d like to see more about motivation where sustainability initiatives are concerned. I hear anecdotes that “doing the right thing” isn’t enough to get people to act. Research I’ve seen about energy conservation behavior shows that’s true. But we don’t know enough about what does make people conduct their business in sustainable ways. It’s always assumed that the clincher always has something to do with money (you’ll save it or spend less) or effort (it’s easier) or competition (looking better than your neighbor).

It’s not that simple. In my work I’ve recently seen how sustainability goals unite employees and inspire them to go the extra mile. I also see customers making the green/sustainable choice because it’s the right thing to do. In both cases, these groups are active advocates. What can we learn about the other two factors, mastery and self-direction, that will help us market more effectively and change behavior—and bring about lasting results that will make a dent in climate change?

So I’m off to find a copy of Drive at the library. (And forgive me if this sounds like an ad for the book, which was published in December.) I’ll report back.

One last note: The video is incredibly creative—an artist draws cartoon illustrations on a whiteboard in time with Pink’s talk. It’s a production of RSA, the Royal Society for the encouragement of Arts, Manufactures and Commerce. RSA are brilliant (they’re British so I can say it like that), and so fun, progressive and insightful that you’d never guess the organization is 250 years old.