Benefit Corporations Show California What Good Business Looks Like

Written by Hannah Roeyer

Topics: Action, Give, Learn

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RAN applauds those businesses that have formalized their commitment to social and environmental sustainability by becoming California’s first benefit corporations. With the enactment of California Assembly Bill AB 361 on January 1st, California became the seventh state to legalize this new corporate framework enabling businesses to take social and environmental impacts into consideration in their operations and bottom lines.

For far too long, traditional legal structures have restricted the ability of corporations — no matter their intentions — to work for the public good, being accountable above all to the financial interests of their shareholders. Businesses who have chosen to incorporate under the new “B Corp” structure are instead required to embrace more than just profit as their sole goal, adhering to what is commonly known as a triple bottom line — considering people and the planet alongside profits.

Beyond simply being free to work towards benefits for all stakeholders, these corporations will actually be held accountable to their commitments via public reporting requirements subject to independent third party scrutiny. These stipulations help turn corporate social responsibility from a buzzword into a verifiable standard and a legal model for successful business.

You may know RAN best for our years of no-holds-barred campaigns against the most egregious corporate offenders, so it is especially sweet to have the chance to commend those businesses that have chosen to leave a legacy of progress rather than destruction. We have long been an advocate of business providing an alternative model. Our IMPACT program (formerly Business Friends of RAN) shines a spotlight on businesses that do well by doing good. IMPACT members make an invaluable contribution to RAN’s campaign work by providing a direct rejoinder to those corporations we target who argue that they have no alternative but to pursue profits by any means necessary.

We are especially proud of those friends of RAN like World Centric, a vocal proponent of B Corp legislation in California and a key supporter of RAN’s Climate Action Fund, an alternative carbon offset program and one branch of the IMPACT program. World Centric began as a nonprofit but has since become a values-driven business. Benefit corporation legislation will finally allow similarly structured businesses throughout the state to navigate that former no-man’s-land between the traditional non-profit and corporate worlds. Now that there is a legal pathway to do so in the nation’s largest state economy — not to mention the eight-largest economy in the world — we look forward to more businesses joining them and proving, by example, that businesses can and should be a positive force for change.

For more information about RAN’s IMPACT program and how to become involved, contact Hannah at hannah at ran dot org.

1 Comment For This Post I'd Love to Hear Yours!

  1. Hannah, Just a quick note of gratitude for writing such a nice and thoughtful piece about the passage of benefit corporation legislation in California and its importance. There are lots of organizations like RAN that have been working on these issues for longer than B Lab has been in existence and we know we wouldn’t have the opportunity to serve without your service. Thank you and RAN. Best, Jay

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