Patagonia first in California to register as benefit corporation
US outdoor brand Patagonia has become the first company in California to elect benefit corporation status. Company founder Yvon Chouinard was among a group of business CEOs to register on the legislation’s first effective date among the seven US states that have passed benefit corporation laws.
“After the ‘year of the protester’, it’s inspiring that a group of business leaders are taking action to create a positive alternative,” said Jay Coen Gilbert, co founder of B Lab, a non-profit organisation that supported the legislation.
Benefit corporations are a new kind of corporation legally required to: 1) have a corporate purpose to create a material positive impact on society and the environment; 2) redefine fiduciary duty to require consideration of the interests of workers, community and the environment; and 3) publicly report annually on its overall social and environmental performance using a comprehensive, credible, independent, and transparent third party standard. Current law requires corporations to prioritise the financial interests of shareholders over the interests of workers, communities, and the environment.
“Patagonia is trying to build a company that could last 100 years,” said Patagonia founder Yvon Chouinard. “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, by institutionalising the values, culture, processes, and high standards put in place by founding entrepreneurs.”
New York, New Jersey, Virginia, and Hawaii passed similar legislation in 2011, joining Vermont and Maryland who did so in spring 2010. Benefit corporation legislation has also been introduced in Michigan, Pennsylvania, North Carolina, and the District of Columbia. Legislation has received strong support in every state.
The California bill had significant business support, including that of more than 200 individual California businesses, 12 business associations, including the Silicon Valley Leadership Group and the US Green Building Council.
