Over the weekend, Governor Brown signed two important pieces of legislation that will help to advance socially and environmentally responsible businesses in the state: AB 361 and AB 913.
AB 361: Benefit Corporations
With AB 361, California joins a growing list of states that now recognize Benefit Corporations. The bill was introduced by Assemblymember Jared Huffman and creates a “new, entirely voluntary type of corporate entity to let California businesses balance the pursuit of corporate profits with environmental and social goals.” Under current state law, corporations are required to prioritize profit and financial interests. Benefit corporations are different in that they allow corporations to give equal consideration to social and environmental interests instead of just to financial profit. This is a significant step that gives triple bottom line businesses legal recognition in California.
AB 913: California Green Business Program
AB 913 requires the Depart of Toxic Substances Control to establish a California Green Business Program. Under the Hazardous Waste Source Reduction and Management Review Act of 1989, the Department of Toxic Substances Control (DTSC) is already required to establish a program for hazardous waste reduction. AB 913 requires that, as part of implementing its source reduction program, the DTSC develop:
“A California Green Business Program that provides for the voluntary certification of businesses that adopt environmentally preferable business practices, including but not limited to, increased energy efficiency, reduced greenhouse gas emissions, promotion of water conservation, and reduced waste generation.”
Green and Sustainable Businesses: Onward and Upward!
Taken together, these two pieces of legislation can have a significant impact on businesses that want to incorporate the triple bottom line into their business practices. AB 913 will provide additional resources to the many small businesses in the state that want to go green but may need guidance and support in order to do so. AB 361 will give corporations that are ready to adopt a new corporate form that better reflects their social and environmental mission an option for legally doing so. Both the creation of a statewide Green Business Program and the new Benefit Corporation entity will also help consumers to distinguish between businesses that make green claims versus those that either meet green business certification standards and/or incorporate social and environmental interests into their legal framework. It should also be noted that both Benefit Corporation status and Green Business Certification are entirely voluntary.