California Benefit Corporation and Green Business Legislation

A couple of years ago, 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 joined a growing list of states that now recognize Benefit Corporations. The bill was introduced by Assemblymember Jared Huffman and created a “new, entirely voluntary type of corporate entity to let California businesses balance the pursuit of corporate profits with environmental and social goals.” Previously, corporations were 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 was a significant step that gave triple bottom line businesses legal recognition in California.

AB 913: California Green Business Program

AB 913 required 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) was already required to establish a program for hazardous waste reduction. AB 913 required 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 have had a significant impact on businesses that want to incorporate the triple bottom line into their business practices.

AB 913 provided additional resources to the many small businesses in the state that wanted to go green but needed guidance and support in order to do so.

AB 361 gave corporations that were ready to adopt a new corporate form to better reflect their social and environmental mission an option for legally doing so.

Both the creation of a statewide Green Business Program and the Benefit Corporation entity also help consumers to distinguish between businesses that make green claims versus those that are actually meeting objective, third-party standards for sustainability.




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  1. […] 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. California Passes Benefit Corporation and Green Business Legislation! | Small Business Green, Sustai… […]

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