Interview with Green Chamber Member law firm Wendel, Rosen, Black & Dean LLP
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The Green Chamber sat down with Donald Simon, a longtime environmental advocate and partner at the Oakland based law firm of Wendel,Rosen, Black & Dean LLP to have an in-depth discussion about one of the most significant pieces of sustainable business legislation to hit the California coast; AB 361, California’s Benefit Corporation legislation. This landmark [...]
The Green Chamber sat down with Donald Simon, a longtime environmental advocate and partner at the Oakland based law firm of Wendel,Rosen, Black & Dean LLP to have an in-depth discussion about one of the most significant pieces of sustainable business legislation to hit the California coast; AB 361, California’s Benefit Corporation legislation.
This landmark legislation, which was signed into law on October 9 by Governor Jerry Brown and will go into effect January 3, 2012, will make the Benefit Corporation a legally recognized and protected form of incorporation available to California companies. This new corporate structure allows businesses that are incorporated as a Benefit Corporation to pursue a material positive impact on the environment and community in addition to maximizing profits.
Donald Simon was a member of the legal working group that drafted and promoted the passage of AB 361 and is extremely knowledgeable when it comes to the details and impact of Benefit Corporations. Read on to learn more about the legal implications, how this new law will impact businesses, and what Simon sees as the next steps for Benefit Corporations both here in California, as well as the rest of the country.
GCC: Can you describe how you see the passage of AB 361 changing legal implications for sustainable business and business as a whole?
DS: Under existing California law, corporate officers and directors have a fiduciary duty to maximize profits. The law does not support their consideration of environmental and social factors, so anytime they put those interests ahead of even short-term profits, they risk liability to a disgruntled shareholder. As a result, companies sometimes sacrifice socially and environmentally responsible decisions for the fastest profit generating approach, which usually burns the most resources at the fastest rate.
AB 361 provides greater freedom and responsibility to companies that choose to become Benefit Corporations. They are required to consider broader societal and environmental impacts, as well as profits, and they have the freedom to prioritize whichever consideration they believe to be in the best interest of the company. Most importantly, they can operate the Benefit Corporation as a true triple-bottom line enterprise without fear of liability. Indelible
GCC: Has there been any confusion about the Benefit Corporation law?
DS: A bit. Some people have confused B Corp certification with being a Benefit Corporation. Although the names are similar they are very different. B Corp is certification label available to companies whose triple bottom line performance has been certified by the non-profit group B Lab, similar to having a LEED certified building. Benefit Corporation is an alternative form of corporation that is now recognized by California law and governed by different rules than those that govern traditional corporations. Although they are similar, a business can be one without being the other.
There has also been some confusion about the third-party standard requirements. AB 361 promotes transparency by requiring Benefit Corporations to quantify their triple-bottom line performance each year using an independent and comprehensive third-party standard and to publish the results on their website. Some people thought this meant that the third-party standard provider must certify the results, but that’s incorrect. The Benefit Corporation can perform the assessment itself. No certification is required. Benefit Corporations are free to hire consultants to perform the assessment or to have the results certified, such as becoming a certified B Corporation, but neither is required.
Businesses should also know that there are an ever-increasing number of third-party standards that meet these criteria, including, : The Global Reporting Initiative (GRI), GreenSeal, Underwriters Laboratories (UL), ISO2600, Green America, and the B Lab Impact Assessment tool.
GCC: Why do you feel Wendel Rosen Black & Dean has taken such an active approach in becoming a certified Green Business and most recently a certified B Corp?
DS: From our founding over one hundred years ago, Wendel Rosen has always been engaged in the community. We are a part of our community and have long had a culture of giving back, which has taken various forms over the years. Green business holds the greatest promise for changing the paradigm of how society interacts with the environment, both locally and globally. Attorneys are often leaders, and we realized early on that we needed to set an example and help lead the green business movement forward in a strategic and effective manner. That is why in July 2003, we became the first law firm in the country to gain third-party certification as a “Green Business”, and became a certified B Corporation in 2010. Truly, it felt natural to act as champions in this space, demonstrating our commitment by putting a flag in the ground and lending our legal expertise since day one.
Thankfully, we aren’t alone. Firms like Hansen Bridget LLP and Montgomery & Hanson LLP are right there with us. Two attorneys from those firms, Jonathan Storper and John Montgomery, were my co-chairs on the Benefit Corporation Legal Working Group. We were the “Three Musketeers” and it was a joy to work with them. We believe at Wendel Rosen, the more the merrier!
Believe it or not, California has some of the most archaic and conservative corporate laws in the nation. Benefit Corporations represent a big shift, and it was a struggle. But we overcame and prevailed because of the support from green business devotees and organizations like the Green Chamber, who lent their voice and showed up at public hearings to demonstrate the importance of this new corporate form.
GCC: With, the passage of Benefit Corporation laws in six states and more on the way, what do you see as the most important next steps for Benefit Corporations in California and across the United States?
DS: Benefit Corporations are the next evolution of business; bringing us all one step closer toward a positive vision of what businesses can be and should be. I keep thinking of the famous line in the movie Field of Dreams: “If you build it, they will come.” Well, we’ve built it. We succeeded in creating the Benefit Corporation. But that’s meaningless unless businesses “come” by organizing or re-organizing as a Benefit Corporation. That’s what will create the buzz and momentum that drives other companies to follow suit, and that’s how we’ll eventually change business as usual in this country so that these commonsense values are part of every corporation’s behavior.
Unlike other leaps forward, this one doesn’t require sacrifice. Being a Benefit Corporation will make businesses more attractive to consumers and investors. Their success will cause others to follow, and it’s through that “win-win” that we’ll drive real and permanent change.
While we encourage companies to become Benefit Corporations, the battle will be to continue to introduce and pass similar legislation in all 50 states, especially in Delaware where the majority of major corporations incorporate.
Upcoming Event: Wendel Rosen and the Green Chamber of Commerce will be co-hosting an event at Wendel Rosen’s Oakland office conference space on Wednesday, December 7 to discuss Benefit Corporations and introduce further information and details regarding becoming a Benefit Corporation. Sign up today