In June of this year, Hawaii became the fifth state to pass a law defining credentials local companies must go through to earn a certification as a “green business,” following New Jersey, Virginia, Maryland, and Vermont. Hawaii’s law is known as the Sustainable Business Corporation. This law will really help companies here commit to going green. Recently, I went to a talk by Trevor Asam, of Cades Schutte, a local law firm that helped get the legislation passed.
Asam said that the passing of this bill was largely credited to those environmental activists who came before the new generation of green businesspeople. For some context, he also cited the problem of the Sustainable Forestry Initiative (SFI), which spurred demand for for good metrics in reporting.
SFI is an industry backed “eco-label” with fuzzy and non-transparent standards about what the certification actually measures. Further, the group has been accused of certifying plots that had been clearcut, old growth harvest, riparian harvest, and other unsustainable practices. SFI came about right after a bunch of activists helped create the Forest Stewardship Council (FSC). FSC is a much more rigorous standard, and Asam pointed out that if you were one of the first few companies that jumped on board with an FSC label, you got shafted, to some degree, at least in terms of payoff, because SFI went out and confused the public about what sustainable forestry meant. Those companies didn’t get the marketing benefit of an ecolabel because the situation got muddied quickly, and consumers, at least at the beginning, didn’t know the difference.
The law in Hawaii will eventually turn into a process for issuing tax breaks to companies exhibiting a public benefit. Sustainable business corporations must meet the following criteria:
- A demonstrable, material public benefit. A measurable, tangible benefit to the broader community.
- Companies applying must appoint a benefit director.
- The company must measure its progress and publish a report about how its public benefit is doing against an industry standard, and this needs to be transparent. To clarify, Asam said, you don’t actually need to be doing well, you just have to make the commitment and be public about it.
In essence, Hawaii now has a B-corporation status all its own. Some may suggest that B-lab is there to provide this guidance and certification to become a B-corp, but as one audience member suggested to Asam, B-lab is not really set up for startups, and the process is a bit overwhelming for them at times. Currently in Hawaii, there are only two companies that have sought the certifcation to become B-Lab certified B-Corporations: Natural Investments, and Deep Ecology Diving. Hawaii’s law is a good way to get the intent done without the same level of work.
Scott Cooney is the developer of a new Triple Bottom Line, Monopoly-esque board game, and the author of Build a Green Small Business (McGraw-Hill).