Since the dawn of corporate social responsibility, Patagonia has been it's pioneer and poster child. The company was founded on the principle that the business's bottom line was more than just monetary. As early as 1974, founder Yvon Chouinard published an essay in the Patagonia catalog urging climbers to be more conscious of their motives and to tread lightly on their climbing environments. Today, the company's mission is defined in terms that clearly reach beyond profit: "Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis."
Patagonia's history may explain why 72-year-old Chouinard was literally first in line at the California Secretary of State's Office on Tuesday to register the company as a Benefit Corporation, a new legal status for businesses. Legislation creating this new designation in the state of California passed into law back in October and came into effect at the start of the new year. The new legal structure provides businesses with a way to integrate considerations for social and environmental efforts more fully into their operations while also giving them legal protection from shareholders concerned solely with protecting their financial interests. Under the current corporate law, shareholders can sue company boards for using company money to pursue social or environmental issues in the name of maximizing profits.
By registering as a Benefit Corporation, a company is committing itself to:
On Tuesday, Chouinard was joined by dozens of small and midsize companies filing to become Benefit Corporations including DopeHut, Give Something Back Office Supplies, Scientific Certification Systems, Solar Works, Sun Light & Power, Terrassure Sustainable Land & Resource Development, and Thinkshift Communications. In order to adopt the designation, companies must get a two-thirds vote of approval from its shareholders.
The author of the legislation that created this new type of business, Assemblyman Jared Huffman, touted the law for creating a "platinum standard" of social responsibility that will also support the health of the state's economy. In a news conference outside the secretary of state's office he said, "There is a way to create jobs and grow the economy while raising the bar for social and environmental responsibility. With this new law, we are attracting new socially conscious companies, investors and consumers."
*** Kara Scharwath is a corporate social responsibility professional, marketing consultant and Sustainable Management MBA Candidate. She is currently working as a Graduate Associate in Corporate Citizenship at the Walt Disney Company while pursuing her degree at Presidio Graduate School. Follow her on Twitter @karameredith.
Kara is a corporate social responsibility professional and marketing consultant with expertise in consumer research and environmental science. Currently, Kara is working as a Graduate Associate on the <a href="http://corporate.disney.go.com/citizenship2010/">Corporate Citizenship</a> team at the Walt Disney Company. She is also a founding partner of <a href=http://besui.com/">BeSui Consulting</a>, a boutique marketing consulting firm specializing in consumer insights and marketing communications.
Kara graduated from Rutgers University with a B.S. in <a href="http://admissions.rutgers.edu/Academics/AcademicContent.aspx?CAMPUS=New… Policy, Institutions and Behaviors</a>. She is currently pursuing her M.B.A. in Sustainable Management from <a href'"http://www.presidioedu.org/">Presidio Graduate School</a> where she is exploring the impact investing space and working to identify new ways to increase access to capital for start-ups and social ventures. Follow her on Twitter <a href="http://twitter.com/karameredith">@karameredith</a>.