Benefit Corporations Protect Family Businesses

Robert Girling Ph.D.

Rohnert Park, CA - In the last decade a number of family owned, mission driven companies have had to sell to large corporations. The juice-maker Odwalla’s Web site advertises it as “earth-friendly” and as “a business with a heart” but nowhere on the site will you find the information that it is a wholly-owned subsidiary of Coca-Cola.The Body Shop, a pioneer, earth-friendly company, was bought by L’Oreal in 2006. The cereal maker Kashi was bought in 2000 by Kellogg and granola-maker Back to Nature and Boca Burger are subsidiaries of Kraft.

Family owned businesses are often caught in a difficult dilemma: how can they access financing without  the loss of their mission based values.  Sometimes a sale of part of the business can give the mission-driven entrepreneur capital and logistical support to grow the business while retaining the company’s original values and practices. But in other situations the clash of corporate culture can be overwhelming, and the worry is that gradually the mission will erode in favor of a focus purely on profit.

To date there has been no other option than to sell. Now there is: AB361 the Benefit Corporation bill introduced by Assembly member Jared Huffman, and signed into law by the Governor on January 1, 2012. The law answers the need a for new form of incorporation  that lets California businesses balance the pursuit of corporate profits with environmental and social goals. The exclusive focus on profit maximization of large corporations has produced the current economic downturn and continued environmental degradation.

Any company can become a Benefit Corporation under AB361 and protect its values, its employees, the environment and the community.

AB 361 authorizes the formation and governance of a new form of corporate entity known as a Benefit Corporation. It is a corporate form that allows business leaders, shareholders, and employees to include environmental stewardship and community development as part of their company’s mission.

Assembly member Jared Huffman, the bill’s sponsor as well as attorneys who helped to write the legislation and representative Benefit Corporations will take part in the 7th Annual Sustainable Enterprise Conference  to be held on May 11 at Sonoma Mountain Village in Rohnert Park. The attorneys, Jonathan S. Storper and Donald Simon, will explain how to become a benefit corporations and why the new law is so critical for sustainable enterprises. Learn more about the conference program at http://sustainableenterpriseconference.com.

The Sustainable Enterprise Conference is jointly presented by Sonoma State University, the Presidio Graduate School and Dominican University of California’s Green MBA to educate the public about how to create an economically resilient, environmentally sensitive and socially just North Bay economy.  

Robert Girling, Ph.D.
Professor, School of Business and Economics, Sonoma State University