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18 Companies Register as Benefit Corporations Under New California Law

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Solar panels shade cars in the parking lot of Patagonia's corporate headquarters in Ventura, Calif.
Solar panels shade cars in the parking lot of Patagonia's corporate headquarters in Ventura, Calif.

Ventura-based Patagonia this week was the first to register as a Benefit Corporation under a new 2012 California law. Alex Goldmark at GOOD nicely described the scene on Tuesday: "When the California Secretary of State's office opened its doors this morning, there stood a band of smiling millionaires..."

Goldmark explained that "A company that files as a Benefit Corporation, as opposed to an LLC, C Corp, or other existing type of company, must consider the impact of business decisions on the environment, employees, and the community as well as the financial return to shareholders."

Patagonia CEO Yvon Chouinard told the Ventura County Star that the law is "going to separate out the green washers."

In all, 18 companies registered.

As explained by the LA Times, "California corporate law historically mandated that the interests of shareholders be paramount to those of all other parties in all circumstances," but this law will legally shield corporate officers from shareholder lawsuits "who contend that company's environmental or social policies diluted the value of their stock."

"This is California at its best, showing there is a way to create jobs and grow the economy while raising the bar for social and environmental responsibility," said Assemblymember Jared Huffman, who introduced the legislation in a press release.

Photo by nicolas.boullosa, used under a Creative Commons License.

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