He outlined key points of the legislation, which was submitted by a number of his constituents. A few key points he noted:
- incorporating as a benefit corporation would be completely voluntary
- benefit corporations would be required to show material positive impact
- benefit corporations would be required to meet higher standards of accountability and transparency
- benefit corporations would create a way for consumers to contribute to social impact through their patronage
- the concept of stakeholders (including the environment, community) would expand on the fiduciary relationship that exists currently between corporations and shareholders to maximize profit.
- a version of the benefit corporation bill has already been passed in 6 states
- Ryan Williams of Method — a scientist at Method–a company that aims to do more than business as usual spoke about Method’s aim to improve the world we work in through supporting infrastructure changes such as AB 361.
- Don Shaffer — an investor and President & CEO of RSF Social Finance attested to the hundreds of millions of dollars that have been invested in B corporations and underlined the interest of investors in funding social enterprises.
- Donald Simon — an attorney and partner at Wendel Rosen Black & Dean and Co-Chair of the Legal Working Group & Founder of 2 environmental non-profit organizations pointed out the social entrepreneurial roots already tied to California and the need to update the arcane view of fiduciary duty in the state.
- John Montgomery — an attorney and Co-Founder of Montgomery & Hansen and Co-Chair of the Legal Working Group behind the bill noted that AB 361 would make California a leader in social enterprise.
- William Clark — attorney and partner in Drinker Giddle and Reath LLP who has been integral in formulating the model benefit corporation legislation that has been passed in 6 states. He mentioned that he and B Lab (the organization co-sponsoring the bill) have been working on California’s legislation for the past 2 years.
Did AB 361 pass?
After about an hour of testimony and answering of questions from Committee members, AB 361 went to vote. It was passed by the Senate Committee on Banking and Financial Institutions 5 (in favor) – 1 (against) – 1 (abstained).
It passed through the Committee.
What’s next for AB 361?
It is due in the California State Judiciary Committee next week where it will face a similar process of presentation, witness testimony, and questioning from Committee members.