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BENEFIT CORPORATIONS

On January 3, 2012, California became the latest state to pass benefit corporation legislation (AB 361).  Maryland, Vermont, Hawaii, Virginia and New Jersey have already passed legislation, while New York, Colorado, Michigan, Pennsylvania and North Carolina have pending bills.

These laws allow companies to register as a B Corp rather than an LLC, C Corp, etc. with stipulations as to their corporate behavior — they are no longer only responsible for a successful financial bottom line; they must take a more holistic view to their role in the world.

CA Corporations Code Section 14600-14604 states "A benefit corporation is one that includes a specific or general public benefit purpose that it sets forth in its articles of incorporation." This means that such a corporation does not have only profit as its purpose, but that in the conduct of its business it also creates public benefit. Examples of these are preserving the environment, improving human health and promoting economic opportunity for individuals and communities beyond the creation of jobs in the ordinary course of business.

As more and more people are demanding transparency, companies will be well advised to consider incorporating or re-incorporating as a B Corp.  If you own a company considering a form of third party certification for sustainability, you can take a free B Impact Assessment at http://b-lab.force.com/GIIRS/BCorpRegistration.

According to B Lab, the organization driving the push, "Benefit Corporation is a new class of corporation that 1) has a corporate purpose to create a material positive impact on society and the environment; 2) redefines fiduciary duty to require consideration of non-financial interests when making decisions; and 3) reports on its overall social and environmental performance using recognized third party standards.”

That's a far cry from the existing laws for corporate behavior. As Bloomberg attests, “Under current law, shareholders can sue corporate boards for not maximizing profits, a risk that hamstrings companies interested in pursuing costly environmental or social initiatives.”

Social responsibility has gained a footing in the business world over the past decade as many firms have found success in pursuing a triple bottom line (people, planet, profit).

Twelve companies were in line to register when the California Secretary of State's office opened on the first day of eligibility: DopeHut, Dharma Merchant Services, Give Something Back Office Supplies, Green Retirement Plans, Patagonia, Rimon Law, Scientific Certification Systems, Solar Works, Sun Light & Power, Terrassure Sustainable Land & Resource Development, and Thinkshift Communications. All told, some 506 benefit corporations now exist in the U.S.

First in line was Yvon Chouinard, founder of Patagonia, who observed, “I hope that five years from now, 10 years from now, we’ll look back and say this was the start of the revolution. The existing paradigm isn’t working anymore — this is the future.... Patagonia is trying to build a company that could last 100 years. Benefit corporation legislation creates the legal framework to enable mission-driven companies like Patagonia to stay mission-driven through succession, capital raises, and even changes in ownership."

Along with the B Corp legislation, California also enacted a less restrictive option, the flexible purpose company or FlexC. This choice allows companies to pursue targeted social or environmental aims without being beholden to the entire slate of B Corp requirements. A third, similar choice available in some states is the L3C low-profit limited-liability company that splits the difference between nonprofit and for-profit.

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Building Operations and Occupant Behavior

By Kristen L. Victor, Legacy LEED AP

The next frontier in sustainable building will include  understanding the impacts of occupancy.  Designers strive to create energy-efficient buildings by controlling the physical features.  However, building operations and occupant behavior have to be addressed.  We are seeing technology tools to do just that beginning to emerge.

A recent study completed by Mark Frankel, Technical Director at the New Buildings Institute, has found occupant behavior can increase energy use by 80% over the predicted use based on anticipated behavior during the design process.  Post-construction impacts are, by nature, more likely to fall short from the anticipated outcome because the design community, energy modelers and energy code all tend to work from a best-case scenario when imaging maintenance and occupant activities.

Analyzing and addressing post-construction energy use patterns will become more widely recognized in the industry and there are likely to be significant changes to design practice, building codes and incentive programs.  In response, codes for better building operations will evolve to include commissioning, metering and feedback systems.

Disclosure ordinances are now being adopted around the country, which bring an intense, market-based focus on the issues driving building energy performance.  The design and building communities are beginning to align their priorities with the building features and operational characteristics having the most impact on building energy use outcome.

For further information regarding this study please visit newbuildings.org.

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