Benefit Company Legislation Update
B.C. Greens introduce legislation to support companies pursuing environmental and social goals
For immediate release
April 10, 2019
VICTORIA, B.C. – The B.C. Green caucus introduced legislation today to provide a legal framework for B.C. businesses committed to pursuing social and environmental goals to incorporate as benefit companies under the Business Corporations Act.
If passed, the bill would become the first Private Member’s Bill from an opposition party to be passed directly into law in British Columbia.
“B.C. Greens are showing a path forward, both by supporting companies committed to pursuing a triple bottom line who choose to embed social responsibility and environmental sustainability right into their corporate DNA, and also by demonstrating yet another way a small caucus can offer leadership within a stable minority government,” said MLA Andrew Weaver, leader of the B.C. Green Party.
“B.C. is home to incredibly innovative companies that want to play a bigger role in addressing the challenges and opportunities we face – climate change, rapid changes in the nature of work, the gig economy, rapid technological advances, and growing income inequality,” said Weaver. “This legislation is part of positioning our province to be a leader on the cutting edge of global economic trends. We are seeing shifts in consumer patterns and behaviour, particularly among younger demographics sensitive to their social and environmental impact. By becoming the first jurisdiction in Canada to create benefit companies, B.C. can best position our economy for success.”
Government recognizes the impact B.C. businesses make in their communities, and has been supportive of the concept of benefit companies.
“I want to thank our partners in the Green Party Caucus for bringing this idea forward,” said Carole James, Minister of Finance. “Many B.C. businesses are leaders in building sustainable and socially responsible practices into their enterprises. We’ve worked closely with our minority government partners to create this opportunity for B.C. businesses to choose a new corporate structure that includes their social and environmental goals.”
The legislation amends the Business Corporations Act, and would enable companies to incorporate as a new type of company in B.C., a benefit company. Benefit companies would embed into their articles two commitments: operating in a responsible and sustainable manner, and pursuing specific public benefits. Directors of benefit companies would need to balance this broader mandate against their traditional duty to pursue the best interests of the corporation. Companies would also need to report their progress against an independent third-party standard. This legislation would ensure that mission-driven companies can stay true to their mission as they grow, and it would help them to attract capital by providing investors with certainty about the mandate of the company without being overly prescriptive with regards to how companies must spend profits.
“B.C. is already home to number of socially responsible companies,” said Weaver. “But government should do more to support those companies that want to create environmental and social value. More companies want to follow the leadership of the early adopters, so let’s give them the framework that will best support them as they take on this critical work.”
Catherine Warren, CEO, Vancouver Economic Commission-
“As Vancouverites and British Columbians, we are proud to be a hub for bold, mission-driven companies, so it comes as no surprise to us that B.C. could pass the first benefit company legislation in the country. Jobseekers, international businesses, and investors with common values come here to build on common ground. The Vancouver Economic Commission is focused on inclusive, resilient economic development and prosperity for all. We recognize that we can always do more – to help local companies lead for people, planet, and prosperity – and VEC’s sees this legislation as one way to ensure that social and environmental values advance tomorrow’s economy.”
Chris Arkell, co-founder of Sea to Sky Removal-
“As a company focused on waste management in the construction industry, we wanted to hold ourselves to the highest available standard of public accountability. Unlike traditional corporations, companies like ours are committed to considering the impact of their decisions not only on their shareholders, but also on their stakeholders – workers, suppliers, community, consumers, and the environment. This legislation would strengthen our ability to maintain our core values even as future directors, management or ownership changes may happen.”
Michelle Reid, sustainability czar, Mills Office Productivity-
“We have been a B.C.-based family business for 70 years. Multiple generations of our family have continued our founder’s commitment to delivering office products ethically and sustainably. This legislation sends a strong signal to the market that businesses like ours are moving in the right direction. We thank the B.C. Greens for showing the way forward for more companies to join us in doing the right thing for our customers, our community and our planet.”
What does this legislation do?
- This legislation provides a simple framework for companies to adhere to that is legally and commercially recognized and creates a higher standard, by requiring that:
- Directors act with a broader purpose with respect to society and the environment, and balance this commitment against the best interests of the company.
- Companies promote a specific “public benefit”, or a positive effect.
- Directors must publish an annual report that describes the company’s activities in relation to their benefit commitments, and they must select an independent third party standard to report their work against.
- This legislation creates clear expectations about the nature and mandate of the company and provides protections for directors who choose to prioritize public benefits, not only profits.
- It will provide certainty for impact investors of the nature and mandate of the company.
- It will enable companies to attract capital while being true to their mission as they grow.
- It will protect the vision of the founders of benefit companies by embedding the environmental and social benefits into the company’s mandate.
How do benefit companies differ from Community Contribution Companies (C3s)?
- Government introduced C3 legislation in 2012 as a hybrid option between for-profit businesses and non-profit enterprises.
- C3s and benefit companies are complementary ways for government to support a spectrum of socially and environmentally responsible business.
- C3s are subject to restrictions related to their allocation of profits and their transfer of assets, while benefit companies would have no such restrictions.
How can a company become a benefit company?
- A company can become a benefit company by altering its notice of articles to include the required benefit statement through a special resolution, which would require two- thirds approval to pass.
- A company would need to include in its articles a commitment to operate in an environmentally sustainable and socially responsible manner, and to promote one or more specific public benefits.
Macon McGinley, Press Secretary
+1 250-882-6187 |[email protected]