A bill allowing companies to choose to have a positive impact on society and the environment by incorporating in Nevada as a “benefit corporation” passed through the Senate Judiciary Committee on May 15.
“The bill was recently heard by the Senate Judiciary Committee, and it’s awaiting a work session so it can be sent to the full floor of the Senate,” said Assemblyman David Bobzien, primary sponsor of this bill, Assembly Bill 89. “Once it’s heard by the Senate, hopefully it passes, and then it goes to the governor for his signature.”
AB89 passed unanimously in the Assembly on March 13. Luke Busby, lobbyist for B-Lab, a non-profit out of New York that supports benefit corporation legislation and has a third-party standard for benefit corporations, is hopeful for a governor signature.
“No one has showed up to the committee meetings and spoken opposition to the bill, and no one even testified neutral,” Busby said. “Everyone who showed up to the hearings testified in favor of it. What’s interesting is [legislators] sometimes have philosophical disagreements about how things should go in the Legislature, but they all agree that this bill is a good thing for the state.”
According to Busby, benefit corporation legislation has passed in 15 states and Washington, D.C., and has three fundamental components in every place that it has been passed: purpose, transparency and accountability.
“Benefit corporations’ corporate charters include the obligation to consider the environment and society when they make decisions on how to operate,” Busby said. “The transparency component is manifested in the fact that per the legislation they’re required to assess their performance of their stated goal against a third party standard. The accountability position manifests itself in the fact that certain glorified entities under the statute are allowed to go to court to seek injunctive relief to force a benefit corporation to act according to its stated purpose.”
The accountability factor present in this legislation holds great promise to help benefit the environment locally and nationally.
“Right now, the effects on the environment, for corporations, is basically only regulated by the law,” Busby said. “A benefit corporation, on the other hand, works to have a material positive impact on society and the environment. The standard is higher for a benefit corporation in its relation to the environment.”
Bobzien believes that Nevada is an ideal location for companies to incorporate here as benefit corporations.
“I think we have tremendous potential, and we already have a burgeoning renewable energy space,” Bobzien said. “I can see a lot of benefit corporations working on issues of sustainability in this state. I think we have a lot of intangibles in place that could lead to a lot of benefit corporations to invest in this state.”
A key point of this legislation and the reasoning for its broad support is that incorporating as a benefit corporation is a choice.
“This is only for people who want to do this,” Busby said. “This doesn’t force anyone to do anything. It doesn’t create a new tax. It doesn’t create any new regulatory requirements for people who don’t operate their company this way. It just provides another model for people to choose.”