Push on to pass Benefit Corporation legislation in Oregon

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Backers of the Benefit Corporation designation are looking to push legislation through in Oregon during the short session.

An effort is on to get a hearing for legislation supporting the legal formation of Benefit Corporations in Oregon during the Legislature's short session, which begins Wednesday.

The legislation would provide a legal framework for companies to register as a company dedicated to providing a public benefit. The designation would be available as an option alongside C Corporation or S Corporation.

Similar legislation has been passed in California, Vermont, Hawaii, New York, Maryland and New Jersey and is pending in North Carolina, Pennsylvania, Michigan and the District of Columbia.

The push for Benefit Corporation legislation is being led by the Philadelphia-based nonprofit B Lab, which has been actively promoting the concept across the company. B Lab also registers companies as B Corps., providing one of the standards that is recognized under Benefit Corporation legislation.

But the late effort faces an uphill battle during a short session that has an agenda already packed with budget, education and health care concerns.

Oregon is currently home to 33 registered B Corps. — there are 517 nationwide — including the likes of Portland companies Bamboo Sushi, FMYI and Sustainable Harvest. But until the state passes legislation to legally recognize Benefit Corporations, the B Corp. standard isn't legally protected.

"We're protecting the entrepreneur and the shareholder," said Erik Trojian, B Lab's director of policy.

Trojian said the legal framework provides certainty that the structure and mission of the company — and a commitment to provide a material positive impact on society and the environment — won't change with a change in leadership.

B Lab has Rep. Shawn Lindsay, R-Hillsboro, lined up to add Benefit Corporation legislation to a bill amendment — provided there is widespread support for the effort.

But Lindsay expressed caution.

"There needs to be some due diligence done on this," said Lindsay, adding that he agreed to provide a placeholder for the legislation as a "professional courtesy."

"I'm merely one of 60 legislators who is intrigued and interesting in learning more," Lindsay said.

On Monday morning the VOIS Alliance urged its members to sign a petition being circulated by the American Sustainable Business Council to urge Oregon lawmakers to take up Benefit Corporations during the short session.

"With such a short cycle, it's going to take quick action," Trojian said.

He said B Lab has met with Rep. Jules Bailey, D-Portland, Rep. Jefferson Smith, D-Portland, and Sen. Jackie Dingfelder, D-Portland, all of whom offered their support for the legislation.

Trojian pointed out that the Benefit Corporation legislation comes at zero cost to the state and B Labs touts an economic development juice provided by legally recognizing Benefit Corporations and clearing the way for a growing interest in social impact investing.

The Benefit Corporation framework has its roots in Oregon, having been inspired by the likes of clothing company Nau Inc. and investment firm Upstream 21. David Chen, founder and managing director of Portland-based Equilibrium Capital Group, sits on B Lab's board of directors.

"I think having (Benefit Corporation legislation) would be a good thing," said Jeff Wolfstone, a shareholder at Lane Powell. "But having said that there are a number of ways that socially interested companies can organize themselves here under existing law."

A 2007 law officially allowed a company’s articles of incorporation to include a provision "authorizing or directing the corporation to conduct the business of the corporation in a manner that is environmentally and socially responsible."

The marketing heft of B Lab and B Corp., however, is growing.

When Patagonia rushed to become California's first legally certified Benefit Corporation on Jan. 3, it generated a flurry of news stories and attention for the growing designation.

A symposium sponsored by the University of Oregon Law School next week will take a close look at legal frameworks for sustainable companies, including Benefit Corporations.

@SustainableBzOR | christinawilliams@bizjournals.com | 503.219.3438