Patagonia Pioneers Sustainability Legal Status

by | Jan 5, 2012

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Outdoor clothing company Patagonia has become the first company in California to elect to be a “benefit corporation.” The legal status affords a company’s directors legal cover to consider environmental and social benefits over financial returns.

Patagonia founder Yvon Chouinard – a long-time advocate of corporate environmental stewardship – and 11 CEOs from other companies together filed documents Friday at offices of the California Secretary of State.

The dozen companies form the largest group of businesses to register on the legislation’s first effective date among the seven states that have passed benefit corporation laws, Patagonia says.

Benefit corporations are a new kind of corporation legally required to:

1) Have a corporate purpose to create a material positive impact on society and the environment.
2) Redefine fiduciary duty to require consideration of the interests of workers, community and the environment.
3) Publicly report annually on its overall social and environmental performance using a comprehensive, credible, independent, and transparent third party standard.

Current law requires corporations to prioritize the financial interests of shareholders over the interests of workers, communities, and the environment.

Patagonia has a long history of environmental awareness. The clothing brand has been championing green causes since 1986 and discloses chemicals used in its products. Committed to lowering consumption levels, the company took out a full page advert in the New York Times on the retail industry’s “Black Friday” sales event that pictured its R2 Jacket beneath a caption reading: Don’t Buy This Jacket,” reports Bloomberg.

The other companies that registered for benefit corporation status are: DopeHut, Dharma Merchant Services, Give Something Back Office Supplies, Green Retirement Plans, Opticos Designs, Rimon Law, Scientific Certification Systems, Solar Works, Sun Light & Power, Terrassure Sustainable Land & Resource Development and Thinkshift Communications.

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