At the first joint appearance of the three leading Portland mayoral candidates, Charlie Hales announced an interesting policy proposal: supporting certified B corporations by charging them only half of the city’s business license tax, while urging the county to halve its business income tax as well.
Hales’ announcement came at the first annual event of the Voice for Oregon Innovation and Sustainability, “Oregon’s Chamber of Change.” It was an impressive gathering of wonks, progressives, and businesspeople, including Mayor Sam Adams, Multnomah County Chair Jeff Cogen, and a who’s who of sustainable business.
Just what are B corporations Hales is talking about? A Wikipedia excerpt:
A benefit corporation is [a class of corporation legally required] to create general benefit for society as well as for shareholders. Benefit corporations must create a material positive impact on society; consider how decisions affect employees, community and the environment; and publicly report their social and environmental performance using established third-party standards.
Six states – Maryland, Vermont, New Jersey, Virginia, Hawaii, and California – have passed legislation in 2010 and 2011 governing this new kind of corporation, and legislation is pending in several other states.
In the same vein, a group called B Labs audits corporations and certifies those that pass as B corporations. Hales’ proposal would allow certified B corporations to get the small tax break, forgoing the need for Oregon to pass a benefit corporation law.
Why the excitement about new corporate structures, laws, and certifications? From B Labs:
B Corporations address two critical problems:
Current corporate law makes it difficult for businesses to take employee, community, and environmental interests into consideration when making decisions; and
The lack of transparent standards makes it difficult for all of us to tell the difference between a ‘good company’ and just good marketing.
That's one fundamental constraint on sustainable businesses: They're doing that at significant legal exposure. [California's new law] helps to provide them with legal protection to pursue what some people perceive as a triple bottom line -- creating financial profit as well as social and environmental impact."
Before [the new law], Gilbert added, "corporations have one fiduciary duty: to maximize value to shareholders even if that comes at the expense of workers or the community or the environment. It's a system that's set up to externalize costs to society."
The Oregonian’s Beth Slovic reports Hales estimates the cost of his proposal at around $60,000.
From the Hales press release:
“As mayor, I plan to encourage these environmentally, socially responsible businesses here in Portland,” stated Hales. “It just makes sense for us to be the first city in America to say thank you financially to businesses that choose a different way, a better way; and to say to socially responsible entrepreneurs across the country: set up shop in Portland – we want your business!”
The proposal sends a positive message while not being grandiose or expensive. It’s a small investment in encouraging the private sector to more explicitly consider public benefits. B Labs’ slogan is “using the power of business to solve social and environmental problems.”
At a time when people are rising up against big banks and Wall Street, it's just smart governance to encourage the growth of Oregon businesses that are eager to contribute to the public good.