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The article I read is based on a bill presented in Senate last week that would legalize for California corporations to pursue social/ environmental good over profit. Right now shareholders can sue companies that have social or environmental programs that affect shareholder equity or company profits. The SB 201 (The Corporate Flexibility Act of 2011) will allow any entity in California to include a social and/or environmental mission and go after them just as much as after profits. I’m not sure if this bill is passed if shareholders will still attain the same shares and/or equity within a company.
Mr. Makower makes an excellent point in his article:
“To gain traction, these companies will need the support — or the demands — of institutional investors, such as large pension funds, embracing flexible purpose corporations. It will take leadership companies, government agencies, universities and other large buyers of goods and services to adopt policies giving procurement preference to these companies. And it may well take preferential tax treatment for flexible purpose corporations, or other policy mechanisms, such as fast-track permitting or reduced oversight.”
I would like to know more details about the “preferential tax treatment” that these companies would get…because again if they see preferential tax treatment, most companies will jump on the sB201 law just to get a break on taxes without actually believing in the environmental and social measures that they will put forth. (Maybe I’m just too much of a negativist when it comes to my beliefs about companies.)
Let’s see if it will pas before I make any further assumptions. I think overall this is a great bill to pass for large companies, but I think it would be unfair to pass it on to small businesses that may not have the means to do so. Also will this be obligatory or just something to protect companies agains shareholders who don’t want to jeopardize earnings?