By Robert Girling
In the last decade a number of family owned, mission driven companies have had to sell to large corporations. The juice-maker Odwalla’s Web site advertises it as “earth-friendly” and as “a business with a heart” but nowhere on the site will you find the information that it is a wholly-owned subsidiary of Coca-Cola. The Body Shop, a pioneering, earth-friendly company, was bought by L’Oreal in 2006. The cereal maker Kashi was bought in 2000 by Kellogg and granola-maker Back to Nature and Boca Burger are subsidiaries of Kraft.
Family owned businesses are often caught in a difficult dilemma: how can they access financing without losing their mission based values. Sometimes a sale can give the mission-driven entrepreneur capital and logistical support to grow the business while retaining the company’s original values and practices. But often the clash of corporate culture can gradually erode the mission in favor of a focus purely on profit.
AB361, called the Benefit Corporation bill, was introduced by Assembly member Jared Huffman and signed into law on January 1, 2012. It offers a new form of incorporation that lets California businesses balance the pursuit of profits with environmental and social goals and to include environmental stewardship and community development in their company’s mission.
At the Sustainable Enterprise Conference earlier this month at Sonoma Mountain Village in Rohnert Park, Assembly member Jared Huffman was among those who explained how to become a benefit corporation and why the new law is critical for sustainable businesses. The conference was jointly presented by Sonoma State University, the Presidio Graduate School and Dominican University of California’s Green MBA. For more information on the conference, visit sustainableenterpriseconference.com.
Robert Girling is a professor in the School of Business and Economics at Sonoma State University. He received his Ph. D. from Stanford University and has taught and consulted in 20 different countries. He has also taught at the Federal University of Bahia, the Federal University of Minas Gerais in Brazil, the University of the West Indies and American University in Washington D.C. He has consulted with the World Bank, USAID, the United Nations, and the International Center for Research on Women.
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