CARSON CITY — Nevada lawmakers are considering legislation that would allow businesses to organize themselves as benefit corporations — a designation that allows for-profit companies to consider the social and environmental benefits of its business decisions.
Businesses are currently required to make decisions — such as cutting costs — that are in the best interests of shareholders. Investors can sue if they suspect a company hasn’t taken steps to maximize profits.
But under Assembly Bill 89, companies could spend more to buy local products, for example, a move that could give a boost to nearby businesses while reducing the environmental costs that come with shipping cheap products long distances. Instead of profit being the factor, it becomes one of three factors.
Assemblyman David Bobzien, D-Reno, presented the bill to the Judiciary Committee on Monday. Benefit corporations would be liable if shareholders didn’t think the company did enough social and environmental benefit each year.
Maryland was the first state to adopt similar legislation in April 2010. Since then, 11 other states have followed suit .
A super-majority vote among shareholders would be required for a Nevada company to transition to a benefit corporation structure. Under Bobzien’s bill, those who object to the change would receive a fair market-value reimbursement for their shares.
Republican and Democratic committee members praised the proposal .
“I think when it comes for a vote, it will be unanimous for it,” said Assemblywoman Michele Fiore, R-Las Vegas. “It’s good for businesses, good for job growth in the state of Nevada, and it gives corporations more incentive.”
The measure would require benefit corporations to submit an annual report outlining its social and environmental achievements, as well as its profit.
Erik Trojian, director of policy at B Lab — a national organization based in New York promoting benefit corporation legislation — flew to Nevada to support AB 89.
“These companies when they operate are allowed to consider the impacts they have on stakeholders, not just their shareholders,” Trojian said.
Supporters said investors are looking for ways to better society and the environment while still making money.
“We are attracting a number of investors not interested in normal venture capitalist avenues, not looking for just a return on investment, but a return on the community as well,” said Susan Clark, CEO of NVA250, a consulting firm striving to incorporate clean energy technology in Nevada.
The committee took no action on the bill Monday.