State Rep. Tobias Read: Oregon’s new “benefit company” law boosts social entrepreneurs

Government can encourage businesses to do well and do good, says Read.

Image credit: Getty

In January 2014, Oregon became one of 20 states allowing businesses to register as “benefit companies” – companies that build social responsibility into their by-laws and are legally recognized for this mission.

On the first day the law became effective, 29 Oregon companies registered as “B-companies” – which the Oregon Secretary of State announced as a record day one response to this type of legislation.

The 74 companies now registered as B-companies in Oregon include a diversity of firms, such as B-Line Sustainable Urban Delivery, which offers eco-friendly, short-haul delivery services using electric “cargo bikes;” the Metropolitan Group, a public-affairs firm specializing in social justice causes; and Flying Fish Co., a supplier of sustainably-caught seafood.

While B-company registration has no impact on a firm’s tax liability, the companies are protected from shareholder lawsuits for decisions based on their social mission. B companies must also report annually on their impact.

According to a study sponsored by B-Lab, a non-profit that “certifies” B-companies and advocates for benefit company legislation, more and more American consumers want to align their shopping decisions with their values. For example, 49 percent of Americans say they would boycott companies “whose behavior they perceive is not in the best interest of society,” while 86 percent say they would switch from a current brand to a brand they perceive as “socially responsible.”

Oregon’s new benefit company legislation was sponsored by State Rep. Tobias Read, who led the coalition that helped win the bill’s passage. Read is a member of the NewDEAL, a national network of “pro-growth progressive” state and local elected officials, and among the state’s most prolific and high-impact legislators. Among other efforts, he led the push to create a state “rainy-day fund” for budget contingencies; sponsored successful legislation for full-day kindergarten; and championed Oregon’s participation in the West Coast Infrastructure Exchange, a public-private partnership aimed at boosting infrastructure investment.

Read says his sponsorship of Oregon’s B-company legislation exemplifies his approach to governance and the respective roles of business and government in the economy.

R3.0: Why did you champion Oregon’s B-company legislation?

Oregon State Rep. Tobias Read

Oregon State Rep. Tobias Read

Read: It’s really part of a consistent theme and thread in the philosophy that informs my way of thinking about being a legislator. I believe there are certainly times when government and business have to be adversaries, but there are a lot more times when government can be a partner and a catalyst.

For me, it’s a chance to make it easier for entrepreneurs and business leaders to bring their values to work. It’s a chance for companies to make clear that part of their reason for being goes beyond profit – that they want to take into consideration the impact of their decisions on their employees, their communities and on the environment.

This doesn’t have any tax implications, but it’s an opportunity for a company to make it really clear what they stand for. It’s symbolic, but it’s important.

And I think it’s particularly important in Oregon, where people are interested in supporting companies that have roots and that have values aligned with the rest of the community.

R3.0: What signals does this legislation send to the private sector?

Read: Oregon has a strong start-up and entrepreneurial community, and every additional thing that we can do to make the state a more welcoming community for entrepreneurs is a good thing.

It doesn’t mean that people can claim things that aren’t justified or transparent, but it does allow people to say what matters to them and how they are going to be held accountable.

There are ways for state government to set standards, but it’s also important to acknowledge and unleash the creativity and “enlightened self-interest” of the private sector.

R3.0: How do you define the ideal relationship between business and government?

Read: It takes a certain level of humility to say that we [in government] don’t know best, that we need to trust our constituencies – experts in various industries and technologies – and that we need to look at ourselves as enablers, as partners and as catalysts.

“There are certainly times when government and business have to be adversaries, but there are a lot more times when government can be a partner and a catalyst.”
In Washington, D.C., everybody talks about the revolving door – people moving from the private sector to the public sector – as a problem. But I actually think that in Oregon the absence of a revolving door is a problem.

We have people, particularly at the more senior levels in corporations and state government, who don’t move. And it creates a real barrier about how to communicate and a lack of recognition about how things work in the public sector and the private sector.

A businessperson might say, “Well, clearly, X is the right policy. Why don’t you go make that happen?” And I have to explain that in the Oregon legislature, there are 89 other people who may or may not believe the way I do. If we can figure out ways -informally or formally – for people to have experiences both inside state government and in the private sector, that could really improve our relationships and our capacity.

There are certainly places where things won’t happen on their own without government intervention, and in those cases, it’s appropriate to intervene, but I think we’re more likely to succeed in delivering the outcomes we want – a growing economy and better communities – and we’re more likely to get support for those efforts, when we recognize that we do well by trusting our stakeholders.

R3.0: How does this approach play out in your other legislative priorities?

Read: There are three things I try to focus my work on. The first is education – making sure that there’s a strong education system both for the future workforce and for the current economy. That includes higher education, but I also carried the bill that makes full-day kindergarten the norm next year.

The second [priority] is to cultivate an environment and ecosystem that makes it as easy as possible for businesses to start, to grow and to thrive in ways that are consistent with our values. For example, in land-use policy, I’m not suggesting that we open up everything for development, but we should spend more state dollars on cleaning up brownfields and making them more attractive for development.

And the third priority for me is infrastructure. We need physical infrastructure – such as roads, bridges and broadband – and the West Coast Infrastructure Exchange is a good example of an ongoing effort of how you stretch taxpayer dollars to deliver better outcomes, improve performance and accountability.

But we also need social infrastructure – communities that support each other and function as a network. A growing economy makes so many other things possible.

Like this idea? Tell the legislators in your state.