August 6, 2013
We’re thrilled today to help support the official launch of the Law Firm Sustainability Network!
Wendel, Rosen, Black & Dean LLP is proud to announce our involvement with the new Law Firm Sustainability Network (LFSN). The firm will serve on the Leadership Council of the nonprofit organization, and Executive Director Gina Maciula has been appointed treasurer of the Board of Directors. The Leadership Council, comprised of eight law firms, will act as an advisory committee to the Board of Directors and provide input on strategy and initiatives.
The LFSN is a nonprofit organization of law firms and legal departments committed to promoting the benefits of environmental sustainability and corporate social responsibility throughout the legal industry. Its mission is to develop key performance indicators, foster knowledge-sharing, develop best practice guidelines and recognize and promote sustainability innovations in the U.S. legal sector. For more on the organization’s initiatives and programs, see the launch announcement press release.
Wendel Rosen has long been a pioneering law firm when it comes to adopting and promoting sustainable business practices in the profession. In 2003, we became the first law firm in the country certified as a green business (certification conducted by the Bay Area Green Business Program) and launched our Green Business Practice Group. In addition, the firm co-chaired the effort to write and pass California’s Benefit Corporation Law (AB361) and has been a Certified B Corporation since 2010. Our attorneys and executives regularly speak and write to business audiences regarding the pursuit of a sustainable business operation.
“We have been a certified green business, and the first law firm in the country to do so, for a decade, and have since been working very hard to educate the industry on the benefits of sustainable business practices,” said Maciula. “We are proud of how far law firm ‘greening’ has come – a defining element of corporate social responsibility – and applaud the industry collaboration to form LFSN. I’m very excited to serve on the governing board of this organization and formally come together with like-minded peers to keep sustainability at the forefront of consideration for law firms.”
November 6, 2012
In Episode 82 of The Wendel Forum (originally aired on October 27, 2012, on 960 KNEW AM radio), show moderator Bill Acevedo, chair of Wendel Rosen’s sustainable business practice group, welcomes Caroline Duell, the founder of Elemental Herbs, an organic body care company based on the central coast of California.
With a background in herbal medicine, Duell is a massage therapist and outdoor enthusiast who began making skin care products for her friends and family. Later, after success selling the products at farmers markets, she launched Elemental Herbs, a California certified B Corporation. That certification is to sustainable business what Fair Trade certification is to coffee – it measures a company’s commitment to operating a business responsibly and sustainably.
Duell also runs a farm, from which she harvests some ingredients for her natural healing products such as All Good Goop, a moisturizer and salve. While Duell also gets ingredients from outside suppliers, she only partners with similar-minded businesses. In particular, she examines other companies’ employee benefits, utilities use, social benefits and transparency. Though not certified organic, all Elemental Herbs holistic products and remedies contain organic ingredients and are free of GMOs (genetically modified organisms).
The Elemental Herbs farm also offers a CSA (community supported agriculture) and serves as an education center, including offering courses about sustainable living. As a member of 1% for the Planet, one percent of all Elemental Herbs revenues is dedicated to fighting for social and environmental justice around the world. Organizations it supports include a local marine mammal protection organization, a local trail organization, Save Our Snow, which provides information about how global warming affects the planet’s snowfall, and cityWILD, which brings inner city kids into the mountains.
Do you care about the company policies, as well as the ingredients, of your skin care products?
Listen to the interview with Duell: Episode 82 of The Wendel Forum (26:47 mins; mp3)
Elemental Herbs website: http://elementalherbs.com
B Corporation website: http://www.bcorporation.net/
1% for the Planet website: http://onepercentfortheplanet.org/en/
960 KNEW AM Radio website: http://www.960KNEW.com
Bill Acevedo’s online profile: http://www.wendel.com/wacevedo
In Episode 80 of The Wendel Forum (originally aired on October 13, 2012, on 960 KNEW AM radio), show moderator Dick Lyons, co-founder of Wendel Rosen’s sustainable business practice group, welcomes Elliot Kallen, founder and CEO of Prosperity Financial, a San Ramon, Calif.-based money market fund with $200 million under management.
Years ago, socially responsible investing meant simply avoiding investing in so-called sin products such as tobacco or the defense industry. Increasingly, though, socially responsible investing means more. While it can mean investing in green companies, the issue is somewhat muddy. For example, is it socially responsible to invest in a solar module product if the parts were made in China and the manufacturing process included toxic chemicals that ended up in the water supply?
Not surprisingly, therefore, everyone has a different opinion of what it means to be socially conscious. Generally, though, it means thinking about doing the right thing and considering every facet – from environmental issues to a company’s shareholder governance and charitable activities to the private activities (such as aiding the Nazis) of a company’s founder.
In addition, there are different approaches to socially responsible investing. For example, an investor can proactively support companies that are doing good things for society or devote a portion of a portfolio to green companies. Alternatively, an investor can simply seek the highest possible return on investments but then commit to donating 10 percent of those earnings to a socially responsible cause. Kallen recommends finding an advisor who will listen to your goals.
What does socially responsible investing mean to you?
Listen to the interview with Elliot Kallen: Episode 80 of The Wendel Forum (26:55 mins; mp3)
Prosperity Financial Website: http://www.prosperityfg.com
960 KNEW AM Radio website: http://www.960KNEW.com
Dick Lyons’s online profile:http://www.wendel.com/rylons
[The following post is written by Wendel Rosen Green Business Practice Group Partner Donald S. Simon in response to a recent article addressing legislation that allows for the formation of benefit corporations. Regular readers of The Wendel Forum will remember we have covered Benefit Corporation in prior episodes.]
A REAL WORLD RESPONSE TO A PROFESSORIAL CRITIQUE
I just read the article entitled “The Truth about Ben and Jerry’s” in this Fall’s edition of the Stanford Social Innovation Review (SSIR). This article challenges the reasons Ben Cohen and Jerry Greenfield have given for approving the company’s sale to Unilever. It also argues that recent legislation creating benefit corporations is unnecessary because traditional corporate law allows social entrepreneurs to accomplish their goals equally well. The article advances erroneous, incomplete and misleading analysis of applicable law and evidences a lack of appreciation for how business and law interact in the real world, outside the halls of academia where the authors reside.
I was not involved in the Ben & Jerry’s transaction; however, I was co-chair of the California Benefit Corporation Legal Working Group that authored the California benefit corporation law (AB 361). I provide this brief response to rebut some of the key inaccuracies in the SSIR article.
The article presents a misleading discussion of corporate law. Corporate law differs from state to state. The article claims that most states do not require corporate directors to maximize shareholder value (i.e., profits) and instead allow directors to consider the interests of other stakeholders impacted by the company’s actions, such as employees, community and environment. This is a gross and misleading overstatement. In fact, directors are permitted to consider broader stakeholder interests only in states that have adopted so-called “constituency statutes.” Such statutes have been adopted in less than two-thirds of U.S. states. And among those that have adopted constituency statutes, each state defines a different list of stakeholders whose interests the directors may consider. For example, some states allow directors to consider the company’s impact on the environment, while most do not. In states that do NOT have constituency statutes (including California), directors lack statutory authority to consider stakeholders interests and must act exclusively based on the interests of the corporation and its shareholders.
What about Delaware? The most surprising omission in this article (among many) is the authors’ failure to mention Delaware. Writing an article on American corporate law without discussing Delaware is like writing a history of the space program without mentioning the Apollo moon landings. Because companies can incorporate under the laws of any state they wish (regardless of where they’re physically located), Delaware sought to dominate the market by providing companies what they seek most – legal certainty. Delaware has achieved this by creating the largest body of corporate law and a specialized (Chancery) court system dedicated exclusively to such matters. As a result, more companies are incorporated in Delaware than any other state. When a court in any other state considers issues of corporate law that have not already been definitively answered by higher appellate courts in their state, they typically look to Delaware court decisions for guidance.
Delaware is critical to this discussion because in a high-profile case from 2010, where eBay sued the founders of Craigslist (eBay vs. Newmark), the Delaware Chancery court reaffirmed the shareholder primacy rule made famous in Dodge v. Ford, ruling that “[p]romoting, protecting, or pursuing non- stockholder considerations must lead at some point to value for stockholders.” The following excerpt from the court’s decision is instructive:
“[Craigslist founders, Newmark and Buckmaster] did prove that they personally believe craigslist should not be about the business of stockholder wealth maximization, now or in the future. As an abstract matter, there is nothing inappropriate about an organization seeking to aid local, national, and global communities by providing a website for online classifieds that is largely devoid of monetized elements. Indeed, I personally appreciate and admire [Newmark's and Buckmaster's] desire to be of service to communities. The corporate form in which craigslist operates, however, is not an appropriate vehicle for purely philanthropic ends, at least not when there are other stockholders interested in realizing a return on their investment. … Having chosen a for-profit corporate form, the craigslist directors are bound by the fiduciary duties and standards that accompany that form. Those standards include acting to promote the value of the corporation for the benefit of its stockholders. Thus, I cannot accept as valid … a corporate policy that specifically, clearly, and admittedly seeks not to maximize the economic value of a for-profit Delaware corporation for the benefit of its stockholders….”
The authors’ failure to discuss Delaware law and the Craigslist case, while mentioning an obscure 1953 case from New Jersey, is puzzling. Surely they were aware of these well-known legal precedents that refute the central theme of their article.
The Article misunderstands the purpose and need for new corporate forms. The article correctly notes that companies can incorporate in one state while locating and doing business in another. Because of this, the authors argue that there is no need for other states to adopt benefit corporation legislation because a handful of states already have. The authors are apparently unaware that states like California impose their key corporate laws (including shareholder primacy) on all companies doing business in their state, regardless of where they are incorporated. See Cal. Corporations Code section 2115(b). This critical fact illustrates the danger of making simplistic generalities about a legal system that differs in each of the 50 states.
A quick primer of how law works in the real world. Although neither of the article’s authors were involved in the Ben & Jerry’s deal and apparently never spoke to anyone who was, they claim to know more about the thinking, motivations and legal concerns than the principals and lawyers who lived it. Ben & Jerry said they accepted Unilever’s higher offer over lower ones because their lawyers (correctly) advised them that doing so could expose them to personal liability if a shareholder chose to sue them for not maximizing their profits by taking Unilever’s higher offer.
The authors apparently read the company’s corporate documents, from which they devised legal arguments they believe would have enabled Ben, Jerry and their board of directors to prevail in such a lawsuit. While their analysis makes for an excellent law school essay question, it is divorced from the reality that governs such transactions.
In the real world, cases aren’t decided by attorneys or professors declaring what they believe the law should be. They are decided by lawsuits, trials and lengthy appeals that can take five or more years to reach a final conclusion. How many businesses do you know that can wait in limbo that long, especially on critical decisions like who will own the company? Ben & Jerry’s lawyers also (correctly) advised them that they could be held personally liable for losses claimed by their disgruntled shareholders. The authors dismiss this fact by saying that Ben & Jerry could have sued the company to recover any personal losses based on indemnity provisions in the corporate documents. I’m sure Ben & Jerry’s lawyers discussed this, and equally sure it provided Ben & Jerry little comfort. After spending years in litigation losing one case and paying the verdict out of their own pocket, I suspect nothing would sound less appealing than spending six or seven figures litigating a new case pursing their indemnity claim against the company they no longer own or control. The delay and costs attendant to litigation, coupled with the inability of companies to remain in limbo while awaiting a final decision, is the central reason why there are so few reported cases addressing these issues.
The article ignores the central advantage that the Benefit Corporation provides. The article conveys the authors’ opinion that social enterprise does not require benefit corporations or any of the other new forms provided by recent legislation, while ignoring the benefit they provide. That benefit is legal certainty, which as noted above, is a critical commodity. Social entrepreneurs operating as a traditional corporation are like guinea pigs waiting to be called for an experiment. So long as all the shareholders remain mission-aligned, the experiment will be a success. But shareholders and their attitudes often change over time, and in traditional corporations, the result is often a dilution of the company’s original social or environmental values. If the values-driven shareholders control the company, then they can do as they wish and roll the dice to see if they’re sued. And if they do, they’ll experience the thrill of litigation, with expensive legal fees, years of watching the slow grind of our legal system and the excitement that comes with never knowing how it’ll end until the appeals have been exhausted or a settlement is reached. For the gambler, this sounds as fun as betting the company payroll on a roulette wheel in Vegas.
The benefit corporation was created for the more temperate social entrepreneurs who prefer not to be a legal guinea pig. The benefit corporation was created for them so that they don’t have to worry about their continued ability to operate their business in a socially responsible manner. No questions, no uncertainty, just clarity and peace of mind so that they can focus their attention on their business instead of threats to their vision of what that business should be.
Partner, Wendel, Rosen, Black & Dean LLP
September 17, 2012
In Episode 64 of The Wendel Forum (originally aired on May 26, 2012, on 960 KNEW AM radio), show moderator Dick Lyons, co-founder of Wendel Rosen’s sustainable business practice group, welcomes Steve Roth, CEO of Roth Consulting, which helps companies devise and execute a “winning strategy,” whether related to capital, expansion, product development or management.
Roth brings his experience as a senior executive and investor in companies in a wide range of industries to green businesses and double-bottom-line companies, those companies for which a social goal — like benefiting the community or the environment — co-exist alongside profit goals. For those companies, the biggest issue is balance, Roth explains. Companies can’t forget that profitability is what allows a company to be generous and, therefore, profitability must remain the core operational focus. Companies shouldn’t become so enamored with a social mission that they lose the ability to fund it.
The average double-bottom-line company devotes about 5 percent of sales to a social mission. The more profits earned, the more impact the company can have. Ben & Jerry’s was one of the first and most successful double-bottom-line companies. “On a public relations basis, charitable endeavors are a big part of their raison d’être.”
Companies can also donate employee time – within limits. In the 1970’s, Xerox was one of first companies to devote its human resources to help the community, and some employees were even promoted on that basis. But Xerox diverted too much attention from its core business and now no longer exists. “It’s an educational tale.”
Another business challenge for these companies is making the charitable work relevant to customers. Many businesses in the coffee industry, for example, donate money back to the cooperatives that grow their beans. It may be more expensive to source products from those areas. As a result, customers may need to pay higher prices or the company may have to accept lower profits. “Corporate communication is critical to justifying the premium” customers may have to pay, especially in a competitive marketplace where consumers have many choices. The customer must be educated about the social benefit of buying that product.
Roth and Dick also discuss socially responsible investing.
What social causes would inspire you to purchase products from double-bottom-line companies, even if the prices were higher?
Listen to the interview with Steve Roth: Episode 64 of The Wendel Forum(27:45 mins; mp3)
Roth Consulting: http://www.consultroth.com
960 KNEW AM Radio website: http://www.960KNEW.com
Dick Lyons’s online profile: http://www.wendel.com/rlyons
Are you looking for the latest in employee benefits for your recruitment and retention efforts in a challenging economy? Group Energy thinks they have found an employee benefit that’s a win-win-win-win (we’ll get into that later) for companies that value sustainability.
In Episode 23 of The Wendel Forum (originally aired on Green 960 AM radio on July 9, 2011), Jessie Denver, CEO and Founder of Group Energy, talks with show host Bill Acevedo about her consulting firm, which works with organizations to set up employee engagement programs that pool employees’ buying power for energy improvements in their homes.
At no cost to the employer, Group Energy organizes employee buying groups that have resulted in savings of up to 40% off the cost of home solar installation.
The process starts with employee education to build program awareness. A group forms within the company, and the group appoints a committee to work with Group Energy to review responses to an RFP process based on the needs of the participants.
Each campaign gets its own webpage for internal promotion, status tracking and communication. Once installations occur, there’s even a dashboard for tracking energy savings for the group, giving the program a quantitative element that will be particularly attractive to those responsible for tracking and communicating Corporate Social Responsibility (CSR) efforts for companies.
With a variety of projects completed now, Group Energy has found that these campaigns have a number of benefits:
- Employees Win . . . by getting substantial savings on home energy improvements, including for solar, water heaters, insulation, etc. Employees are engaged in the management of the process and have a high degree of engagement with their company and each other.
- Employers Win . . . by offering a relatively rare (so far) benefit to employees, aiding in employee loyalty, retention and recruitment. They can also tout the program as a part of their CSR programs and use the campaign tracking statistics in their sustainability measures.
- Lenders Win . . . by offering financing for these projects, including some new products that have evolved out of recent specific campaigns. One credit union developed a new low interest unsecured loan model for participants that don’t have a lot of equity in their homes.
- Installers/Contractors Win . . . because these pooled buying groups streamline the sales process, an expensive and time consuming component of running a solar installation business.
This type of innovative thinking has the potential to make solar and other energy improvements available to a much wider audience of people than might otherwise pursue it on their own.
Listen to the entire interview and let us know what you think. Are you aware of other programs that engage employees in similar ways?
Listen to the interview with Jessie Denver: Episode 23 of The Wendel Forum (27.26 min)
Group Energy website: www.mygroupenergy.com
Group Energy email: email@example.com
Group Energy information: Group Energy Info Sheet [PDF]
Green 960 AM radio website: www.green960.com
About host Bill Acevedo: www.wendel.com/wacevedo