Today in the legislature we debated at second reading Bill M209: Business Corporations Amendment Act, 2019. This is my Private Members’ bill that proposes amendments to the Business Corporations Act and will create a new Part 2.3 in the Act that enables companies to become benefit companies. The bill passed second reading today and moves on to committee stage shortly.

Below I reproduce the text and video of my second reading speech.

Video of Speech

Text of Speech

A. Weaver: I move that Bill M209 be now read a second time.

It gives me great pleasure to rise and speak at second reading to Bill M209, Business Corporations Amendment Act. I will outline my speech in four different sections. I’ll start by giving a brief introduction as to the purpose and the intent of the bill — what it does — moving on to the process by which it was created and finishing with a conclusion and the type of the economy it’s trying to encourage and build.

This is a bill that my office has been working on for quite some months since May of last year, and I’m thrilled that we’ve been given the opportunity to debate it today. I’m, frankly, grateful to government for providing us and members of the opposition access to legislative drafters to allow us to bring this bill in the form that we know has gone through the formal legislative drafting process.

I’ve talked a lot about the emerging economy and the fact that the government needs to be prepared and resilient amidst the rapid shifts that are occurring in our society and our economy. These include, but are not limited to, things like climate change, environmental degradation, changes to the nature of work, rapid technological advance, the whole increasing disparity between those who have and those who don’t have income security and so forth. I believe that, frankly, business must play a central role in helping us tackle these enormous challenges and find solutions. It is not only up to government to find the solutions. It is also up to business.

That’s why we created this legislation to create benefit companies in British Columbia. The idea for this legislation was brought to us from the business community, from both small and large companies that are already using their business to do good and wanted a clearer legal framework under which to operate. I think government, frankly, needs to do more to encourage and support these types of businesses that have chosen to go beyond the pursuit of profit to also pursue critical social and environmental values.

What does the bill do? I want to start by highlighting some of the key elements of the bill. One, it adds a new part to the Business Corporations Act, enabling companies to incorporate as benefit companies. It would provide a legal framework for companies that are committed to pursuing a triple bottom line to embedding social responsibility and environmental sustainability into their companies’ DNA. These companies could take on expanded purpose, accountability and transparency.

The bill would require companies to change their articles to enshrine a commitment to act in a responsible and sustainable manner. This means they must — that’s important, the word “must” — take into account the well-being of persons affected by their conduct and endeavour to use a fair and proportionate share of available environmental, social and economic resources and capacities. They must, again, also pursue one or more specific public benefits of a positive effect on society or the environment.

Another key component of the legislation is that it creates new duties for directors of benefit companies. They must — again I use the word “must” — balance their duty to act in the best interests of the company with the new duties to act with a view to operating their business responsibly and sustainably, as well as to promote specific public benefits. I want to come to highlight this a little bit more because I think this is an important element, a key element, that we need to highlight.

Right now it’s clear. Our case law already makes it very clear that directors may — the very important word “may,” as opposed to “must” — consider broader stakeholders as they consider their duty to act in the best interests of the corporation. The federal government recognized this and is now codifying this into the Canada Business Corporations Act. That’s a very welcome move, frankly, that the federal government is doing in making it clear that all directors have the ability to consider broader stakeholders in their decision-making — that they may consider. That’s based on the case law that arose from the very famous BCE case that enshrined at the Supreme Court level that directors may in fact go broader than just fiduciary responsibility.

We also know that considering broader stakeholders in their decision-making is one thing but also that Canadian directors are not bound by a shareholder primacy rule. This bill does something different. It does something very different: it goes further. It creates a duty for directors of benefit companies to act responsibly and sustainably to promote public benefits. More than this, it requires directors of benefit companies to balance their existing duty to act in the best interests of the company with these new duties to act responsibly and sustainably and promote public benefits. I’m going to come back to this. This was an issue brought to us by small and large business looking for certainty, looking to do a reduced risk as they move forward in these directions.

It’s important to note that nothing in this legislation precludes the directors of an ordinary company from also considering other interests, like employees or the environment, when acting in the best interest of the company. This is not preclude any existing company from doing that. But benefit companies must also report their performance against an independent third-party standard which must be developed by a person or entity that is unrelated to the benefit company.

The reporting must be done annually and must be available to the public. This element is important to ensure transparency for suppliers, purchasers and customers that the company is indeed living up to its stated goals. I hope that this requirement will spur innovation in B.C. and that strong local standards will emerge for benefit companies to use, as put forward and adjudicated by strong, B.C.-based, third-party verifiers.

The legislation creates clear expectations about the nature and mandate of the company and provides protections for directors who choose to prioritize public benefits and not only profit.

This legislation would help mission-driven companies stay true to their mission as they grow and protect the vision of the founders of benefit companies by embedding the environmental and social benefits into the companies’ actual mandate.

It would provide more certainty for impact investors, another critical aspect of this bill. The impact investors are looking to invest in mission-aligned companies of the nature and the mandate of a company, but what’s critical to them is that they not have an asset lock that existed in very fine enabling legislation for the creation of what are called C3s in the province of British Columbia, put forward by the B.C. Liberals in the last session. That doesn’t affect that at all.

But what it does here…. The asset lock associated with those C3s precluded impact investors from actually moving forward, because you invest and you can’t get your investment back out. This would allow impact investors to actually know that the company is triple-bottom-line and is one focused on a much broader mandate than just fiscal benefit for the shareholders.

The act would provide more certainty for impact investors looking to invest in mission-aligned companies, as I said. And moreover, this legislation would provide a simple framework for companies to adhere to that is legally and commercially recognized.

The choice to become a benefit company is completely voluntary. There’s no requirement. There’s no impact on existing corporations and no tax implications at all. Although the government down the road may view some kind of change in the way it incorporates tax to benefit companies versus other companies, if a government moving forward sees that this is something they wish to encourage…. But that is up to government and not something that we’ll be bringing or discussing in a private member’s bill.

I also believe that the benefit company legislation would be complementary to existing structures in place. And I want to recognize again — come back to this — the leadership and initiative put forward by the previous government in creating the so-called C3, or community contribution companies, that I spoke about. I see C3s and benefit companies as different ways, on a spectrum, for government to support socially and environmentally responsible business forums.

Now, I’ve heard, and we’ve consulted extensively, from many businesses that the C3 structure is simply too restrictive for many for-profit businesses, since they would need to fundamentally change their corporate structure and reduce their ability to attract investment. We can and should, frankly, provide another option to support sustainable and responsible businesses in B.C.

The C3 structure works wonderfully if a not-for-profit is looking to create a business arm that is permanently associated with the not-for-profit because the asset lock of the company associated with a not-for-profit is the not-for-profit. So any profits must be flowed back to the not-for-profit. That works well in that case. It does not work well for a for-profit business venture which is seeking to do more than just fiscal bottom line.

I’d fully support any efforts to continue the work started by the previous administration to support C3s. Steps in this direction could include, for example, doing more to promote the C3 brand, enhancing public awareness of C3s and providing tax incentives and benefits for investments in C3s.

So this, again, is not something that we believe competes with C3s. It’s something that we believe is very complementary to C3s. But it gives certain classes of companies, those that are looking to the triple bottom line and not have to worry about the asset lock associated with the C3 to actually incorporate and move forward in that manner….

I’d like to take a few minutes on section 3 here to discuss the process that led to the position we’re in now. As many, obviously, who are aware, I first introduced this bill for debate last May with the purpose of starting a conversation of that legislation.

We had a discussion and a debate and passed second reading, and over the following months, we worked as a caucus very hard to consult stakeholders and experts from across Canada, frankly, and elsewhere to make sure that we got the details right. We met with many, many business leaders, as well as leaders in social enterprise and owners of C3s, about their goals for a sustainable economy and how this legislation would fit in or what we needed to do to ensure that we were able to build support.

We also undertook an extensive consultation with the B.C. branch of the Canadian Bar Association to get insight from them as to the various legal questions that might be arise from this.

Throughout this process, we worked closely with the legislative drafter, the one that we’ve assigned to this project, to craft this amendment in order to ensure that it is legally enforceable and that it works well and is consistent with existing B.C. laws. And, of course, we consulted with government through the confidence and supply agreement secretariat.

In conclusion, I’m very proud of this piece of legislation, and I’m very glad to see that we’re debating it at second reading today. I’m grateful to government for bringing this forward to the order papers to actually allow us to have this debate. I think it bodes well for working across party lines to see private members’ bills discussed in this fashion. I hope we’re able to move forward both with opposition bills as well as other bills from others in this chamber.

We will have a rather interesting and novel process in committee stage. I look forward to articulating that as we move towards that. This hasn’t been done before in this Legislature, as far as we can tell, where an opposition member is in committee stage. That will be a unique experience. I think we might point to some revisions in standing orders that we might want to discuss collectively as we move forward, as we move to this committee phase, an odd committee phase that it is, in the B.C. Legislature compared to other jurisdictions.

I believe that, frankly, becoming the first jurisdiction in Canada to champion benefit companies is a huge opportunity. We know that Quebec is right behind us here and likely going to follow through shortly thereafter. But we’re leaders here in B.C. We don’t follow others. I think British Columbians enjoy being leaders, and that’s why I’m excited that government has continued to support this effort moving forward.

B.C. is already, like Quebec…. We’re sort of a mirror of Quebec in that regard. We are home to many, many socially responsible companies. It’s part of our, frankly, stellar brand as one of the greenest places in the world. “Super, natural British Columbia” and “Beautiful British Columbia” are monikers on our licence plates, for years have been focusing on our natural beauty and what brings people to our lovely province.

We’ve been seeing, also, shifts in consumer patterns and behaviour, particularly among younger demographics sensitive to social and environmental impacts. We know, again, from our extensive consultation, that the millennial group — the category, however you want to call them — millennials in this area, are very concerned about social enterprises. They’re very supportive of and look actually to buy from and invest in social enterprises or triple-bottom-line companies. Benefit companies allow those companies, from small to large, to actually demonstrate, distinguish and be publicly transparent about their overall mission in a triple-bottom-line sense.

Frankly, we’re struggling as a society to adjust and respond to massive technological, social and environmental shifts that we’re facing — whether it be, as I said earlier, from climate change to automation. We need, frankly, I think, to think differently in order to turn our challenges into opportunities. This is one of the things this bill does here.

We need the partnership and to engage with the business community to help us deal with these challenges. Not to prescribe solutions to business but to work with business to allow the innovative ideas in business to flow through in an environment that seeds and nurtures this innovation. That’s how we’ll be successful.

Government and the non-profit sector cannot, by themselves, respond to the challenges that we face before us; frankly, nor should they. Businesses play an incredible and a huge role in our society, and they must be part of any solution to any problem that we see emerging. Companies that pursue a triple bottom line, frankly, are on the cutting edge of rethinking the role of business in the 21st century.

Now, some are doing so voluntarily. Others wish to do so, and they wish to be protected. This legislation gives them protection and gives them the ability to follow a suite of rules that are set out to ensure that what they do is enshrined in their articles and protected moving forward.

You know, businesses know that acting in the best interests of people and the planet is the best way to build a thriving economy for the long term. If B.C. had this legislation on the books and if companies were able to incorporate as benefit companies, with an explicit social or environmental benefit baked into that purpose, it would send a very strong signal to the market that the government supports this approach to business, and British Columbia is a home and wants to seek and attract new business in this area.

We look forward and encourage more companies to incorporate social and environmental values into their own business, empowering them to create change in our province and to help us to solve many of the challenges that face us all.

I look forward to listening to the other comments and the deliberations at committee phase.