This week the state of California approved a new bill which will likely become a law that strives to achieve something that no other laws have done. The bill is the first of its kind in that it allows companies to be socially responsible regardless of what shareholders say or vote on. Previously shareholders controlled and could influence nearly any major corporation’s decision and legally the company was obligated to follow that vote but this new law will change all of that.
The so called social responsibility law is exactly what it sounds like; it is giving the power to companies to become socially responsible regardless of shareholder opinions. The idea is that it will convince companies to act in manners that benefit or help society and the environment even if it might mean slight losses for the company’s profit margin. Obviously this was often avoided before because shareholders cared much more about making money but now that they have been removed from the picture legally it is entirely up to the company itself.
No word on when exactly the law will be officially instated or completed but many are hopeful that it will in fact make a difference in terms of social responsibility. As always only time will tell if other states are going to follow suit but for now it is simply good to see that one major state in the United States has stepped up to the plate to allow socially responsible companies to prosper.