Texas House Bill HB1928

Texas 2013 - 83rd Regular

Caption

Relating to social purposes of a for-profit corporation and the consideration of social purposes and other interests by officers and directors of a for-profit corporation.

Impact

The implications of HB 1928 are notable as it facilitates a framework within which for-profit corporations can pursue societal benefits without compromising their profit-generating capabilities. This dual approach could incentivize companies to engage in socially responsible practices, thereby impacting their decision-making processes significantly. If adopted, this legislation may influence the behavior of businesses across Texas, encouraging them to invest more heavily in initiatives that address social issues and contribute positively to their communities.

Summary

House Bill 1928 introduces amendments to the Business Organizations Code that recognize 'social purposes' of for-profit corporations. This legislation allows these businesses to incorporate social objectives alongside traditional profit motives into their certificates of formation. The bill defines social purposes broadly, encompassing various positive societal and environmental impacts, including the promotion of economic opportunities for underserved communities and the preservation of the environment. This marks a significant shift in how for-profit corporations can operate, potentially leading to a broader acceptance of corporate social responsibility as a key aspect of business operations.

Contention

While the bill presents a progressive approach to incorporating social purposes in corporate structures, it is also likely to spur debate regarding the accountability and genuine intent of corporate social responsibility. Detractors may argue that merely stating a social purpose in a certificate of formation does not guarantee that a corporation will enact meaningful changes. Critics may voice concerns about corporations using social objectives as a facade to bolster their public image or pivot away from accountability for their traditional business practices. This potential dilution of corporate responsibility could result in skepticism surrounding the actual motivations of businesses adopting such measures.