2019 -- S 0395

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LC002010

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2019

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A N   A C T

RELATING TO BUSINESSES AND PROFESSIONS

     Introduced By: Senators Seveney, DiPalma, Coyne, and Euer

     Date Introduced: February 27, 2019

     Referred To: Senate Commerce

     It is enacted by the General Assembly as follows:

     SECTION 1. Title 5 of the General Laws entitled "BUSINESSES AND PROFESSIONS"

is hereby amended by adding thereto the following chapter:

CHAPTER 89

TRANSPARENCY AND SUSTAINABILITY STANDARDS FOR RHODE ISLAND

BUSINESSES ACT

     5-89-1. Purpose.

     The purpose of this chapter is to support Rhode Island business entities in their global

sustainability efforts by providing this enabling legislation that permits a Rhode Island entity to

signal its commitment to global sustainability. This chapter does not purport to prescribe which

sustainability standards an entity chooses to adopt. Thus, a Rhode Island entity is free to choose

standards promulgated or developed by any entity.

     5-89-2. Legislative findings.

     The legislature finds that:

     (1) The state of Rhode Island is committed to initiatives designed to support

sustainability practices by providing a platform for manufacturers and businesses to demonstrate

their corporate commitment to social responsibility and sustainability.

     (2) In recognition of the increasing interest from investors, customers and employees for

greater transparency in sustainability practices, this legislation provides Rhode Island businesses

a means to demonstrate to their customers, investors, and employees that they are committed to

sustainability that embodies business practices and systems that are designed to foster innovation

and long-term profits as well as environmental and societal benefits.

     (3) Rhode Island's program shall be implemented by way of voluntary enabling

legislation and applies only to those who seek to become certified as reporting entities. There is

no single blueprint for best practices in sustainability among or within industries, and this

legislation shall allow businesses to craft a sustainability blueprint that meets their specific needs

provided that the entity's governing body approves its standards and assessment measures and

that they are made publicly available.

     5-89-3. Definitions.

     As used in this chapter only, the following terms shall have the following meanings:

     (1) "Acknowledged" means with respect to any document or instrument required to be

executed by an authorized person pursuant to this chapter, the authorized person executing such

document or instrument has certified, under penalty of perjury, that the information set forth in

such document or instrument is accurate and complete to the best of such authorized person's

actual knowledge after due inquiry.

     (2) "Assessment measures" means with respect to any entity, the policies, procedures or

practices adopted by such entity to adduce objective factual information to assess the entity's

performance in meeting its standards, including any procedures for internal or external

verification of such information.

     (3) "Authorized person" means, with respect to any entity, any person or entity who has

been duly authorized in accordance with the organizational documents of the entity and the laws

of this state (whether statutory, common law or otherwise) under which the entity is incorporated,

formed or organized to execute such documents and instruments and make such

acknowledgments as are required by this chapter.

     (4) "Certification of adoption of transparency and sustainability standards" means a

certificate, issued by the secretary of state, attesting that a reporting entity has filed with the

secretary of state a standards statement pursuant to this chapter. Such certificate shall state on its

face that the state has not reviewed the contents or implementation of the matters referenced in

the standards statement, nor verified any reports made by the reporting entity.

     (5) "Control,'' including the terms "controlling,'' "controlled by'' and "under common

control with,'' means the possession, directly or indirectly, of the power to direct or cause the

direction of the management and policies of a person or entity, whether through the ownership of

equity or other voting securities, by contract or otherwise.

     (6) "Entity'' means any:

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     (i) Corporation (stock or nonstock), partnership (whether general (including a limited

liability partnership) or limited (including a limited liability limited partnership)), limited liability

company, or statutory trust validly existing under the applicable laws of this state; or

     (ii) Any association of the kind commonly known as a joint-stock association or joint-

stock company, and any unincorporated association, trust or other enterprise having members or

having outstanding shares of stock or other evidences of financial or beneficial interest therein,

the internal affairs of which are governed by the laws of this state and which has not otherwise

been dissolved (whether voluntarily or by any order or decree of any court of competent

jurisdiction) or otherwise terminated.

     (7) "Governing body'' means the board of directors or equivalent governing body, person

or entity having the power to manage and direct the business and affairs of the entity, and shall

include any duly authorized and empowered committee of the board of directors or equivalent

governing body.

     (8) "Nonreporting entity'' means any person or entity (including any entity) that is not a

reporting entity.

     (9) "Organizational documents'' means the certificate of incorporation, bylaws,

partnership agreement, limited liability company agreement, articles of association or other

agreement, document or instrument containing the provisions by which an entity is formed or

organized and by which its internal affairs are governed, in each case as amended, modified,

supplemented and/or restated and in effect as of any date of determination.

     (10) "Provider'' means, as to any entity, any third party that is engaged to provide

professional consulting services or advice to assist entities or enterprises in measuring, managing

or reporting the impact of their business and operations on issues of social and environmental

impact.

     (11) "Report'' means a report with respect to a reporting period for a reporting entity

containing the following:

     (i) A summary of the standards and assessment measures in effect during the applicable

reporting period, which summary shall include the third-party criteria and any other source used

to develop the entity's standards and assessment measures and the process by which they were

identified, developed and approved by the entity;

     (ii) A summary of the actions or activities by which the entity has sought to meet the

standards during the applicable reporting period, including engagement with and disclosure to

stakeholders, if any;

     (iii) The most recent available objective and factual information developed pursuant to

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the assessment measures, if any, with respect to the entity's performance in meeting its standards

during the reporting period, and an assessment by the governing body whether the entity has been

successful in meeting the standards, and in the case of any failure to meet such standards, a

summary of any additional efforts the governing body has determined the entity will undertake to

improve its performance in respect thereof, or its determination not to undertake such additional

efforts;

     (iv)(A) The identity of any provider assisting the entity in measuring, managing or

reporting the impact of the entity's business and operations in light of its standards; or

     (B) A statement that the entity has not engaged the services of any provider for such

purposes;

     (v) A summary of any changes to the standards, assessment measures or reporting period,

the process by which such changes were identified, developed and approved by the entity, and the

third-party criteria used to develop any changes to the standards;

     (vi) A summary of the actions or activities planned for the next succeeding reporting

period with respect to measuring, managing and reporting with respect to the standards if such

actions and activities are materially different from those described for the applicable reporting

period; and

     (vii) Notwithstanding the foregoing, no entity shall be required to include in any report

any information that such entity determines in good faith is subject to an attorney-client or other

applicable privilege or would result in the disclosure of trade secrets or other competitively

sensitive information.

     (12) "Reporting entity'' means an entity that has been issued a certificate of adoption of

transparency and sustainability standards and that has not become and continues to be a

nonreporting entity pursuant to § 5-89-6.

     (13) "Reporting period'' means a period of one year, the initial such period to begin not

more than one year following the filing of the standards statement, and subsequent reporting

periods to begin on the day following the last date of the prior reporting period, unless a

governing body elects to shorten the duration of a reporting period that has not begun in order to

change the start date for subsequent reporting periods.

     (14) "Standards'' means, with respect to an entity, the principles, guidelines or standards

adopted by the entity to assess and report the impacts of its activities on society and the

environment, which principles, guidelines or standards shall be based on or derived from third-

party criteria.

     (15) "Standards statement'' means the filing described in § 5-89-5.

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     (16) "Third party'' means, with respect to any entity, any person or entity other than any

person or entity that controls, is controlled by or under common control with such entity,

including any governmental or nongovernmental organization that provides services, standards,

or criteria with respect to measuring, managing or reporting the social and environmental impact

of businesses or other enterprises.

     (17) "Third-party criteria'' means any principles, guidelines or standards developed and

maintained by a third party (including a provider) that are used to assist businesses or other

enterprises in measuring, managing or reporting the social and environmental impact of

businesses or other entities.

     5-89-4. Certificate of adoption of transparency and sustainability standards.

     (a) The secretary of state shall issue a certificate of adoption of transparency and

sustainability standards to any entity if the secretary of state shall have determined that the

following conditions have been satisfied:

     (1) Such entity shall have executed and acknowledged, and delivered to the secretary of

state, a standards statement;

     (2) Such entity shall have paid all fees and costs assessed by the secretary of state; and

     (3) Such entity remains a reporting entity, and if such entity is registered or formed with

the secretary of state, it is in good standing upon the records of the secretary of state.

     (b) Each reporting entity shall, for all purposes of the laws of this state, be authorized and

permitted to disclose, publicly or privately, that it is a reporting entity.

     (c) The secretary of state is hereby authorized to promulgate rules and regulations

necessary to implement this chapter and shall issue any such certificate required pursuant to this

chapter and shall further be permitted to charge a reasonable fee for any certificates issued and /or

renewed.

     5-89-5. Statement of adoption of transparency and sustainability standards.

     If the governing body of an entity has adopted resolutions setting forth the entity's

standards and assessment measures, the entity may file a standards statement that:

     (1) Acknowledges that the governing body of the entity has adopted resolutions setting

forth the entity's standards and assessment measures;

     (2) Identifies an Internet link on the principal website maintained by or on behalf of the

entity at which the standards and assessment measures, the third-party criteria used to develop the

standards, a description of the process by which such standards were identified, developed and

approved and any report filed or to be filed by the entity are and will be readily available at no

cost and without the requirement of the provision of any information, and will remain available

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for so long as the entity remains a reporting entity (the "website'');

     (3) Acknowledges that the entity has agreed to acknowledge and deliver to the secretary

of state, within thirty (30) days after a request therefor by the secretary of state, its most recent

report;

     (4) Acknowledges that the entity has committed to:

     (i) Use the assessment measures to assess the entity's performance in meeting its

standards;

     (ii) Review and assess its standards and assessment measures from time to time, and

make such changes thereto as the governing body in good faith determines are necessary or

advisable in furtherance of meeting the entity's standards;

     (iii) Prepare and make readily available to the public at no cost and without the

requirement of the provision of any information (by posting on the website at the identified

Internet link) a copy of its report within ninety (90) days of the end of each reporting period;

     (5) Sets forth the address within the state to which the secretary of state shall mail any

notices; and

     (6) Is acknowledged by an authorized person.

     5-89-6. Reporting entity status - Renewal statement.

     (a) A renewal statement shall be submitted to the secretary of state between October 1

and December 31 of each year. A reporting entity shall become a nonreporting entity on January

1 of the following year if the reporting entity shall have failed to submit the renewal statement to

the secretary of state in accordance with this chapter without the need for further action by the

secretary of state. A reporting entity's renewal statement shall:

     (1) Acknowledge that any changes since its most recent filing of a renewal statement or

restoration statement, or, if no renewal statement or restoration statement has been filed, since the

filing of its standards statement, to its address within the state or standards and assessment

measures, and a description of the process by which such changes were identified, developed and

approved by the entity and the third-party criteria used to develop any changes to the standards

are available on the website;

     (2) Acknowledge that, for the most recent reporting period for which a report was

required to be made available on or prior to October 1, if any, a report was made available on the

website in accordance with this chapter within the time period provided for in § 5-89-5(4)(iii);

     (3) Provide an Internet link to the report for the most recent reporting period, if any, on

the website;

     (4) Be acknowledged by an authorized person.

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     (b) No standards statement shall be accepted by the secretary of state for an entity if it has

become a nonreporting entity pursuant to subsection (a) of this section within the prior year.

     (c) On or before September 1 of each year, the secretary of state shall mail to each

reporting entity at its address as specified in § 5-89-5(5), a notice specifying that the renewal

statement together with applicable fees shall be due on October 1 of the current year and stating

that the reporting entity shall become a nonreporting entity on January 1 of the following year if

such renewal statement is not filed.

     5-89-7. Restoration statement.

     (a) If any reporting entity shall become a nonreporting entity for failure to file a renewal

statement, it may, at any time during the calendar year following such failure, file a restoration

statement. The restoration statement shall:

     (1) Acknowledge that any changes since its most recent filing of a renewal statement or

restoration statement, or, if no renewal statement or restoration statement has been filed, since the

filing of its standards statement, to its address within the state or standards and assessment

measures, and a description of the process by which such changes were identified, developed and

approved by the entity and the third-party criteria used to develop any changes to the standards

are available on the website;

     (2) Acknowledge that a report for all the reporting periods ended more than ninety (90)

days prior to filing the restoration statement have been made available on the website in

accordance with this chapter;

     (3) Provide an Internet link on the website to the report for the most recent reporting

period and any other reporting period for which an Internet link has not been previously provided

in a renewal statement or restoration statement; and

     (4) Be acknowledged by an authorized person.

     (b) Any nonreporting entity that files a restoration statement shall thereupon

automatically become a reporting entity, without the need for further action by the secretary of

state.

     5-89-8. Limitation of liability.

     Neither the failure by an entity to satisfy any of its standards, nor the selection of specific

assessment measures, nor any other action taken by or on behalf of the entity pursuant to this

chapter or any omission to take any action required by this chapter to seek, obtain or maintain

status as a reporting entity, shall, in and of itself, create any right of action on the part of any

person or entity or otherwise give rise to any claim for breach of any fiduciary or similar duty

owed to any person or entity.

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     5-89-9. Fees.

     No document required to be filed under this chapter shall be effective until the applicable

fees required by this section are paid and upon the receipt of a statement under § 5-89-5 or a

renewal statement under § 5-89-6, or a registration statement under § 5-89-7, a fee in the amount

of up to two hundred dollars ($200) shall be paid to and collected by the secretary of state.

     5-89-10. Enabling.

     This act is enabling and applies only to those businesses who seek to become certified as

a reporting entity and, who comply with all applicable registration requirements. Reporting

entities are enabled to craft whatever sustainability blueprint they require that meets their specific

needs as there is no single blueprint for best practices in sustainability among or within industries.

     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO BUSINESSES AND PROFESSIONS

***

     This act would create the Certificate of adoption of transparency and sustainability

standards act that would enable Rhode Island businesses to voluntarily promulgate standards to

guide its business activities in a sustainable and responsible manner, as well as metrics for

assessing whether it has met its objectives.

     This act would take effect upon passage.

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