There is growing knowledge and acceptance (albeit often reluctantly) that current business practices are not working from the majority of people and our planet. It seems capitalism’s approach of profit maximisation through efficiency and growth at any cost may just be its own demise.
In response to these challenges, new businesses are forming around the world to bring profit, people and planet together. Many of these businesses are choosing to become B Corporations, an independent accreditation for businesses that meet the highest standards of verified social and environmental performance, public transparency. Measuring social and environmental performance alongside financial performance allows businesses to create a better working culture for their employees as well as products and services with minimal environmental footprint.
Within this movement a new term is emerging, the Benefit Corporation.
The Collective Role of Benefit Corporations and Certified B Corporations
A Benefit Corporation is the legal structure used to create and govern a business which incorporates social and environmental factors in its mission. It is chosen when businesses file to register with the Government.
Traditionally, the mission of the business as stated in their legal form is to maximise profits. This is important to note as board members are liable to the business mission. So when a business is focused on profit, it is easy to sacrifice people and planet for the sake of meeting short term objectives.
To put it simply, this legal structure allows directors and leaders to focus on broader stakeholder returns (example: employees, customers, community, environment), not just short term financial shareholder returns.
The Benefit Corporation is the legal structure of a business, whereas a B Corporation is an ongoing certification (also known as a B Corp) through a B Impact Measurement assessment which tracks the progress of targets towards social and environmental outcomes. Instead of having a legal structure that is purely profit oriented, Benefit Corporations are able to incorporate social and environmental purpose in their core business practices.
It is not compulsory for Benefit Companies to become certified B Corporations, however the measurement and tracking is often a powerful and helpful tool to help board members and leaders ensure mission alignment.
Having both a legal structure and a certification with ongoing measurement creates a new and important market dynamic. Businesses who want their purpose to encompass social and environmental factors as well as profit can now enter the market in a way that doesn’t compromise their values, and in many cases, actually creates a competitive advantage.
The Global B Corp Movement Hits Italy
In Italy, the B Corp movement has been growing at a rapid rate. In 2016, they were the first European country to develop a new legal status called Società Benefit” (Benefit Corporation). This allows businesses to create a solid foundation for long term mission alignment and value creation that focuses beyond profit. It protects the mission through capital raises and leadership changes, creates more flexibility when evaluating potential sale and liquidity options, and prepares businesses to lead a mission-driven life post-IPO. This is important as it allows the social and environmental values of the organisation to become an integral part of the business, culture and practices rather than just a passion project of a leader.
I met with Eric and Anna from Nativa, the team behind the growth of the B Corp movement in Italy. ‘The B Corporation movement is one of the most robust, compelling answers to the system change we need to evolve capitalism. It creates a framework for us to think about the relationship between businesses, the environment and society that ensures healthy growth for all.’ Eric explained.
Meet the Team Behind the Italian B Corp Movement
Nativa was the first B Corp in Italy and in fact Europe. Eric Ezechieli and Paolo Di Cesare, co-founders, did not want to create their business with a legal structure that focused purely on profit. ‘We were rejected from the government administration department four times because our mission did not reflect the accepted terms. On the fifth time, we were given our business licence, but I think it was because the employee was tired of dealing with us.’ Eric laughed. ‘They said that because we didn’t follow standard protocol, we may be liable. So, we really became the first illegal B Corp in Italy.’ Anna and Eric discussed with passion the role they played to pioneer a new legal structure in Italy.
With the momentous occasion of their business starting, Nativa decided they wanted to make it easier for the next wave of businesses who want to bring people, planet and purpose together.
The B Corp Movement in Italy Today
Today, there are over 400 companies across Italy listed as a Benefit Corporation and 80 certified as a B Corporation. ‘We are at the point where we have businesses coming to us daily now asking how they can become a B Corp. It is like we have pushed a rock up a hill and now it is rolling down and gathering momentum.’ Anna said.
The team at Nativa want Italy to be known globally as the country creating innovative and powerful businesses that are good for profit, people and planet.
However, there was a lot of work to get to that point. A working group was formed with the purpose of petitioning Government to pass a new business legal structure, the Benefit Corporation. Their successful campaign was an important one and is now being used as a model by Governments around the world. From their experience, Anna and Eric shared some lessons and reflections about how to create a country wide movement.
4 Lessons for Building the Benefit Corporation Movement in Your Country:
1. Spread awareness through existing mission aligned networks
Building critical mass within existing networks is one of the most helpful ways to get attention for an issue and keep pushing forward. The Nativa team worked alongside a small group of people from various organisations including the Senator and his team as well as B Lab USA and local teams to increase the awareness of the importance of the legal structure. Ensure everyone has the same mission and goals so coordination is streamlined.
2. Educate decision makers
Eric said that one of the working group members was integral with the education process of Government officials. ‘We had one member who organised meetings with Senators to step them through why it is important, what Italy has to gain and the opportunity it presents for the economy.’ Anna explained. It seemed that the key factors for educating decision makers was to create a compelling case with the use of terms and concepts that Senators felt comfortable discussing.
Education is key for not just decision makers but also business leaders. ‘We cannot stop the rate of disruption in business, but we can prepare leaders to face into these changes.’ Eric shared. Many business leaders are facing challenges including climate change, retaining talent, social inequality and resource scarcity on a daily basis. These points of disruption are only set to increase. It is critical for leaders to build skills including systems thinking, empathy, visionary leadership and humility to help them navigate into the future.
3. Lower the barriers for influential people to advocate
‘We spent a lot of time working with Senators and others influential leaders to help them understand the value of creating a Benefit Corporation Structure. However, the most compelling point we found was that we were not really asking for anything from the Government. There were no tax incentives, special processes or taxpayer money required to create this legal structure.’ Anna shared.
Focusing on the benefits and making the steps as easy as possible creates a strong platform for change.
The key to getting the legislation passed was to keep it simple, minimise taxpayer costs and was able to articulate the social, environmental and economic potential impact.
4. Help people find their voice and role
As more people became aware of the B Corp Movement, the working group worked to help them find their voice. This was done by mobilising the entire B Corp community globally and entrepreneurs/people in Italy through an online petition with change.org. This was then used with Senators and in Government decision making. This also allowed people to express why they believed a Benefit Corporation was important for the Italian market.
Importantly, after the new legal structure was passed through Government, the community were kept engaged and empowered to spread the news in their network.
The Next Phase For B Corps in Italy
Both Eric and Anna are incredibly excited for the next phase of growth in the Italian B Corp market. ‘We are proving through our growing number of registered B Corps that there is a new way of working within the capitalist system that aligns people, planet and profit. The next phase for us it to move into the mainstream. We have some really exciting Italian businesses in the B Corp pipeline and we also want to increase public awareness of B Corp certification.’ Eric shared.
For Anna, the next phase is about educating the media to understand why B Corporations are important and to build more awareness within the public and business community. ‘Ultimately we want to create a mindset shift in business and the public so that the B Corp market isn’t just an option, but in fact seen as the future of capitalism.’
Nativa’s team passion, drive and commitment for the B Corp movement was so inspiring. For them, it represents a positive shift towards a healthier and stronger capitalist society. With over 1800 certified B Corps from over 50 countries around the world, the momentum is building for the next wave of business growth that doesn’t compromise people or our planet.
The Australian B Corp community, led by B Lab ANZ is petitioning the Government to introduce a Benefit Corporation (Benefit Company in Australia) legal structure. You can learn more about the Australian movement here and you can also sign the petition here.
You can also check out Planet B Insights’ previous post ‘3 things to know about the B Corp movement in Australia.’ for more information.
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