B Corp: business serving the common good

B Corp: business serving the common good

DELES has chosen to start on the path to becoming a B Corp, a goal in which the management strongly believes and which requires them to get involved and change both the corporate culture and many operating methods. But what does it mean to become a B Corp and why do many companies today choose this path?

Imagine a world in which all stakeholders of a company – not just shareholders – are valued and put first. It is the dream of transforming the power of business into an enterprise serving the common good, a B Corp. This is the future imagined by B Lab, a non-profit company founded in Wayne, Pennsylvania in 2006, which gave rise to the B-Corporation movement or, in Italian, benefit companies.

The starting point from which the B Corp movement was born is an observation: the economic system in which we live does not work well. It produces development, but at the same time pollutes the planet we live on, generates abysmal inequalities in the distribution of wealth, causes colossal waste of food and resources, and exploits working conditions that for many are simply inhuman. Globalisation, while no longer as unstoppable today as it was at the beginning of the millennium, only reaffirms this picture on an even greater scale. It is a question of impact. It seems that the wealth produced (for a minority) has a negative impact on society as a whole and on the planet.

This is not a new observation but, having reached this point, what to do? Collectivism was tried in the short century, and with little luck. Instead, it is a question of evolving the very concept of the company that underpins the economic model in which we live. On closer inspection, there is hardly a business article that does not begin with an opening on change, an unstoppable change that requires companies to evolve to seize market opportunities. Yet, the dominant legal forms of business have remained virtually unchanged for decades and are based on models born at the time of the Industrial Revolution, almost three centuries ago. The traditional company, the ‘corporation’, was born with a constitutive and structural objective: to distribute dividends to shareholders; this is how it works (and we also know how it ends). How to change this paradigm?

If we take away the distribution of dividends, if we give up profit, we get a non-profit company. The third sector has, especially in recent years, gained a growing and influential role in the economy and society. These organisations are born with the aim of having a positive impact on people and the environment but do not have a sustainable business model, i.e. they assume the existence of the value generated by for-profit companies in order to exist and continue operating.

A paradigm that needs to evolve

At B Lab they were looking for a more evolved paradigm, one that would challenge the principle of dividend distribution, or rather the very nature of dividends. To be a B Corporation one needs to complement profit goals with the aim of having a positive impact on society and the biosphere: people and planet. It is a positive transformation of the dominant profit-driven business models to make them more appropriate to the challenges and opportunities of 21st century markets. In addition to the profit motive, which remains, benefit societies also pursue, in the exercise of their business activity, one or more purposes of common benefit. This may be the pursuit of one or more positive effects (or the reduction of negative effects) on persons, communities, territories and the environment, cultural and social goods and activities, bodies and associations. A benefit company pursues these common benefits in a responsible, sustainable and transparent manner and their management requires managers to balance the interest of shareholders and the interest of the community.

Why this emphasis on positive impact and the common good? Is it just an ethical concern? The fundamental principle driving this change of perspective is interdependence, the same interdependence that governs the functioning of all forms of life on Earth. Even in human societies, we must act with a clear understanding of this mutual dependence, which is also a responsibility towards others (employees, stakeholders, customers, inhabitants of the territory), towards the environment in which we live and towards future generations. This is why interdependence and the consequent mutual responsibility become the founding element that drives the B Corp movement, according to the People – Planet – Profit paradigm. All B Corporations sign a Declaration of Interdependence.

A regulatory issue

The objectives of balancing interests and mutual responsibility require a legal basis, which must be constructed. According to Italian doctrine, in fact, companies are created to pursue a single purpose, namely to distribute dividends to shareholders: this is a structural element that limits the management’s ability to innovate in directions useful to society, as well as making virtuous companies vulnerable to events such as changes in management or its orientations, the entry of new shareholders or stock exchange listings.

The growing popularity of B Corporations and Benefit Corporations has prompted the Italian legislature, among the first in Europe, to recognise the legal status of benefit corporations. In Italy, the activities of these companies have been recognised and regulated since 2016.

How to become a benefit company

Under Italian law, a benefit company is a traditional company with modified obligations that commit management and shareholders to higher standards of purpose, accountability and transparency. Specifically:

  • Purpose: commitment to create a positive impact on society and the biosphere, i.e. shared value, in addition to generating profit. Sustainability is an integral part of the business model and these companies create favourable conditions for social and environmental prosperity, today and in the future.
  • Responsibility: commitment to consider the impact of the company on society and the environment, in order to create long-term sustainable value for all stakeholders.
  • Transparency: communicate annually and report according to third-party standards on achievements, progress and future commitments towards achieving social and environmental impact, both to shareholders and the general public.

In order to become a benefit company it is therefore necessary to include the benefit purpose in the company statute, specifying the benefit aims and identifying the target groups. The company must also create a dedicated organisational structure to promote and monitor the achievement of the declared benefit objectives, which must then be included in the financial statements in a special report.

In addition to the path required by Italian law, there is the B Corp designation, which is a certification issued on the basis of a standard defined by B Lab itself, which then acts as the certifying body. B Corp certification is not required by Italian law: in other words, one can be a benefit company without taking the B Corp certification route and vice versa, although there are obviously many common areas between the two. In Italy, B Lab considers the status of a benefit company to be an important requirement for certification.

Today there are about one thousand benefit companies in Italy, while B Lab certified companies worldwide exceed six thousand. Companies or start-ups adopt this model both for ethical reasons and to attract investors and talent, thanks to the reputational value that a benefit orientation ensures. “I believe that benefit corporations will have better economic results than other types of companies,” said Robert Shiller, Nobel Prize winner in Economics in 2013 and one of the fathers of behavioural finance. Perhaps this authoritative statement can take us back to the structural motivations that make up the substance of a for-profit corporation, even in the 21st century. It is a growing movement with ambitious goals: to change capitalism from within by working on the behaviour, structure and culture of companies.

DELES therefore joined the B Corp movement and embarked on this certification path, relying on the advice of partner Nativa. “We believe in the role of people actually working in ecosystems to bring about positive change, and this systemic vision and relationship between internal and external people (stakeholders, customers, suppliers) is perfectly reflected in the B Corp approach and has now become a business requirement for DELES,” says Stefano Scaroni, DELES CEO.

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