Who they are, how they originate, prospects and opportunities. Italy’s leading role and the activism of young people, the (true) protagonists of the Impact Revolution.
Since 2016 [1] to today, there are over two thousand entities active in various sectors of our economy that have been established or have become Benefit Corporations. Startups, SMEs, and large corporations that want to generate a positive and lasting impact on society.
BENEFIT CORPORATIONS BETWEEN PROFIT AND IMPACT
Profit or non-profit: where do Benefit Corporations stand? According to Italian law, Benefit Corporations “in addition to the purpose of distributing profits, pursue one or more common benefit purposes and operate responsibly, sustainably, and transparently towards people, communities, territories, and the environment.” An innovative model that goes beyond the traditional profit-nonprofit dichotomy and integrates an element of additionality. As highlighted by a recent Pwc study [2], “it is not just about being responsible regarding generated externalities, which [Benefit Corporations] consider essentially mandatory, but about adopting in the common benefit a purpose that defines the orientation of the entire business activity.”
FROM DEFINITION TO ACTION
Whether they are corporations, partnerships, or cooperatives, Benefit Corporations must meet certain requirements: identify the common benefit purposes (impact objectives) and include them in their articles of incorporation or bylaws; ensure the balance, in business management, between shareholders’ interests and those of other stakeholders; appoint a responsible person within the company to oversee the achievement of the defined impact objectives; produce an annual report (Impact Report) that, through external evaluation standards – such as the B Impact Assessment – assesses the results achieved against the declared impact objectives.
WALK THE TALK OR… TROUBLE!
Benefit Corporations that do not pursue the objectives set out in their corporate purpose may be sanctioned for violations of the rules on misleading advertising (Legislative Decree 145/2007) and the Consumer Code (Legislative Decree no. 206/2005) by the Italian Competition Authority, which has the power to prohibit the continuation of the activity, order the publication of corrective statements at the company’s expense, and impose fines ranging from 5 to 500,000 euros. Needless to say, while the sanctions are severe, the reputational damage can be incalculable.
AN ITALIAN FIRST
Among the many achievements we can be proud of is this one: Italy was the first country in the European Union to give legal recognition to the Benefit Corporation business model, the movement founded in 2006 in the United States by B-Lab, a non-profit organization whose goal is to use business as a positive force to create lasting and shared prosperity for society. This is precisely the main difference: while Benefit Corporations are a corporate model provided for by the legal system and complementary to traditional business models, B Corps are such because they obtain certification based on the standard defined by B-Lab. Therefore, a Benefit Corporation is not necessarily a B Corp, but a B Corp is required to obtain Benefit Corporation status within a certain timeframe from its certification, if possible in the country where it is based.
IMPACT, A DISTINCTIVE FEATURE OF YOUNG PEOPLE
In the face of global macroeconomic and social tensions and the extreme consequences of climate change, it is understandable the success of Benefit Corporations - which doubled during the pandemic period [3] - especially among young people who, as shown by a recent Deloitte study [4], are particularly sensitive to social and environmental issues. It is no coincidence that the “benefit purpose” is the key element on which brands are focusing to attract and motivate young generations, protagonists of what Ronald Cohen calls the Impact Revolution [5]. A peaceful and gentle revolution “started by young consumers and entrepreneurs who are revolutionizing prevailing business models with the goal of improving people’s lives, reducing inequality, and making the planet better. “The profit-with-purpose model - writes Cohen - is the hallmark of the millennial generation.”
CONSUMER DEMANDS
Taking a concrete stance in a market increasingly attentive to socio-environmental consequences is right and beneficial. As shown by the research of Banca Ifis, “Economy of Beauty" [6], for 58% of Italians values are ‘decisive’ in choosing brands and products, while another 33% consider them ‘important’, highlighting how social and environmental issues have become relevant. Consumers, in short, “are transforming from a simple audience into critical actors at the center of the stage who want to interact, converse, and judge.”
MARKET EXPECTATIONS
Sustainable companies appeal to consumers and attract investors’ interest: as shown by research conducted by LIUC University in collaboration with IR Top Consulting [7], the priority themes in investment evaluation will increasingly be linked to companies’ ability to position themselves solidly on the crucial issues of our time: climate change, circular economy, and social issues such as diversity and inclusion.
[1] Benefit Corporations were introduced with the 2016 Stability Law (no. 208 of December 28, 2015), paragraphs 376-384 of article 1.
[2] Benefit Corporations: a new entrepreneurial paradigm, Pwc, 2022, p.39
[3] Businesses, a boom of Benefit Corporations in the year of Covid-19, Vitaliano d’Angerio and Daniela Russo, Sole 24 Ore, June 29, 2021.
[4] Climate change: the number one challenge for Millennials and GenZ, Nicola Andreatta, Green.it
[5] Ronald Cohen, “Impact. The revolution that is changing capitalism,” LUISS University Press, p. 21.
[6] Banca Ifis, Economy of Beauty, https://www.bancaifis.it/comunicati-stampa/nel-2021-leconomia-della-bellezza-rappresenta-il-24-del-pil-nazionale/
[7] ESG disclosure and capital markets: state of the art and future scenarios
