The Benefit Corporation(SB) integrate in their corporate purpose,
in addition to profit goals, the aim is to have a positive impact on society and the biosphere.
They represent an evolution of the very concept of a company.
Wrote E.M. Dodd: “Business activities are permitted and encouraged by law because they are a service to society rather than a source of profit for its owners”
(Harvard Law Review, 1932).
After almost eighty years, the B Corporations realize the winning intuition of the famous American jurist. It is now a question of not giving up, not listening to false teachers.
Stefano Zamagni – Professor of Economics, University of Bologna
The Benefit Corporations (SB) represent an evolution of the very concept of a company. While traditional companies exist with the sole purpose of distributing dividends to shareholders, benefit companies are the expression of a more advanced paradigm: they integrate into their corporate purpose, in addition to profit objectives, the aim of having a positive impact on society and on biosphere. A Benefit Corporation is a legal tool that creates a solid foundation for the alignment of the mission in the long term and the creation of shared value. It therefore allows you to protect the mission in the event of capital increases and changes in leadership, create greater flexibility in evaluating potential sales and maintain the mission even in the event of generational changes or listing on the stock exchange. It is not a question of Social Enterprises or a non-profit evolution, but a positive transformation of the dominant business models for profit, to make them more suitable for the challenges and opportunities of the 21st century markets. Since January 2016 Italy has introduced, first in Europe and first in the world outside the USA (where the legal form of Benefit Corporation, equivalent to the Italian Società Benefit, was introduced in 2010 and now exists in 33 States), the Benefit Corporation to allow entrepreneurs, managers, shareholders and investors to protect the company’s mission and distinguish themselves on the market from all other corporate forms through a virtuous and innovative legal form.
Fundamental characteristics of the Benefit Corporations
The Benefit Corporations voluntarily pursue, in the exercise of the business activity, in addition to the purpose of profit, also one or more purposes of common benefit. By common benefit we mean the pursuit of one or more positive effects (which can also be pursued by reducing the negative effects) on people, communities, territories and the environment, cultural and social assets and activities, bodies and associations and other stakeholders. The Benefit Corporations pursue these purposes of common benefit in a responsible, sustainable and transparent way and their management requires managers to balance the interest of the shareholders and the interest of the community.
By law, BCs must appoint a management person who is responsible for the impact of the company and undertake to report their activities in a transparent and complete manner through an annual impact report, which describes both the actions carried out and the plans and commitments for the future.
The path of introduction of the Benefit Corporations in Italy
Since 2006, a global movement of companies, the certified B Corp®, has promoted the introduction of a substantial change in the essence of companies, namely in the articles of association and corporate purpose. According to Italian doctrine, in fact, companies exist to pursue a single purpose, that is to distribute dividends to shareholders: this is a structural element that limits the ability of management to innovate in directions useful for the company, as well as making virtuous companies vulnerable. in the face of events such as changes in management or its orientation, the entry of new shareholders, stock market listings, etc.
Since 2014, the Italian certified B Corp® have promoted a political and legal project coordinated by Sen. Mauro Del Barba, first signatory of the Bill on Benefit Companies, filed in April 2015. The Italian legislation on Benefit Corporation was developed by an international team of lawyers, entrepreneurs and other stakeholders in harmony with the discipline of the Benefit Corporation existing in the USA and currently also introduced in Colombia (2018), Puerto Rico (2018), Ecuador (2019), Canada – British Columbia (2019), Peru (2020) and Rwanda (2021). The draft law on Benefit Corporations was then merged into the 2016 Stability Law. The regulation of the benefit corporations is contained in Law No 208 of 28/12/2015 (2016 Stability Law) Art.1, Commi 376-384 and is entered into force as of January 1, 2016.
Benefit Corporation: Purpose, Responsibility and Transparency
A Benefit Corporation is a traditional corporation with modified obligations that commit management and shareholders to higher standards of purpose, accountability and transparency. In particular:
1) Purpose: BCs are committed to creating a positive impact on society and the biosphere, i.e. shared value, as well as generating profit. Sustainability is an integral part of their business model and BCs create favorable conditions for social and environmental prosperity, today and in the future.
2) Responsibility: BC undertake to consider the impact of the company on society and the environment, in order to create long-term sustainable value for all stakeholders.
3) Transparency: BCs are required to communicate annually and report according to third-party standards the results achieved, their progress and future commitments towards achieving social and environmental impact, both towards shareholders and the general public.