12 July, 2022
Sustainability and ESG criteria in Italy: from political agenda to core value for companies
Climate change has entered political agendas in Italy since the advent of the Green Deal, which EU Countries joined in 2019. The goal is to achieve zero climate impact by 2050 and a net domestic reduction in greenhouse gas emissions of at least 55% by 2030.
It is not only the environmental situation that dominates the debate in Italy. The social and cultural aspects that characterize this century, such as gender equality, the fight against inequality and discrimination, etc., are also mixed in with the sustainability trend.
These issues populate discussions in the Italian media especially at the present time, due to the pandemic aftermath, climate change effects and war-related consequences.
Businesses and entrepreneurs are involved in all this as well. Italian companies are increasingly called upon when it comes to environmental and social impacts, so much so that their commitment is increasingly being sought.
In this article we look at how companies in Italy are involved in responding to these new needs from the market.
Benefit Corporations in Italy
Becoming a Benefit Corporation is a good way to endorse a new sustainable approach in business.
The number of Benefit Corporations in Italy is also a mirror reflecting the afore mentioned trend, as it doubles each year: in april 2021 its number reached 926, and in June 2022 Assobenefit surveyed just over two thousand (2146).
These companies are characterized for having, as a social object, the commitment to generate positive environmental and social impacts for employees, stakeholders and communities.
Italy has been a pioneer in this matter, being the first Country in Europe (and one of the few globally) in adopting the Law of December 28, 2015 that institutionalizes this kind of business model.
An explosion of interest followed the 2016 legislative intervention (stability law) that Italy accepted and strictly enforced, which adds provisions to promote benefit corporations.
The Decree Law 1882 of April 17, 2015 reports guidance on what is meant by “common benefit” and how to structure its processes. In particular:
- give guidance on how to make the beneficial purposes explicit in the corporate mission, amend corporate name, articles of incorporation and bylaws;
- give a definition of common benefit and how to balance the interest of the company’s members with the interest of those on whom the social activity may impact;
- introduce external evaluation standards for assessing the impact generated;
- identify areas of evaluation.
Benefit Corporations can make use of tax incentives as well. The Relaunch Decree (DL 34/2020) established a tax credit equal to half of the costs of incorporating a BC or transforming an existing company into a Benefit one (up to a maximum of 10000 euros).
To incorporate a Benefit Corporation there are subsidized expenses regarding notary fees, registration with the Companies Register, professional assistance and consulting services directly involved in the Benefit Company incorporation or transformation.
B Corps in Italy
Benefit Corporations and B Corps are two separate things. We use the term “ Benefit Corporation” to identify the type of legal form of a company (recognized in Italy but not very common internationally), while, “B Corps” are companies certified by the no profit organization B Lab.
B Corps meet the world’s highest standards of social, environmental and economic performances, with a legal involvement towards their stakeholders. As for Benefit Corporations, B Corps are a great indicator to identify a Country vision towards sustainability.
The first certified B Corp in Italy dates back to 2013 and since then the number has been steadily growing.
In 2021 the number of B Corps in Italy reached 140, +26% over the previous year, with a turnover of 8 billion and 15 thousand employees. In 2020 in Italy, B Corps saw their turnover grow in the 66% of cases and 52 % of them experienced an increase in workforce.
Regulation and ESG criteria
Companies that pay attention to environmental and social aspects while leading their activities and monitor their CSR performances have gained importance and popularity.
We summarize the tripartition of the environmental, social and economic role of companies today with the term ESG (which stands for environmental, social, governance). This term encapsulates a set of criteria on which many corporations are evaluated. The legislative activity has helped in regulating sustainable activities and in facilitating an unbiased monitoring of companies, preventing the so-called greenwashing.
How to monitor companies’ activities and achievements on these matters? The answer lies in the non-financial reporting that not only Benefit Corporations but also many listed companies draft. This is a qualitative report that informs stakeholders about the impact of social and environmental policies undertaken by the companies.
The GRI standard, developed by the international nonprofit Global Reporting Initiative and updated in 2021, is one of the most important benchmarks in giving a unique framework on sustainability reporting.
Publishing a public sustainability report is not the only way to identify companies’ activities and impacts from a sustainability perspective. ISO certifications, issued to companies by accredited bodies, are particularly important in supply chain and supplier assessment: ISO 9001 for Quality, ISO 14001 for Environment, ISO 50001 for Energy, and SA 8000 for Social Responsibility.
Understand and align with trends
To conclude, checking local trends on Benefit Corporations, B Corps, Sustainability reports and ESG criteria is a good way, even if not the only one, to evaluate a Country on its commitment towards environmental and social values. It is also important for entrepreneurs that intend to expand or set their business in Italy, in order to be aware of the approach and mindset towards sustainability.
Contact us for more information about Benefit Corporations and their incorporation, or to register an existing company as a Benefit corporation.
Sources:
- ilsole24ore.com (Benefit Corporations)
- societabenefit.net (Benefit Corporations legislation)
- esg.360.it (facts and figures on benefit corporations and b corp in Italy)
- ilsole24ore.com (BCorp)
- wikipedia.org and globalreporting.org (GRI standards)
