B Corp: Beyond Profit, it measures what matters. | Eric Ezechieli | TEDxMilano


Translator: TEDx Milano Translators
Reviewer: Michele Gianella I want to start with a question,
and I want your gut reaction. By a show of hands, let me know
how you think the world is doing. Who thinks it’s doing okay? Okay. Lower your hands. Who thinks things are going badly? Okay, do the math for yourself. This graphic was created by Hans Rosling, a brilliant Swedish scientist,
maybe you’ve already seen it. It shows us what happened
over the last 218 years. We’re in 1800, each of these dots
represents a country, the Y-axis is life expectancy, the X-axis is income. The tiny yellow dot out in front
is England in 1800. 40 years of life expectancy, 2,500 euros of average income,
in today’s value. Look what happened
over the last 200 years. You see? During the 1800s,
almost nothing happens. Income goes up a little, but life expectancy stays very low. Look what happens
at the turn of the century. See the dip in the years
of the First World War? It recovers immediately. See the Second World War? Now look what happens
in the post-war period. An extraordinary,
exponential acceleration. It’s a real transformation of society. The global population,
every country in the world attains a high level
of well-being and life expectancy, which is really extraordinary. There is a force,
an extraordinary engine of growth that made this possible: technology. And there is business,
the operating arm of technology. Through companies,
entrepreneurial activities, we managed to transform
the human condition in an extraordinary way. So today, there is a whole series
of indicators you see here: poverty, education, literacy, democracy, vaccination, child mortality. All these indices
are extraordinarily positive as we could have never imagined
a few decades ago. But now I need you to look
into the future a little. Then I’ll ask you another question. When we think about the future,
it seems far away. Hands up, how many of you
in this room have children? Okay, a good half. Think about the year
when they’ll be your age today. Or, if you don’t have children, when children born in 2018
will be your age today. For me, it’s 2051 and 2055. Think about what happened
in the previous 200 years, and imagine, with this
extraordinary acceleration, what could happen
in the next 20, 30, 40 years. Bear in mind that we are experiencing a change
that is not linear but exponential. Exponential means that for a long time nothing happens, and then a kind of explosion. You can see, when I was born, there were fewer than four
billion people on Earth. Now there are almost eight billion. You’ll realise that we’re living
in an era of disruption, of the unimaginable acceleration
of a whole series of aspects, a whole series of trends,
both positive and negative. And we find the same dynamic
almost everywhere. There are hundreds of parameters, indicators, activities, and their impact that are following the same trend. So, for a long time,
nothing seems to happen, then we have this explosion. We are in the middle of this explosion. At the same time, we live on a planet that has been the same
for billions of years. There used to be
so much planet, so few people; now there are so many people,
and the planet hasn’t changed. And we have adopted an economic model
that has potent consequences. A model that worked fine until now but possibly won’t lead us
to a desirable future. I’ll show you what’s happening today in the middle of the Pacific,
in the Midway atoll. Look at these images. This is what happens
when we adopt a business model that works up to a point but is poised to change in the future. We see what’s happening to animals,
to the albatross, in the Midway, and actually, the same thing
is also happening to us human beings. So, as we look at this image,
let’s consider breastfeeding. In some areas of the planet,
the most polluted ones, there are hundreds,
thousands of toxic chemicals that are now found in breast milk. Breast milk should be treated
as toxic waste. Without exaggeration, this is true
even in Italy’s most polluted areas, not to mention China or other regions. It’s clear that we must completely
transform our economic model. We must transform our paradigms. And the other thing
I want to share with you is this. See this red line? 800 metres long, Sempione Park,
not far from here. If we consider a human body’s volume, each one is about 70 litres. All humanity, the whole human race could fit within an 800 metre cube. The volume of every human on Earth today. And yet this microscopic dot – this pixel, compared
to the dimensions of the planet, through technology and its business models manages to impact the machinery
of the entire planet. You realise that the rate
of change is not linear. The future will not be a projection
of what we experienced in the past. In the future we will see the drastic acceleration
of a whole series of phenomena. This wheel represents
every country on Earth, and these animated bars represent the average temperatures
compared to historical zero. Look what happens from 2000 onwards. The more red it becomes,
the more the planet is heating up. Do you see the non-linearity
of these changes? The sense of urgency
that pushes us toward change? What actually happened from 2000 onwards is that the oceans lost their capacity
to absorb heat and excess emissions. So the Earth, instead of continuing
to absorb our excesses, began to turn into an emitter. It is no longer able to absorb
our environmental impact. So, we have to move on
from an extractive model – and I’m not just referring
to the mining industry but to a business model
driven by a single goal: search for value,
collect it, concentrate it, extract it and concentrate it,
extract it and concentrate it. Because this extraordinary machine
that is business – companies today – if we look at the default model,
it is driven by a single goal: distribute dividends
or maximise value to shareholders. If that’s the single goal, the consequence is very simple
but quite shocking. People and the planet
are not considered in this business goal. You must realise that although
it worked until now, given the conditions and the speed
of change we are experiencing, it won’t work in the future. It is essential that it changes. To give an idea of ​​how well
this model works, I’ll show you an equation. It seems a bit odd: 8=4,000,000,000. This model of the value concentration
has been working so well that today eight humans on Earth – they could fit in this golf cart – have as much wealth as the Earth’s
four billion poorest people. So, business is an extraordinary force, like earthquakes, volcanoes and climatic events. But the time has come
to transform its very essence. The time has come to transform it into something that is
regenerative, not extractive, something that recognises
the interdependence of everyone involved
and the whole system it belongs to. Let me read you this sentence: “Every company must serve
a social purpose. It must produce results
that are not just financial, but that benefit
all its stakeholders also, shareholders, employees, customers
and the communities they operate in.” The first time I saw this, I thought it had been written
by, maybe, Adriano Olivetti, an almost mythological entrepreneur. Actually, this is an excerpt from the letter that was sent
at the beginning of this year by Larry Fink, the CEO
of the world’s largest investment fund, to all CEOs of the companies
the fund invests in. Larry Fink wrote to all the companies
his fund invests in – BlackRock manages almost
seven trillion dollars of assets, more than three times the GDP of Italy – he wrote, “What is your mission? You have to have a mission,
you must have a meaning, you must play a role
that positively impacts the planet.” He said, “If you don’t take
this mission into account, you will have lower returns, you will be less profitable,
you will do worse than other companies because you’re not up
to the collective challenges ahead of us.” Benefit Corporation came out of all this. Benefit Corporation
represents an evolution, perhaps the most advanced representation
of what a sustainable business could be: the concept of using the business
as a force for good. How can we use
this extraordinary potential to help solve the major
challenges of our time? Any company can start to reinterpret
and reorient itself in this direction. In this way, it can turn
into a regenerative company. This means that the company
measures what really matters and manages all its impact with the same thoroughness and rigour that is now applied to economic
and financial measurements. A regenerative company
has a vocation written into its statute. In the United States, it has been
a legal form since 2010. These companies are recognised as existing not only for profit,
but more than profit, for benefit, and have this mission
written into their social objectives. A regenerative company competes,
not to be the best in the world, but to be the best for the world. And so, if we imagine that all companies,
or more and more companies, move in this direction, we’ll see business becoming an engine
of lasting and shared prosperity. Kennedy’s ideal becomes reality. And so, here is a chart
inspired by Carlo Maria Cipolla, in which I tried to represent the main types of companies
or organisations. There are, let’s say, the “good” ones, that have a positive impact on others but don’t necessarily
create value for shareholders. Then there are the locusts, those who destroy value for others, keeping the benefits for themselves. Cipolla would actually
call them the stupid ones. Those who harm others
and in the process, also themselves. So the great majority
of companies are extractive and generate value for themselves
and their shareholders, but they don’t necessarily generate
any value for anyone else. Finally, there are regenerative companies, the Benefit Corporations, that create just as much value
for themselves as for others. So this is a model available
today, if we want it, that we hope to disseminate
as much as possible. Bob Shiller, the Nobel Prize winner
in Economics in 2013, said a few years ago, “I believe Benefit Corporations will be more profitable
than other types of company precisely because they are responding
to the needs of the 21st century.” These are companies that use technology to do something that was
unthinkable not so long ago: measuring all its impact, measuring what matters
in a comprehensive, rigorous way. So, for a dozen years, we’ve had a technological platform
called B Impact Assessment, open and accessible
to anyone in the world, which job is to establish if a company is creating
or destroying value for society. It’s not just about economic value but also environmental and social value. Today it is possible for a company to take all their data,
measure their activities and, using technology, do something
that just a few years ago wasn’t possible: to find out where it ranks,
from 0 to 200 points. At 80 points we find ourselves
at the threshold – let’s say, in equilibrium. Under 80 points means
we have an extractive company, which takes more from the world
than it creates. Over 80 points means
that it is regenerative, creating more value than it extracts. We hope to have
as many of these as possible. Currently, it is quite difficult
to pass this threshold. This graph here shows us
more than 70,000 companies in the world that have been rated using this protocol, and there are only 2,650
that have passed this threshold. But it demonstrates one basic fact: that it can be done. These are all companies
who measured their impact, in 60 countries and across
140 different industries, that show that it is possible
to run almost any business in a way that creates more social,
environmental and economic value than you extract. Do you realise how
revolutionary this concept is? So, in 2012, what did we do? When we founded Nativa, we copied this model
from the United States. We said, “If they can do it, so can we.” We contacted lawyers,
notaries, legal experts. We wrote our statutes, in which we declared our aim
to make Nativa a regenerative company, one that goes beyond
the concept of profit. So, we set up the company
and went to the Chamber of Commerce. But our statutes were rejected. Why were they rejected? We had something
so innovative, extraordinary. We were not asking anything. “No, it cannot be done. The law prevents a capital company
from doing something other than producing a return
for its shareholders.” So, it could not be done. We persisted. We were rejected a second,
a third, a fourth time. The fifth time, exhausted, the Chamber of Commerce agent
said, “All right, all right. We’ll register it. Nobody will care.” And then we begin to operate
in limbo, a grey area. We hoped nobody would notice
so we could get on with our business. But this, let’s say, didn’t work out well. So, together with Paolo Di Cesare,
co-founder of Nativa, we started to push this idea ourselves. We began to contact people
who would understand the opportunity. Maybe they could help us
promote this innovation. We created a working group that within 14 months
basically wrote a bill. This bill was presented before the Senate and was introduced as an amendment
to the 2016 Stability Law. And as you see here, the law was passed on December 22, 2015. This is me with senator Del Barba
and Paolo Di Cesare. And for the first time in Italy,
a new legal form was introduced where Benefit Companies
were recognized as companies that “in the exercise
of their economic activities, in addition to the aim
of creating dividends, pursue one or more goals
for the common good.” It is a rewiring of companies’ DNA. Italy thus became
the world’s first sovereign state to adopt this legal form. Today, it exists in 34 states
of the USA, in Italy, and Colombia, and there are 15 other countries
who are introducing the same model. Italy finds itself as the country
where this model is growing the fastest. More than 85 Italian companies
did pass the 80 point threshold in a measured, verified,
and certified way, and we have more than 300 companies
who adopted this legal form. Overall, in Europe, when Nativa was born,
we were Patient Zero. There were no other Benefit Corporations. Today, there are more than 700 Benefit
and B-Corp certificate corporations. Today, Italy is a planetary laboratory. The world looks at us
and says, “How did they do that?” We want this same model,
the one we have in Italy, to spread to other countries. We believe this concept
of a regenerative company is also very similar to our own DNA, very close to our entrepreneurial make-up. And so I hope that, as citizens, you start looking in depth
at what you buy. Where is it from, who made it,
does it have a positive impact or not? If you are an entrepreneur, find out if your company
is creating or destroying value. Do you know? Have you ever measured it?
Today, this is how to move forward. If you are an administrator,
now dozens of cities around the world, one example is New York City, are adopting this model
and spreading the idea around because, obviously, the more companies of this type
are in a given territory, the better it is for the economy, for the environment, and for society. I am positive, optimistic, despite what I forced you
to see at the beginning. I believe peoples and nations
will always do the right thing, but only after exhausting
all the other alternatives. I don’t know if we have run
out of alternatives yet. I believe we are fast
approaching this wall and much more quickly
than is commonly believed. But I also believe that we have
the opportunity and the tools, and that the only thing
that might be missing is a little leap of faith
to speed up this positive transformation. Thank you. (Applause)

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