What Italy’s B Corps can teach global business about community

In the wake of the covid-19 pandemic, plenty of companies are revamping their physical offices in an attempt to lure employees back to work. The strategy isn’t always working.

Reti, a technology company based near Milan, is taking a somewhat different approach. It’s designing a campus for more than just its employees. The space is meant to be a hub for the local community, too.

Pictures of the building it’s been working on, a converted cotton mill, certainly look enticing: all high white walls, large citrus trees, and art belonging to Bruno Paneghini, CEO and president of Reti, and his wife.

Paneghini talks about the importance of natural light, plants, and aesthetically pleasing, comfortable furniture. But more compelling, as a departure from other corporate remodeling efforts, is the way he describes the building’s use.

“It’s not just about being comfortable, but about creating a sense of community,” Paneghini explains in Italian, via a translator. To that end, Reti organizes events centered around books, food, and art, not just for staff but for locals; it held 14 such events in 2021. The idea of an on-site restaurant and food education facility is in the works, too.

The company also opened a training center for engineers, so Reti can hire more people from the immediate area—a strategy which Paneghini says also helps convince investors that the projects aren’t just window-dressing, but actually make business sense. In 2021, Reti hired 71 new employees, 20 of whom had gone through the company’s two-year training program.

Reti needs to keep shareholders on side: It is one of only a handful of Italian companies that are both listed on a public stock exchange and certified as a B Corp, a structure that places multiple stakeholders—including shareholders and the local community—at the center of its business model, and commits it to work for all stakeholders, rather than the older, neoliberal model of “shareholder primacy.”

Across Italy, there is an entire cohort of companies, some public but most private, in tech, fashion, food, pharmaceuticals, and other sectors committed to running and growing sustainable businesses. Being deeply embedded in their local communities is part of the plan to get them there.

What is a B Corp?

Italy has more B Corps than any other European country apart from UK and France, according to data from Nativa, a consultancy that helped a raft of Italian companies, including Reti, make the B Corp transition.

Nativa was also instrumental in drafting and lobbying for a 2016 change in Italian law, which made it the first country after the US to make purpose part of a legal business model. Once the società benefit (social benefit corporation) company structure was created, it took four years for the first 40 B Corps in Italy to get created, and just two more years for that number to triple to 121, as of October 2021, says Eric Ezechieli, co-founder of Nativa.

The journey to becoming a B Corp is more arduous than a simple legal change. It’s a wholesale audit of a company’s “sustainability.” B Corp’s certifying body, B Lab, evaluates companies on their approach to employees, customers, the environment, communities, and governance. A B Lab score of 80 or higher is the bar for certification.

For most companies, the assessment takes months, not least because B Lab is backed up trying to process applications.

Chiesi Group, a multinational Italian pharmaceutical company, said it had to answer more than 300 questions for its certification, providing data to back up each answer. Silvia Mazzanti, sustainability manager at Italian outerwear brand Save the Duck and the person responsible for that company’s B Corp certification process, says she spent four or five months in 2018 filling in forms and answering questions—and discovered that was speedy when it comes to getting B Corp status. But even that process was quick versus the alternative of relying on legislation to mandate more responsible business practices.

“If we have to wait for governments to create all the infrastructure, it will take forever, and we don’t have this time,” Mazzanti says. “This earth doesn’t have this time, our children cannot afford this time.”

B Corp certification isn’t always an easy ride. When France’s Danone, one of the biggest multinational food brands in the world, began certifying its subsidiaries one by one, it racked up superlatives: The biggest company to ever attempt certification, the biggest B Corp in the world when its North America division certified. But things got rocky. In March 2021, Emmanuel Faber, the CEO who had pushed for certification and a sustainability agenda that was radical for such a big company, was ousted by his board. By his account, it was a clash of views with certain individuals, and not the direction he was taking the company, that led to his removal. But market watchers have certainly drawn a link between the two.

Will the community roots of Italian B Corps protect their leaders from the same fate?

Italy may not be the first country most of us think of when it comes to responsible, sustainable business. Perhaps that’s the legacy of outworn stereotypes about corruption or a lack of the type of political will that’s brought more rapid changes to corporate governance and sustainable investing standards in, for example, some Nordic countries.

But when it comes to community, says Nativa’s Ezechieli, there are historical precedents in Italy, which he sees as a strength for those businesses making concerted efforts to become better places to work, and contributors to both local and global reforms on things like energy use and supply-chain management.

Italian business is “very strongly rooted to the community and place where the company was started. And this stays even when the company becomes global,” Ezechieli says.

Some of this might have to do with Italy’s history. The country was only unified in the 1860s and 1870s, before which it was “a salad bowl of 20 independent states with their own language, and currency, and legislation,” Ezechieli notes. He describes Italy as a country of “pocket-size multinationals” whose market is global, but which stay rooted at home. “They feel very strongly about [their] impact on the land, the environment, the community.”

Life and death

Maria Paola Chiesi, shared value and sustainability head of Chiesi Group, says that when the coronavirus pandemic struck, it put to the test some of the measures that the pharmaceutical company had been trying to put in place.

Back in 2020, “Italy was the first country to be hit, and so nobody knew what to do,” said Maria Paola Chiesi. “There was a lack of masks, there was a lack of gloves, everything. There was a lack of pulmonary ventilators.” The pandemic quickly overwhelmed Italy’s health system, and the northern city of Parma, where Chiesi is based, was in the eye of the storm.

As a pharma company, Chiesi had expertise and supply lines that even public hospitals lacked. “So we understood that with our procurement, with the process we have for buying from vendors…was much more efficient than that of public hospitals,” Maria Paola Chiesi told Quartz. “So we bought all these things instead of the hospitals…and then we donated them to the hospitals and to the community.”

From local to global

Companies that form a deep bond with the communities of which they form a part is not a new thing for Italy, nor are they limited to B Corps.

Several B Corp executives interviewed for this article mentioned the manufacturer Olivetti, which in Italy is as well known for its social projects, community engagement, and worker focus as it is for its famous designs. Paneghini, it turns out, worked for Olivetti in the mid-1980s at the start of his career. The experience, he says, influenced him even during times when “penny-pinching” was the norm. He still tried to invest in his own staff and immediate environment—a strategy which he says has kept staff turnover low.

But companies with strong local connections are also realizing that they need to be more outward-looking if true sustainability is their goal.

When the pandemic struck, coffee company Illy, which became a B Corp in 2021, tried hard to make sure its workers’ jobs were protected, and that they were safe. As with most businesses, everyone who could started working from home. The company’s coffee-roasting and tasting facilities quickly brought in measures like separate changing rooms and bathrooms, masks, and on-site testing. Illy managed not to lay off any Italian staff, said David Brussa, Illy’s quality and sustainability director.

But Brussa also acknowledged that local employees are only part of the picture for a company that relies on a commodity like coffee, which is mostly grown in non-European countries and relies on a complex, often problematic supply chain.

For years, Brussa says, part of Illy’s mission has been to “de-commodify” its own supply chain, recognizing that coffee is not just a material to be bought, sold, and consumed, but a plant grown and harvested by specific people in specific places. Illy has developed close relationships with suppliers, Brussa said, sometimes working with growers for five years to improve their processes before starting to buy from them at a premium price.

When supply chains were majorly disrupted by the pandemic, he said, these relationships came into their own: Illy could rely on receiving a top quality product without the need for multiple rounds of testing that a brand marketed as “premium” would normally require.

Whether at the local or international level, what Italy’s B Corps have in common is a belief that companies—private and public, big and small—need to lead on sustainability, not wait for legislation to do the work for them, or even disaster to make it imperative.

What Italy’s B Corps can teach other global businesses about community

All over the world, businesses are increasingly beginning to acknowledge how much they are, and should be, a part of the communities they inhabit. But their actions sometimes feel out of alignment with the goal. One example is the practice by Silicon Valley tech giants of busing employees out to campuses where they not only work but also eat and socialize, driving up local living costs up without bringing other benefits.

Amazon’s failed Pride branding is another example of how companies sometimes get it wrong. Whether or not Amazon tried to “buy” Seattle’s iconic Pride parade in 2022, its offer of a $100,000 sponsorship in exchange for a “presented by Amazon” mention offended Pride organizers and backfired spectacularly. Instead of getting an inclusive local event with its brand name attached, the e-commerce juggernaut looked out of touch with exactly the people they’d been trying to appeal to: its home city’s local community.

As with any corporate attempt to make the world a better place, there’s a balance to be struck: How can a firm make real impact close to home, without losing sight of its impact on the world as a whole? Increasingly, Italy seems to be a place that companies all around the world can look to for answers.

With Italian translation assistance by Annalisa Merelli.