Dipartimento di Impresa e Management Cattedra di Managerial Decision Making Sustainability and profit, two incompatible realities? How Benefit Corporations can change the way we look at business: the case of Aboca Prof. Luigi Marengo Prof. Gianfranco Di Vaio RELATORE CORRELATORE Roberto Remedia Matricola 692371 CANDIDATO Anno Accademico 2018/2019 Abstract The key topic of this work is a theoretical and empirical analysis of the new school of thought created by the emergence of the Benefit system in the business landscape and its potential consequences. In the first chapter, this thesis analyzes the current global challenges, with a specific reference to the main initiatives and congresses, which drove the operations of the United Nations in the last decades. After this macro-excursus, the focus moves towards the micro-concept of enterprise, considering the Corporate Social Responsibility evolution in the literature and in the development of the modern business framework. Then, after a brief consideration of the main tools and standards available for the sustainability and impact reporting, it introduces the idea of the B-Corp certification and its legal counterpart, the Benefit Corporation, both in the US and in Italy. The third chapter is focused on the example of Aboca. It starts from the company overview and then it describes the path of this business entity, which is embracing both the Benefit certification and the new legal form. In the final chapter, it is mentioned the role of business organizations both in facilitating social investors and sustainable behaviors, thanks to the help of game theory. In particular, it is explained the role of Benefit Corporations as “focal points” in coordination games for the alignment of participants’ strategy, with the construction of situations, where they have their own interests. It will be analyzed also the law importance in causing behaviors that allow reduction of transaction costs, assessing whether it is possible for the Benefit form of organization to be both a “focal point” and a driver of transformational change, a “norm catalysts”. All those elements will help to conclude whether this new model could be the answer to many of the problems of our time or at least a good starting point for rethinking our development, within the Capitalism borders. 2 INDEX Introduction ........................................................................................................................................... 5 CHAPTER 1 .......................................................................................................................................... 6 1.1 Evolution of the concept and global initiatives of Sustainability ................................................................ 6 1.2 The results of those initiatives ................................................................................................................... 9 1.3 Chronological development of CSR debate ..............................................................................................14 1.3 Different points of view about CSR ..........................................................................................................15 1.5 The obsession for the linkage between CSP and Financial performances .................................................17 1.6 The need for an organic view of business and society: going beyond CSR ................................................19 1.7 Sources of data and tools available ...........................................................................................................21 CHAPTER 2 .........................................................................................................................................25 A terminological elucidation ..........................................................................................................................25 2.1 Origins of a Capitalism pillar: shareholder primacy and its consequences ...............................................26 2.2 Three Stanford alumni and a new paradigm creation ..............................................................................28 2.3 From certification to legal recognition .....................................................................................................30 2.4 The certification tool and procedure of the Benefit Impact Assessment ...................................................31 2.5 Benefit Corporations and B-Corps in Italy...............................................................................................36 2.6 How do you become Benefit? ...................................................................................................................38 2.7 Differences between Italy and USA ..........................................................................................................40 2.8 It pays to become a Benefit Corporation ..................................................................................................41 2.9 Outspoken critics of B-Corps ...................................................................................................................43 CHAPTER 3 .........................................................................................................................................45 3.1 Aboca Group: company presentation .......................................................................................................45 3.2 Aboca: Benefit Corporation since 1978 ....................................................................................................52 3.3 Why did Aboca decide to complete the Benefit Impact Assessment? ........................................................54 3.4 The certification process ..........................................................................................................................55 3.4 A talk with Pedro Tarak ..........................................................................................................................61 3.5 A reflection on the BIA ............................................................................................................................62 3.6 A reflection on B-Corp certification .........................................................................................................62 CHAPTER 4 .........................................................................................................................................64 4.1 Describing the game field .........................................................................................................................64 4.2 The framework of rules until now ............................................................................................................65 4.3 The separation of Profit and Non-profits it is not enough anymore ..........................................................66 4.4 The need of coordination and the “Meeting Place Game” ........................................................................67 4.5 A practical experiment of the Game: everything depends on the focal points ...........................................69 4.6 Law: an artificial constructor of focal points ............................................................................................70 4.7 Benefit model as a competing focal point in the business environment .....................................................71 4.8 Are Benefit Corporations conspicuous in the real world? The US and Italy situations .............................73 3 4.9 The importance of a proper structure in Benefit Corporations accommodation ......................................75 4.10 Focal points and Norm changers: not always the same thing ..................................................................76 4.11 Why could the statutory characteristics of Benefit model undermine a real change ...............................76 4.12 The focal point influence on behaviors could rely just on its existence ....................................................78 4.13 The risk to show the wrong way to companies ........................................................................................79 CONCLUSION .....................................................................................................................................81 Appendix A ...........................................................................................................................................84 Appendix B ...........................................................................................................................................85 References.............................................................................................................................................88 Online references ..................................................................................................................................94 4 Introduction I chose this topic for my Master’s degree thesis, because, since many years, I was attracted by the breakthrough streams of consciousness originating from the sustainable development concepts. Just few years ago, I felt directly on my skin the consequences of an unsustainable way of living, trying always to achieve success or economic returns, losing the perception of reality and of the real factors that contribute to the consideration of life as an organic and complex system, capable of understanding something higher than money. After that moment, I