How can business not be for-benefit? by Eric Ezechieli

The following is a transcript of a recent interview that Eric Ezechieli shared during one of B Lab Europe's talks on stakeholder governance. He has a way to make his radical ideas sound totally logical and inevitable, hope you will end the article ... unfrozen.

"We are living in myths. There is a mythology about business and how it should be run.

About the principles, how you define success ... but these are just ideas and those ideas seem completely frozen, completely unchangeable unless or until someone does something different and then you demonstrate that there is a better alternative.

“I didn't think about it before”, “I thought it was impossible”?but then when you see that it exists,??it becomes possible.

I like this saying that you cannot change reality by just forcing a change in reality. You have to create a better model that makes the old obsolete - Buckminster Fuller had this perspective about how to change things.

What is the new that is emerging? It is that Benefit Corporations are so radically better with respect to traditional business that it's a no-brainer. I mean why should we stay stuck with the shareholder primacy and such a narrow definition of value creation which is also not helpful , is not an advantage for shareholders either?

What is emerging is that Benefit Corporations perform on the market just as well or even better with respect to other companies, of course there are many factors you need to run a company properly, you need to have a good strategy and a good product and good market opportunities ... let's take this for granted:

when you become beneficial you just jump to another level.

Because by including stakeholders you pretty much change your time perspective, your horizon about when you want to get results. With the traditional non-benefit company you tend to focus too much on the short term but there are such big trends that determine your success in the short term that if you don't consider them you are not going to be successful in the future.

So it is a more robust way to run a business.

The evidence is emerging very very strongly, even just recently, seeing phenomenal cases of Benefit Corporations that are going public on the stock exchange, that become unicorns in a very short time and where investors are happily investing,

We are now having mainstream companies adopting Benefit Corporation status and this leads to an amazing acceleration.?

Because you know the proof becomes stronger and stronger and the other myths just fade away just like fog in the morning.

The interdependence coalition can be incredibly important in bringing together companies like Illy coffee which has become a benefit corporation is now also a B Corp.

We have Chiesi which is an incredibly successful innovative and also profitable pharma company which is a Benefit Corporation and B Corp.

We have now the case for example of one subsidiary owned by ENI the italian oil company and??of course there is a lot of attention around them. They became a Benefit Corporation just recently but this is very very important because the Italian government is one of the shareholders of this company and so they are demonstrating that they believe in this model and they are investing a lot in energy efficiency and renewables and they really want to use this model to have a solid foundation for an energy and ecological transition.?

So letting people know about these success stories is very very important?and the other very important thing is to create a critical mass.?

Usually??the decision of policy makers are influenced by lobbyists and traditionally lobbyists come from a very large corporations, very traditional interests; but now if we can create a critical mass of this new perspective and lobby in a positive way,?we can really lobby for a change in the structure of the legislation and this becomes a fundamental enabling factor for the energy and ecological and social justice transition that we need.?

We need to change the rules of the game for big change to happen.

Now we have the EU recovery plan, the Next Generation Europe, but unless we change the substrate, the very essence of business, you will not have a very good way to connect the strategy with the implementation.

Whereas if you have, imagine millions of benefit corporations and possibly eventually also B corps because you know become a benefit corporation is is the entry level is a commitment becoming a B Corp is an achievement?... so we we wish all companies to become Benefit Corporations and then become B Corps.

This is fundamental in order to implement the Next Generation European strategies.

So it is not optional it's something that really needs to change at the core in order to to be able to build what we want to build for a sustainable future.

QUESTION: why would or how could a legislation accelerate these kind of changes???do we need also a mandatory legislation when there's so much movement already?

Well you can have a voluntary commitment in becoming a benefit corporation and you have to be careful about what you make mandatory.

But to go to the point why benefit corporation makes such a difference, the reason is that the shareholders give a different mandate to the management.

So in a non-benefit and I will start to speak more and more about non-benefit , highlighting how wrong it is to have a non benefit corporation , having such a strong negation in your corporation is so wrong, non appropriate, and one day non-benefits will disappear.

Having said that in the non-benefit, the shareholders tell to the management "you have to create value for the shareholders".? This is the only single instruction you have to follow.

In a benefit corporation the shareholders give a completely different instruction to management.

It's very simple : you have the freedom, you have the permission to create value for both shareholders and stakeholders.

As a shareholder if I make this decision it is because I understand that if you and the company’s management create value also for all stakeholders I will eventually benefit as a shareholder as well.

So there is no conflict of interest. The evidence is emerging very strongly that it is not one against the other, and this makes all the difference. Because managers, the CEO and the board and everyone in the organization wakes up every morning and says? “okay I have to create value for this category and for the rest of the world,??and for now and for the future and this completely changes the mindset.

We call it double purpose mindset.?It's completely different to run a company with a double purpose mindset than with a single purpose mindset.

Already so many companies are already doing it even without being benefit corporation, but there is a vulnerability.? Because conditions may change, the management may change, new investors could come in and you could lose this double purpose.

So once it is written in your bylaws it is there to stay.??It's a different operating system for the company.

I think it's indispensable. I and Nativa cannot imagine a future in which this is not the new normal.

QUESTION: the power of stakeholder governance is that some companies pioneer but they have a lot at stake to pioneer and to lead the way, with others maybe following. What if by legislation we allow all companies to be empowered to pursue the same level of risk and??opportunities? Would that also allow companies to take faster action and to be more confident instead of being fearful about being different?

It is really setting different rules of the game.

I think who is already moving in this direction does not fear anything, so to say, they just think is is the right thing to do.

But in order to accelerate to scale up this model, it would be useful and important to have some kind of legislative push.

Think about an ancient example:?at a certain point we decided to abolish slavery.

You know someone was already against slavery and they didn't accept this to be the norm but at a certain point it became a planetary rule that you wouldn't found a company with a business plan based on slaves to make your profit.

We think in a few years it will be unacceptable to create profit by destroying value for someone or something. Or destroying opportunities for future generations or degrading the environment: this will be just illegal.

So let's speed up the process because time is getting short, we are seeing what's happening around us now with the climate, what's happening with the social imbalances.

Unless we reverse the mythology, the old business model, we are going to get worse and worse. But on the other side of the coin, if we reverse the mythology we can take off to another level.

QUESTION: What is one next step in changing this mythology? Perhaps one next step we can all collectively take is to join the interdependence coalition, and also being a change maker in pursuing its goals from bringing about mandatory stakeholder governance,??into aligning investment, corporate governance and creating EU wide alignment requirements?

Yes and one last thing, something we've been discussing a lot within Nativa and with many partners and organizations we work with.?We think it's really time to be bold, maybe crazy, maybe radical, name it as as wish but we cannot just keep going as we have been going.

Our model, our economic paradigms have been very successful until now. We have been thriving thanks to a certain model and structure but we have really reached the boundary of what is possible, reached the limit of capacity of the planet,??of social boundaries.

From now on we we have to become radical and really push for a very strong change.

So just go for it and let's go together, so let's join the the interdependence coalition and stay tuned about the changes that are going to happen, some of the projects we are working on that we hope will make news.

There is a saying if you don't like the news go out and make your own. So go out and make some news. That's the leadership and that's the new human presence on earth that we are inviting through these actions."

Thank you for the inspiration Eric and for your coherent and "bold and crazy" actions ... perhaps they can become the norm in the near future, having to be a for-benefit corporation.