I'm delighted to have with us today Eric Ezechieli, co-founder of Nativa, The Benefit Corporation, and also the first B Corp certified in Europe. Eric is the President of The National Step Italy, and he is the Chapter Ambassador for Singularity University. Hi Eric. Thanks for joining us today. ERIC: Hi, Thanks. MEHRA: so Eric you are wearing many many different roles and I probably have missed a few. But help us to make a connect between the two organizations that you primarily lead here in Nativa and your role in actually setting up the B Corp movement in Italy. ERIC: Okay. So, Nativa is really a catalyst. What we do, everything we do aims at accelerating an evolution towards sustainability. So we do it in different ways, but they are all interconnected, is a systemic approach we have. So we do strategic advisory for the top levels of organization of businesses. We advise policymakers, we design software, or we do architectural and design products, we do communications, so all these activities, including incubating new organizations, have the same purpose of accelerating this transformation toward a sustainable society. So it's not really different hats, it’s different ways, different tools and different perspectives that move and advance in the same direction. MEHRA: Thank you. The one which excites us, and of course, it's the one which got the headlines, was your role in catalyzing a new legal form, The Benefit Corporation in Italy, but it wasn't as easy as it appears. Tell us about that story. ERIC: Yeah. So we have been operating for many years as a nonprofit, as an NGO, The Natural Step Italy, and we were doing already strategic level, strategic work to innovate toward sustainability, but increasingly, we felt that the nonprofit, let’s say, box, the nonprofit mindset, the nonprofit organizational form, was not fit to the kind of impact we wanted to have. And so, we started to explore about different possibilities, and we eventually found, actually on the Harvard Business Review, the description of the For-Benefit Enterprise, and we said, "Wow, this fits exactly with what we have in mind." So we want to have a business approach, we want to be competitive, we want to be innovative, we want to mobilize everything a business can mobilize, but the purpose must be the one to really have a positive impact on society, to change things in a positive direction. So business and making profit are not the end of the story, are just a tool for what we want to do. And so, we took this forum that was already existing in the United States as a benefit corporation and we studied the statutes, we confronted, we had dialogues with lawyers, with notaries, with the other experts and eventually we wrote the statute of Nativa in 2012, and we were very proud, and the notary said, "Wow, this is great. It's really innovative." And then we went to the Chamber of Commerce of Milan. And when we wanted to deposit, also to register in the official registry, the company say, "We are sorry, you cannot do this because this is against the law." And so they rejected our statute because we were saying that the purpose of the organization was double purpose. It was yes, to run a business, to make a profit, to distribute dividends, and to create value for shareholders, but was also to serve all other stakeholders and to create a positive impact on society. And so, this was not allowed by the civil code and by the existing regulations. So, after four attempts, eventually, the fifth attempt, our statute was registered, but we were in kind of a gray area. It was kind of a stealth registration. I think they thought, well, no one is going to notice, but eventually we got more and more involved with that, and we realized that actually there was a very big part missing in the law, in the legislation about corporation, about businesses. And so, we ignited the process to introduce the legal form that was existing in the United States also in Italy, and what was fantastic is that this was approved in just 14 months. So there was very strong support from all political parties. And this has made Italy the first country out of the United States to have the Benefit Corporation legal form. And in Italy, it's called the "Societa Benefit". And now there are already more than 200 companies that have embraced this new paradigm because it's really a different way of interpreting the role of business in society in the purpose of business. MEHRA: Okay. Thank you. And I think that captures quite well of how an agency going about its business sometimes has to step into another role of actually influencing policy in bringing about structural change. But I would be interested in taking the conversation to what you mentioned what was happening in the B Corp in the US. And there's always some confusion about what the Benefit Corporation is as a movement and the scope, let's say, of the B Corp. And if you could clarify that for us and tell us what are the trends you see in the US vis a vis in Italy? ERIC: Yes. Let's say, the Benefit Corporation concept was conceived and was developed by entrepreneurs, by business people. And when they started it they said, "We need two components, and they are strictly connected to each other, they are complimentary with each other. One is a legal entity that allows us to protect the mission of a company over the long-term, and to allow, to give permission to the management, to the CEO, and to the board to take some decisions knowing that they have the support of the shareholders. And the other part is the measurement of performance, of the impact which is created. And so, these entrepreneurs got some funding that they created mostly from Rockefeller Foundation and other very important foundations mostly in the United States. And with this funding, they created this protocol to measure the impact of a company on society, on all the stakeholders, so they created the B impact assessment, which is this protocol that considers 360 degrees everything a company does, impact on workers, on society, on the communities in which they operate, on the environment, the governance, the transparency, the business model, everything is calculated, and the result is a number which tells you if the company is creating value for society or destroying value for society. So you may have a company which is very profitable, but if you calculate with this protocol, with the B impact assessment, you realize that it's actually taking more value from society than it creates. On the other hand, you can have a company that creates profit, but also, and also, creates a positive impact, and you can measure these in a very robust way now, after, I would say, 10, 11 years of implementation of this protocol. And so, there is a threshold which is very challenging, 80 points on a scale from zero to 200, and the companies performing at or above these 80 points can be labeled as certified B Corps. So the legal form is, let’s say, the DNA in the operative system of the company, and the certification, the B Corp certification, is the measurement, the official measurement of the impact which is created on society. And it's incredibly inspiring, on the one hand, it's also quite challenging because today in the world, about 70 thousand companies have measured themselves with this protocol. So it's the most robust and the broadest, the largest, let’s say, benchmark in the world about measuring impacts. MEHRA: And if I can just ask you, it's across for-profit and nonprofit sectors? ERIC: No, it’s only for businesses. Of course even nonprofits can use it, but the measurement applies and only let's say, for-profit companies can apply to become certified B Corps, so 70 thousand that use it, but just about 2,500 so, about five percent go beyond this 80 point threshold. So, it means that there are let's say, almost 70 thousand businesses that have started to measure themselves. They are evolving towards creating a positive impact on society, that are demonstrating that this model is possible, you can be profitable and you can have a positive impact on society, and eventually we believe this will be the normal way of doing business in the future. How can you conceive or can you accept that the business can make profits while not creating a positive impact or while creating a damage on society, on people, on the environment. So now we can still accept it, but in a few years this will become quite strange and less and less acceptable. MEHRA: Eric you mentioned that a lot of the concepts around sustainability sound a bit awkward and complex at this stage but might be something which is normal business in some time. Is that what you meant when you said that Nativa was founded for 2023? ERIC: Yeah, in a way yes. We think sustainable thinking and sustainable management and sustainability brought into the core of the strategy is absolutely normal, and when we see what's going on today, we see still a little bit of surprise, yes, here is business, here is sustainability, sustainability is a cost, no, sustainability is just understanding how to run a business so that your profit today does not compromise your possibility of making profit tomorrow, and is not even a philosophy. There are very precise tools, expertise, case studies, and the methodologies to apply and one of these is called "backcasting." So this comes from 30 years of research, from The Natural Step and Nativa, is founded, everything we do is founded in backcasting. So we imagine a sustainable future and then we define what is the strategic path to fill the gap between the present and this sustainable future we want to create. So we start always from this vision and this definition of a sustainable desired state, which must be, of course, something better than what we know today, and then how to advance in this direction. MEHRA: Thank you, that's a very interesting way to look at the future but also look at backcasting as the way to go. Is that where you draw your inspiration from? We're talking to students and people interested in sustainability and sustainability in the sense of them as consumers, as citizens. Is there any approach or any food for thought that you would leave with the participants on looking at the future? ERIC: Well, we really believe, and this is emerging stronger and stronger every single day now in 2018, we see that there is this acceleration of the attention in the practice of sustainability, and this is going to accelerate more and more as we go on in the future because these dynamics that underlie sustainability are not linear, but are exponential. So we have exponential trends in climate, in pollution, in technology, also in the Cultural Revolution. So we see this stronger and stronger acceleration and so we will see more change, more evolution in the next five years than in the previous 30 years. So what we believe is that this is really the time to focus, to understand, to study, to apply and to implement this concept, because there is no other possibility for the future. By definition if something is not sustainable, it cannot continue over time, so it is really fundamental to become competent and to lead along this path. And we also believe, and this is also our vision, that Italy can play a very special role in these evolutions. Italy, for many aspects is already a leader in sustainability, for example, in terms of benefit corporations and B Corps. We are really an example on a global scale of how this model can be implemented and can thrive and grow. But there are many many other fields in which we believe that Italy can have this role of leader example and model, and inspire others and inspire itself, to really create a future of shared and durable prosperity. MEHRA: Fantastic. Thank you Eric for joining us today. Eric is also an alumnus of the university and it was a pleasure to have him join us and talk to us about the future of sustainability.
