Do Benefit Societies still have an innovative mission?

The issues related to the renewal of the innovative mission of Benefit Societies were analyzed by Andersen partners Francesco Marconi, an expert in tax planning, transfer pricing, and due diligence, and Sandro Catani, of counsel at the firm specializing in advisory and M&A, in an article in the Nedcommunity magazine La Voce degli Indipendenti.

Characteristics and Limits of Benefit Societies

Benefit societies came into effect in Italy in 2015 thanks to Law 208, which regulated their main characteristics. In particular, benefit societies must comply with three criteria:

• pursue ‘common benefit’ in addition to profit, i.e. the objective of achieving one or more positive effects for other stakeholders, such as the community, the environment, employees, and suppliers
• appointing an ‘impact manager’ to oversee the aims as part of the corporate purpose
• produce an annual ‘impact report’ accounting for the initiatives carried out in pursuit of its environmental and social function.

However, the standard has several critical issues, first of all monitoring ‘impact reports’ and assessing the ‘common benefit’. Moreover, these companies have gradually turned into shareholders, thus joining the many companies that today take ESG criteria into account in their activities in order to respond to new regulations and consumer preferences.  In this context, it is urgent to question the possibility of also considering these companies as Benefit Societies.

Indeed, in recent years there has been a proliferation of regulations imposing on companies new control systems on the social and environmental impact of their activities. Documents such as the Corporate Governance Code, the Corporate Sustainability Reporting Directive and the final version of the 12 European Sustainability Benefit (drawn up by EFRAG) impose sustainability standards on companies. In this context, we may say that Benefit Societies have already become obsolete or, at any rate, potentially emptied of the meaning attributed to them by the legislator in 2015.

Clearly, it is now necessary to enact legislation that gives coherence to the possibility of adding the wording ‘Benefit Society’ to the company name of companies active in the ESG sphere. However, at the same time, it is important to devise an effective control system on the work of companies that imposes transparent regulatory constraints in terms of output.