Nov. 3, 2022

Benefit Corporation: the virtuous business model that is right up LATI’s street

Corporate social responsibility has always been at the heart of the Conterno family’s business decisions, so it should come as no surprise that LATI has become a Benefit Corporation (Società Benefit), a virtuous and innovative Italian legal form that combines pursuit of profit targets with a commitment to having a positive impact on society and the environment.

What exactly is a Benefit Corporation?

Enterprises in Italy, like anywhere, are expected to satisfy the expectations of their shareholders, which traditionally means striving to maximise the economic performance. The most virtuous enterprises, however, also try to meet the needs and interests of stakeholders and of society in general.
We are living in a rapidly changing socio-cultural environment in which there is an ever-growing awareness of the limits of the capitalist model of development, the levels of pollution generated, and the fact that there is “no planet B”. Today’s demanding younger generations want a “sustainable” economic model, and they expect companies to do their bit towards this.

How do you commit to doing business in a more ethical way?

Through Benefit Corporations! Under Italian law, these companies are hugely innovative because, as stated in paragraph 376 of the Italian law, a Benefit Corporation “in the exercise of an economic activity, as well as sharing profits, pursues one or more purposes of common benefit and operates in a responsible, sustainable and transparent way towards people, the local area and communities, the environment, cultural and social goods and activities, cultural entities and associations, and other stakeholders.”

The concept of Common Benefit is therefore introduced into the company’s bylaws. Thereafter, the company is required to inform its shareholders of its results, in terms of profits, while stakeholders must be informed of the results of its efforts to bring about common benefits, which must consist of “one or more positive effects or the mitigation of negative effects” on “people, local communities, the environment, cultural and social assets and activities, bodies and associations, and other stakeholders” such as  workers, suppliers, lenders, creditors, public authorities and civil society.”

Therefore, the focus on sustainability changes from Corporate social responsibility (CSR) to Creating shared value (CSV). In fact, whereas CSR programmes focus primarily on reputation and are not really connected with the business itself, which makes it difficult to justify and maintain them in the long term, CSV is functional to the company’s profitability and competitive position, as it exploits the company’s specific resources and expertise in order to create economic value through the creation of social value.
 

LATI’s natural transition to a Benefit Corporation

LATI’s transformation into a Benefit Corporation was the natural evolution of a commitment to issues such as sustainability and the needs of people and the local communities that has been part of its approach ever since it was founded in Vedano Olona in 1945 and started its activity by recycling war surplus.
“It is an objective pursued with determination and conviction, because it completes and represents that process of quality and sustainability that, since our foundation in 1945, we have always pursued, continuing to invest and evolve in line with the dynamics of society and the market,” says Michela Conterno, CEO of the company.

LATI began by approaching sustainability from a formal point of view, in order to learn how to report its processes in a sustainability report, through the use of sustainability Key Performance Indicators (KPI), i.e. the GRI standards and the SDG goals. Once this system was fully operational, in 2021, LATI certified its Sustainability Report along with a Limited Assurance statement issued by PwC. In July 2022 SATI also modified its corporate purpose, introducing the following objectives:

1. Product sustainability
2. Wellbeing of people both within and outside the company
3. Development of the local communities and ecosystem

Finally, in July 2022, LATI appointed an Impact manager.
The impact manager is the individual assigned responsibility for presenting and reporting the results that show fulfilment of the specific objectives consistent with the company’s common benefit aims. This individual must therefore:

1. ensure that all corporate functions are involved in the implementation of the plan for the achievement of the said aims, and ensure improvement of the same
2. support the directors by providing information and data on the internal and external context in which the company operates;
3. Promote transparency of the impact results, ensuring that they are published on the website and through appropriate channels.

“Quality and sustainability are the very heart of what LATI does, and of what I do, and they have always very much been part of the company’s products, processes, and commitment to the local communities. This is a successful business model that has allowed it, over time, to face difficulties, challenges and changes, and to seize new opportunities. So why not set all this in stone?! This is why LATI chose to become a benefit company: it is a natural transition that sees LATI’s focus switch from ‘corporate social responsibility’ to ‘creating shared value’, and from voluntary efforts to a structured commitment to the common benefit” explains Gabriele Ciovati, CSR & Quality System Specialist and Impact Manager at LATI.
In short, this has been a 77-year journey, and it’s not over yet. A journey that has brought challenges, satisfaction and results. Follow us to discover the next developments!