From public and corporate to territorial and collaborative: Welfare needs a change of pace

Public intervention and corporate social responsibility appear to be converging toward a single trajectory, in an attempt to create social cohesion and reduce inequality. Yet inequality and poverty continue to grow in our communities. Now more than ever, public welfare is revealing its structural limitations, caused not only by a lack of resources, but also an inherent organizational rigidity that makes it impossible to respond to the granular needs of contemporary communities. At the same time, the private sector is developing corporate welfare and give-back approaches (improperly labeled CSR), but these necessitate greater strategic direction and a longer-term perspective if they are to create real value.

More important than the provider of welfare is the person who benefits from it. But the risk, embedded in the actions of public and private actors alike, is that welfare systems will increasingly operate not as antidotes to inequality but as amplifiers of it. Services provided by public systems are more and more polarized, focusing either on extremely vulnerable individuals or on those who are strong enough to make their own voices heard. Private systems, by contrast, are polarizing between captive offerings and niche initiatives. The first are presented as welfare interventions, but in reality are much closer to legitimate and effective HR or marketing strategies (so-called corporate welfare models); the second may be highly effective but are incapable of generating systemic change.

Healthcare and education, the two foundational pillars of citizenship as it has developed in Italy, are the areas where we should begin to foster convergence. Consider employer-sponsored childcare centers, for example. Large companies can afford them; small businesses, retail stores, and professional practices cannot. Municipalities, acting alone, struggle to provide widespread, diversified childcare services that are competitive in both quality and pricing while remaining sustainable over time. Yet solutions already exist in pilot initiatives: Large companies are opening unused childcare slots to the employees of companies in their supply chains or to small businesses in the surrounding area. This is a public-private-territorial alliance (or 4P—plural public-private partnership) built around a community service, using a multiplier approach that transforms corporate welfare into territorial welfare while shoring up reputation and resilience across the value chain.

Now consider healthcare. Waiting-list times vary, and not only across regions and local contexts. In fact, people living in the same area can have very different levels of access to healthcare services. On one side are public welfare models, rooted in local communities, struggling to meet the needs of an aging population that naturally necessitates more extensive and complex healthcare protection. On the other side are corporate welfare systems whose priorities and incentive structures are entirely disconnected from public welfare.

Investing in efforts to harmonize public and private resources—financial, material, and organizational—and integrate them intelligently, avoiding overload in the public sector and fragmentation in the private sector: this is one of the major challenges of ensuring sustainable welfare and social cohesion in the years ahead.

The issue is collaborative territorial welfare, made possible through partnerships with flexible, pluralistic configurations involving multiple stakeholders. But partnerships are complex, difficult, and costly. To ensure that calls for this kind of collaboration don’t go beyond wishful thinking, we need to adopt the perspective of potential partners and provide answers to several practical questions:

• Vision and incentives
• Territorial alliances
• Skills and capabilities

Vision and incentives: beyond reporting

Why should companies embrace this approach? Because paying attention to the social cohesion of the territory in which they operate affects several aspects of corporate life.

First, there is an issue of identity. Does the company see itself merely as part of an economic system, or as an element of the broader territorial system? as a “black box,” or as a market actor whose competitive capacity contributes to the opportunities available in the surrounding community, and in turn, draws strength from the territory in which it grows? Around this question of identity, as we know, social responsibility, HR management, and marketing either intersect or remain sharply separate.

Second, there is the issue of incentives. The Corporate Sustainability Reporting Directive (CSRD) provides a regulatory framework that makes it mandatory to report impacts on communities, and this represents an initial incentive. But stopping there would be reductive. The literature clearly shows that companies that invest in effective welfare programs have better organizational climates, higher engagement, and lower turnover. So the intrinsic incentive already exists; what’s missing is external recognition. ESG ratings still measure the social dimension through now well-established indicators such as gender equality and pay equity, which represent a baseline rather than an endpoint. The time has come for a qualitative leap: Companies should be assessed on their ability to generate welfare impacts in their territories through plural partnerships and shared initiatives. Nor should we overlook the financial and tax incentives that governments provide to businesses. These too should be modernized, looking beyond financial statements and toward a company’s capacity to act as a central player in territorial systems.

Territorial alliances: from local actors to the financial system

Public institutions and socially responsible businesses can create new equilibria, in which the resources and expertise of each contribute to a welfare model situated between public welfare—whose universalistic ambitions are becoming increasingly difficult to fulfill—and private, corporate welfare, which is reserved for working citizens and their families.

The risks associated with this type of collaboration also require financial instruments capable of absorbing fluctuations in demand, integrating the contributions of the business sector on one hand and the financial system on the other. The latter can play an unprecedented and decisive role in this field. In fact, with direct access to large corporations as well as SMEs, banks and institutional investors are in an ideal position to promote collaborative welfare initiatives and support companies in co-design processes. In sum, we need a new approach, one that is far more strategic and ambitious than current rating systems can capture, going far beyond what social finance or the “S” dimension of finance currently delivers.

The missing capabilities

The rarity of these initiatives is also due to the lack of implementation capacity. The public sector must learn to view private actors not as outsourcers for certain welfare programs, but as genuine partners in the co-production of collective goods. The financial system must develop capabilities in territorial facilitation and impact assessment. Businesses must evolve their corporate welfare programs and philanthropy toward systemic approaches. And all stakeholders—large and small companies, financial institutions, and public administrations—must develop a new culture of partnership: not the episodic project-based logic of traditional CSR, but a systemic commitment that can no longer be postponed.

As a school of management, which is broader in scope than a traditional business school, SDA Bocconi places these hybrid capabilities at the center of its programs. We believe they are essential for building corporate, public, and territorial systems that are stronger because they are more collaborative.