We need big names like Danone for sustainability push
2020 has been a very good year for the rich. While billionaires have been multiplying their billions and the share prices of large multinationals have been breaking new records1, many have been asking “what’s in it for us?”.
While higher share prices clearly benefit our pension accounts, it still feels that something is missing in this equation.
Emmanuel Faber, CEO of Paris-based Danone shares this observation. He is leading the largest dairy company in the world and he has noticed that more and more consumers of his products ask deep questions ranging from environmental sustainability to relevance of capitalism in its current form. Great questions that haven’t received many good answers yet.
Yes, many rich CEOs2 and hedge fund billionaires3 have made suggestions for improvement, but Faber had enough of it and decided not only to talk the talk but also walk the walk.
Brand by brand, business by business, he helped Danone gradually transform itself into a ‘B Corporation’, an entity which aims to meet a rigorous set of criteria in areas including sustainability, transparency, and legal accountability4.
Certified B Corporations are businesses that meet the highest standards of verified social and environmental performance to balance profit and purpose. B Corps are meant to accelerate a global movement towards a more inclusive and sustainable economy based on the belief that governments and non-profits can’t do it alone and need help from the private sector.
During a meeting in 2019 of Business Roundtable, an influential group of global CEOs, Mr. Faber dramatically departed from the typical mantra of a multinational CEO that companies exist solely to enrich their shareholders. He stated that Danone has now wider obligations: to customers, employees, suppliers and communities, as well as to anyone who owns a single share of the company.
Being B Corp certified does not only mean that you get a nice shiny certificate but it means real changes and actions in your organization. In case of Danone it meant higher quality information about food that its consumers are purchasing such as better labeling. Danone is also now focusing on advocating for action against climate change, promoting renewable energy and finally, given it is a food company, it runs several projects around sustainable agriculture and soil health.
As of today, there are around 3,500 B Corp certified companies globally, most of them small and local. However, if a global giant like Danone can show that being B Corp certified is good for business (as of today, about 45% of Danone’s business is B Corp certified with a goal to reach 100% in the coming years), we can expect more multinationals to join them. And then, just maybe, it can start a gradual movement towards a more sustainable and equitable capitalism that works for all of us and not just the richest.
Danone is currently one of the positions that PGGM holds in its impact portfolio where we invest in financially attractive companies that also have a positive social and environmental impact. Our investment philosophy rests on the belief that over the long term companies that contribute to solving key global challenges rather than creating them, are more likely to outperform financially as well. We believe that Danone fits that bill with its focus on shareholder value complemented by close attention being paid to a wide range of environmental and social issues.
1. The World’s Billionaires Have Gotten $1.9 Trillion Richer In 2020 (forbes.com)
2. (54) Why and How Capitalism Needs to Be Reformed (Parts 1 & 2) | LinkedIn
3. Marc Benioff: Capitalism 'led to horrifying inequality,' must be fixed (cnbc.com)
4. Certified B Corporation
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