Danone: Pursuing Business Success with Social Progress
Making decisions that benefit all people, communities and the planet is one of the core principles of the B Corp movement. To rethink the role of business, all B Corps are required to change their legal articles to embed purpose into their organization and ensure they consider their impact on all stakeholders – including, but not limited to shareholders. But what does this mean in practice, especially for large multinationals? As part of a collective call to action for all business leaders, investors and policy-makers to embrace this way of doing business, B Lab sat down with the B Movement Builders to understand what adopting these governance frameworks means to them.
Why is it important for Danone to adopt this commitment to Stakeholder Governance?
At Danone, we believe that a robust stakeholder governance makes us stronger, more resilient and responsible as a business. That’s why we became an Entreprise à Mission and are committed to become a B Corp, cementing our intention to create shared value for all and to build collective action based on stakeholders’ contribution. To date, more than 150 Danone entities have become B Corp Certified all around the world, and around 75% of Danone’s global net sales are already covered by B Corp certification.
With our ambition to become a B Corp, we are transforming our own company but also pioneering a broader paradigm shift, to make business a force for good. As one of the largest multinationals to seek global certification, we want to prove this is possible whether a company has 10, 100, 1,000 or 100,000+ employees.
How does this impact Danone’s decision-making processes?
More broadly, stakeholder engagement is deeply embedded in Danone culture and ways of working. We seek stakeholder feedback to define what is material for Danone (materiality assessment, currently being updated, Danone People Survey and social dialogue) and in developing and implementing strategies to address material issues (captured in the Danone Impact Journey).
For example, engagement with key stakeholders (customers, policymakers, NGOs) was critical to our decision to become the first food and agriculture company to set a methane reduction target for fresh milk.
What did the journey look like for Danone and what does this form of governance look like in practice?
Danone’s dual project of pursuing both business success with social progress has given rise to major sustainability commitments and innovations since Antoine Riboud’s 1972 speech: “We can't accept that growth would leave behind so many people, especially workers - it is a matter of collective conscience."- Antoine Riboud, 1972 Marseille (France).
Concretely, adopting stakeholders’ governance structures Danone’s approach to unite sustainability and performance. Danone became the first publicly listed company to adopt the "Société à mission" status This status entails:
Define a purpose (“raison d’être”) and write it into the company’s by-laws: "bring health through food to as many people as possible”.
Include social and environmental objectives aligned with that purpose in its by-laws. Our social and environmental objectives are aligned with the United Nations’ Sustainable Development Goals.
Create a Mission Committee responsible for monitoring progress made towards achieving these objectives and for establishing a report every year to the shareholders’ meeting;
Appoint an independent third party to verify that the mission is carried out.
The Mission Committee, currently composed of 8 members that are meeting several times a year, is responsible for monitoring the implementation of the social and environmental objectives that Danone adopted as a “Société à Mission” by:
Monitoring the effectiveness of the actions carried out by Danone within the context of the roadmap defined by the Company to achieve the mission
Examining the relevance of the actions and key performance indicators (KPIs) of the roadmap to achieve the mission, in particular with regard to their impact on various stakeholders and changes in the Company’s ecosystem.
Presenting an annual report, attached to the management report submitted to the Shareholders’ Meeting called to approve the Company’s financial statements, on the monitoring of the Company’s execution of social and environmental objectives.
What advice do you have for other business leaders who are considering adopting better ways of doing business?
Stakeholder governance enables us to adapt to a world that is changing faster than ever. The objective is to be even more connected outside, and well aligned on our priorities inside so that we can make the best decisions, even tough ones, to deliver our mission. It allows directors and the management team to consider stakeholders, including social and environmental factors, alongside shareholders. This helps us understand emerging trends, risks and opportunities and leverage collective intelligence to address them. It is critical to setting impact objectives, prioritizing actions and monitoring progress.
Globally speaking, we have had strong support from stakeholders, including our shareholders which voted overwhelmingly in support of Danone’s “société à mission” status.
Our advice would be to engage skeptical stakeholders to help them understand that stakeholder interests are broadly aligned, rather than opposed, and that when we create value for stakeholders, we are making our business stronger and more resilient.
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