Becoming the Biggest B Corp

By David Yee Associate, CEO Engagement, CEO Investor Forum

In an interview on the Leadership Next podcast with Alan Murray of Fortune, Danone CEO Emmanuel Faber reaffirmed the company’s ambitious goal of becoming one of the first multinational companies to certify as a benefit corporation (B Corp) by 2025. Danone already has 17 B Corp-certified entities – Danone North America currently being one of the largest B Corps – that represent over 30% of the company’s global sales.

What does that mean? Companies who are B Corp-certified pass an evaluation of minimum social and environmental performance that assesses impact on employees, customers, communities, and the environment. They also meet accountability and transparency requirements. Faber and Danone have set 30 key performance indicators that will be audited by a third party, reviewed by an independent committee, and communicated to the public on an annual basis.

Becoming B Corp-certified addresses criticisms of companies’ results that do not measure up to the lofty environmental, social, and governance (ESG) targets in their corporate social responsibility and sustainability reports. The certification evaluates businesses’ impact across many ESG issues, provides feedback, and areas for improvement. With clear performance indicators and processes in place, Danone is able to measure progress each year in a consistent format.

Danone’s website provides more insight into its drive to attain certification, stating, “In this increasingly complex world, big brands and companies are fundamentally challenged as to whose interests they really serve. At Danone, we are convinced that addressing this issue in straight and simple terms is the best way for our brands and our company to reinforce trust with employees, consumers, partners, retailers, civil society, and governments. That is why we joined the B Corp movement.”

What about their duty to shareholders? Faber asserts that he understands he has a responsibility to investors, but his responsibility cannot be fully fulfilled without consideration for various stakeholders. He even said stakeholder capitalism “is a fact.”

Faber makes an important distinction that companies do not have to become certified B Corps to participate in stakeholder capitalism. Although the B Corp certification assures a thorough analysis of corporations and their impact, companies can begin to evaluate and report on their own. In fact, in recent years companies have begun to create integrated reports intended to break down the barriers between sustainability and investor relations. A few pioneering companies are even discussing ESG topics in their quarterly analyst calls.

Materiality assessments are a starting point. Analyzing and determining what issues are most relevant to a company business allows them to disclose the most important topics and reduce the noise of information less relevant to investors.

For example, climate change poses a great risk to Danone’s business by potentially damaging the ecosystems that allow it to grow plants, feed animals, and ultimately develop products. To not monitor and consider the environmental impacts of their operations would not only be negligent, but irresponsible to the long-term viability of the company. Therefore, it would make logical sense for Danone to report on topics like greenhouse gas emissions, water and waste management, and biodiversity impacts.

As Faber said, companies do not need to be B Corp-certified, but by doing so, Danone has made a commitment to hold itself accountable in its quest to create value for all stakeholders. 

 

 

 

 

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