Throughout his career, Emmanuel Faber has shown the value of engaged leadership. As former Chairman and Chief Executive Officer of Danone, he converted the company into a purpose-driven organization by first securing its B Corp certification and becoming France's first "Enterprise á Mission".
Controversially, and due to some of his management decisions that went against the traditional shareholder model, he was ousted from his leadership position in 2021 by activist investor Bluebell Capital.
CEO and co-founder of Yunus Social Business, Saskia Bruysten, spoke with Faber in the Unusual Talks series about his views on purpose-driven leadership, his social enterprise with Danone, and what his dismissal meant for the corporate purpose movement.
Saskia Bruysten: First of all a big welcome to you, Emmanuel. It's an absolute pleasure to have you. We met for the first time 12 years ago, when you had started Grameen Danone. Now, you’ve been a corporate purpose leader for many years trying to turn corporations into a force for good. Today, I want to speak to you about how we can actually change companies to become a force for good. What are the elements that you need to change in a company to actually make that happen?
Emmanuel Faber: Thanks, my friend Saskia. First, change needs to address the fundamentals of the company. There won’t be a systemic impact with only marginal shifts and CSR. The real change only happens if you talk about the core business of a company, which means that you have to ask yourself the questions: “What am I useful for as a company? What is the purpose that I serve? What is the best that I can bring it to the world?”. I strongly believe that it all starts with the mission and the purpose, defining what is unique, truly unique about the company and how it can change the world through its business processes. I believe that this is a competitive advantage. Secondly, allow the governance to adapt to this change. This can mean a number of things, depending on the company but adjusting the governance to the mission is fundamental if you want the change to be lasting and not depend on one committed individual. People come and go but institutions and the mission stay. The third point is about incentives, and that is a very easy one to do. The day we started the carbon compensation, we also started the carbon reduction. The last thing is the metrics. You need a metric to design the roadmap of where you want to go and you need the metrics to design the incentives. The one thing that certainly I will leave is that finally we will have metrics for climate and social issues at the level of the International Financial Reporting Standards, in a matter a couple of years.
Saskia Bruysten: Can you make it a bit concrete? On the environmental side, what kind of KPIs did you put in place to make it measurable? Also on the social side, where we often have less of a currency. What kind of KPIs did you actually use?
Emmanuel Faber: Yes. There were obviously sub KPIs and bigger KPIs. On climate, we actually worked for one year with SAP to co-develop an SAP module that we'll be able to calculate the CO2 footprint of FMCG products. After one year it worked and we started actually to co-market it to the rest of the industry, open-source, as the platform. We use that platform and we are able to calculate the CO2 impact of our products and therefore incentivize managers on that CO2 impact and CO2 reduction. On the social side, you have operational KPIs like inclusion and diversity, gender pay gap or personal safety at work. But we also used lately a bigger KPI, which is the sustainable engagement of employees. We believe that everything starts with people and ends with people.They are the energy of the company. They are the ones that make the mission happen and the impact. As I said, purpose and engagement are meant to be competitive advantages. In 2017, we negotiated a €2 billion syndicated loan with 12 of the largest banks in the world, where we use two ESG metrics to reduce the interest rates. The more we were certified by B Corp, the lower the interest rate. It's also to say that finance starts to understand that a company that is more resilient, that has a highly engaged base of employees, a B Corp certification, and a positive impact on climate has a better credit rating than a company that does not because they create incentives. Not only for employees but also in terms of getting the right capital at the right price.
Saskia Bruysten: What do you say to the critics that say, "Oh my God, with ESG, there's just so much to measure? A CEO just doesn't have time to focus anymore on what they need to focus on". How do you deal with that type of criticism?
Emmanuel Faber: I think that a CEO that says that should not be a CEO. Not because it would not save the world but because his or her company would just go down. We are not living in a linear world anymore where nobody cares for climate or society. Your employees are talking to everyone and whenever they want on social media. Look at what happened at Shell. Shell had a vast majority of shareholders that agreed to vote for the carbon reduction proposed by the board. The activists proposed a different resolution with a significantly higher one and 30% of shareholders, the same that voted for the other resolution, also voted for this one. Which makes no sense. Why they went for this one and tick that box is because they receive pressure from their stakeholders. Money market funds are under pressure to invest because it's very hard if you are in the oil investment to not be supporting activism that supports a higher CO2 standard. Again, if you don't work on your ESG, you shouldn't be a CEO.
Saskia Bruysten: We've now spoken about that broader picture of how do we transform the whole corporation into a force for good. But what role do concrete examples, like social businesses or funds, play in this broader transformation of the corporation?
Emmanuel Faber: I think, first of all, there’s entrepreneurship, and then there’s social entrepreneurship. Entrepreneurship is where companies try to replicate the behaviour and the dynamics of much smaller enterprises to make things grow or change within the organization. It can apply whether you are doing this for the mission, for money or whatever. Then you have social entrepreneurship, which is applied to social innovation. I think that social entrepreneurship is really nurturing the companies’ reverse innovation ability.
The big question for me in terms of leadership for all of us is how many risks are we prepared to play, and to take on the power that we've been given, the mandate that we have. We all have a mandate. The company, whether you are the CEO or whether you are a young employee coming from university. How much of a mandate are you actually ready to challenge in order to push the boundaries further and get change to happen? Which truly for me is what leadership means. I think social intrapreneurs within companies are agents of change and, beyond everything that I said before, I think the level of impact that they have is a pretty direct correlation to how daring you are to lose your job. Because you're bigger than your job, your mission is bigger than your job. If you think that's the right thing to do, you do it. It's a matter of dancing with that all the time. But trying to be as free as possible about that topic so that you can take the right amount of risks to get things done. Frankly, even as the CEO of the company, I wasn't able to convince everyone at the same time. It never happens alone. You need to take the time of bringing people around you. If they feel your courage and your dedication to the company you can be a change agent.
Saskia Bruysten: I just want to ask you one final question. We mentioned earlier that you left them in the summer, and that that was also in part driven by activist investors. What does that mean for future CEOs that are as visionary as you, and that try and use their company as a force for good?
Emmanuel Faber: Personally, let me start by saying, I think activists are an important part of the game. I am an activist and activists who pressure management boards on something they're convinced about actually do the real job of a shareholder. The big question in the case of Danone was not the activist. It was the board. The activist used some politics within the board that had felt that they could increase their power. In a matter of a few days, they created this alliance.The end of the story was that the whole board decided formally and publicly that they would resign because they lost credibility to the 98% of shareholders that voted for what I was suggesting. My advice to CEOs is even if you think that you know people for long, make sure that you have the right board, and a board that's fundamentally as courageous and as visionary as the company should be because that was not the case with Danone.
Saskia Bruysten: That's a clear statement. Emmanuel. Thank you so much.
Interested to hear more? Tune into our Unusual Talks - a podcast series hosted by Yunus Social Business which brings together some of the most inspiring leaders on the topic of social impact, purpose-driven leadership, and business as a force for good.
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