Danone chooses to become B Corp

The food industry has made a mess of things. With sweet-salty misleading brands that have caused us to eat and drink unhealthily, obesity has become a chronic public disease, and our oceans are full of plastic packaging. Emmanuel Faber (CEO Danone) thinks it should be different and spoke candidly about it during a B Corp event at the Sustainable Development Goals House, Royal Institute of the Tropics in Amsterdam. Many packaged goods giants like Nestle, Mars and P&G are now busy here and there taking their social responsibility better. Smaller portions, a bit less sugar, fewer bad fats. And occasionally an advertising campaign about world peace and happiness.

CEO of Danone goes a few steps further

But Emmanuel Faber, CEO of Danone, a French food giant with offices all over the world and a market value of $US47 billion, goes a few big steps further. Last Monday, November 26, he addressed a hall with 400 business leaders during a B Corps event at the Royal Institute of the Tropics in Amsterdam.

Danone is well on its way to becoming the world's largest certified B Corp. The goal is that not only the shareholders, but especially also society and employees will have more benefit. At the moment, about 30% of Danone's business is B Corp certified and the plan is to be 100% certified by 2030.

Capitalism driven by greed

During the B Corp event last Monday, Faber pulled no punches. He spoke about a revolution needed to arrive at a radically different economy and distribution of power and wealth. An economy where not only shareholders benefit and become richer and richer, at the expense of society. Faber expressed his disgust about capitalism that is mainly driven by greed, whereby now 50% of global capital is owned by 8 billionaires, and 99% is owned by 48 billionaires. An economy that has the goal of taking money from consumers and then giving that money back to society much later, and very limitedly. An economy that ultimately ensures that capital is distributed more unequally.

Away from the big brands

According to Faber, many people in the developed Western world are currently running away from the old familiar brands of the big food manufacturers, because they no longer trust that these organizations still serve their interests. There is a growing fear and conviction that the big corporations only exist for the interests of the financial markets and shareholders. More and more people prefer to buy brands from smaller manufacturers, with local raw materials and healthy organic ingredients. Danone has developed the idea to adjust the company's reason for being, the 'purpose' of the company, as a response to this development. That starts with rejecting the Anglo-Saxon concept that a company primarily exists to make maximum profit for shareholders. Danone strives for a richer and more meaningful goal. Our goal is not to create shareholder value, says Faber. What matters to us is that we make healthy nutrition available to as many people as possible, whereby everyone benefits. From suppliers, to consumers and ultimately also the owners of the company. According to Faber, this idea fits well with Danone and is not fundamentally new at all. In a speech from 1972 by Antoine Riboud, one of Danone's then leaders, the idea of a 'dual project' was launched, which meant that they pursue both an economic and a social goal. That speech, strongly influenced by the anti-capitalist protests and social unrest after 1968, is still often quoted by Danone's leaders today.

Highest standards on ethical, social and environmental policy

In line with these developments, Danone is now working hard to be certified as a B Corporation. A label that stands for the highest standards on ethical, social and environmental policy. Until now, it was mainly relatively smaller companies like Patagonia (outdoor clothing), Tony's Chocolonely (chocolate bars) and Triodos (financial services) that led the way with B Corp. Worldwide there are now about 2700 companies certified, of which about 70 in the Netherlands. In April, Danone North America, including WhiteWave (acquired by Danone in 2017 for $12.5bn), became the largest B Corp. Naturally, Faber hopes that prominently carrying the B-Corp brand will help consumers regain trust in Danone's products.

Bug in capitalism's source code

B Corps are certified by an independent organization called B Lab. Andrew Kassoy, Co-founder of B Lab, was also on stage last Monday. Andrew also spoke about the need to repair a bug in capitalism's source code; shareholder value first. B Corps ensure better governance and better serve the interests of employees, suppliers and society as a whole, on top of shareholder interests.

Bankers already participating with lower interest rates

Danone's approach to becoming B Corp certified is already paying off positively, Faber said. In a refinancing round last February, 12 lenders were involved who jointly provided a credit facility of €2bn, which is directly linked to Danone's B Corp status. This allows Danone to borrow money more cheaply. Apparently, the financial gentlemen now also see the advantages of a more social focus than 'shareholder primacy'. As more Danone divisions become B Corp certified, the interest rate on the outstanding loan drops. Ultimately, this should of course all be reflected in the price of Danone shares on the stock exchange.

Amsterdam, November 28, 2018

written by:

Alexander Koene, Emotive Transformer BR-ND

BR-ND People has been a certified B-Corp since early 2018. Certified B Corps are a new kind of organization that put their purpose first. They are legally obliged to consider the impact of decisions on employees, customers, suppliers, society and the environment. It's a group of leaders who are bringing about a global movement where business is used as a force for good. More about B-Corps