DISCUSSION How, in a noisy world, Danone does more than talk the talk

by Michael Wise _______15th August 2018
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As bland as they sound, and as ubiquitous as they have become, it doesn’t take much to figure out why words like ‘trust’ and ‘authenticity’ have become so buzzy. And, let’s face it, it is as though both are bumbling haplessly up and down the kitchen window, making a noise that’s sounding…well…more than a little tired. Will they ever escape? Will they ever amount to something more than simply noise?

It was pleasing last week to read an article in The Economist about Danone and the progress they’re currently making. Why? Because for starters we know them well: Tomorrow’s Company worked closely with Danone on our most recent report, The Courage of Their Convictions, which we published in April of this year following conversations with around 20 companies of all shapes and sizes. The underlying theme was, of course, of a purpose beyond profit. More specifically, though, we were attempting to understand how companies with such an attitude might be better able to cope in fast-changing and uncertain times.

The latest news was encouraging: Danone’s aim is that all its subsidiaries – the likes of Activia yoghurt, plus the mineral water brands Evian and Volvic – should become B Corporations by at least the year 2030. (At this stage, we perhaps need to explain what a B Corporation is. According to Wikipedia it’s ‘a type of for-profit corporate entity in the United States that includes positive impact on society, workers, the community and the environment in addition to profit as its legally defined goals’.) Danone are currently 30 per cent there, thanks largely to their purchase of WhiteWave, an organic food firm, in 2017.

It was a buy that has already made Danone the world’s biggest B Corp. But imagine the statement that would be sent out if it actually achieved its objective. This is a company that sells to over 130 countries and made nearly €25bn ($28bn) in revenues in 2017.

Now whether you can forgive me for the, frankly, useless analogy I made at the start of this blog is one thing, but hopefully you can now see the point of it. Danone do rather more than merely make a noise about how much they care about the world; they take action. And since their purpose – to bring health through food to as many people as possible – has not only been defined but also communicated to, and imbued, encouraged and reviewed by staff members, there should exists a culture and behaviours that will enable them to weather whatever storms they encounter on the way to their destination.

Yet, as we noted in The Courage of Their Convictions, employee engagement levels in general remain consistently low. The problem appears to be linked to the failure of companies to deal effectively with new challenges and opportunities: the pace and disruptive effects of the digital world; threats and opportunities in the changing labour market; and short-termism and volatility from social, political, religious and environmental forces.

And as we are currently learning in our latest inquiry, Voices of Progress, the sort of stakeholder which a company like Danone seeks to embrace has similar concerns. Of course, progress means different things to different people – and it’s certainly hard to see what a French yoghurt manufacturer can realistically do about, say, the lack of children playing on the streets of a particular town in the north of England, or the perception that computer games and/or social media are not necessarily that good for us.

But, of course, what Danone can do – what they actually do – is set an example: that business can turn a profit and benefit society. Did you know, for example, that nearly $1bn worth of company stock is owned by the Norwegian national pension fund, which is obliged to consider how investment decisions might affect future generations?

They also meet a demand. “People are walking out of brands that they’ve been consuming for decades,” says Danone boss Emmanuel Faber, referring to consumers who are increasingly rejecting mass-produced in favour of smaller producers and buying organic, plant-based or GM-free products. Millennials in particular, he says, are making the switch.

Again, anecdotally, our latest inquiry seems to be pointing towards not so much a dissatisfaction with the world and wherever it may fast be heading, but more an awareness that, ultimately, it’s up to all of us to be aware of the consequences, whatever they might be, and better absorb them. “Rights come with responsibilities,” as one interviewee told me last week.

Maybe that’s another buzz phrase – one more in a world where the chatter seems to be getting ever more shrill. But much as an individual with the right to walk down a public street also has the responsibility not to throw litter, should not a company with the right to make a big profit also have the responsibility to be environmentally sustainable, to re-invest a certain amount of its profits in an employee’s long-term development, or to make an effort to accommodate an employee who, with good reason, makes a request for flexible working?

It’s with such concrete steps that words like trust and authenticity become something more. We can all do more, but business can make bigger steps than most.

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