Belonging extends to shareholders: actions for Purpose-led, ESG-conscious companies
Can companies put #ESG and #Purpose at the heart of #Belonging?
Yes... but... sobering lesson from #Danone yesterday: take care to help #shareholders share the same sense of belonging.
And the same expectations of timescale, in turning values into value.
Shareholder activists have forced the exit of Danone's long established CEO and Chairman Emmanuel Faber.
Danone, a pioneer in responsible capitalism and Environmental Social and Governance (ESG) practice for many years, was the first big listed French company to change to new legal status ‘enterprise à mission’, or purpose-driven company, delighting that they’d “toppled the statue of Milton Friedman”. But activist shareholders are unsatisfied with poor commercial performance, slow pace of change, splitting role of CEO and Chairman, and concerns about long-term sustainable performance.
So investors do care about ESG issues, but not in favour of profit. The FT’s ‘Due Diligence’ note this morning says:
“the activists campaigning at Danone were careful not to directly attack its sustainability focus, they did argue that the balance between shareholders’ interests and others had been lost under Faber.”
The need is for Belonging around ESG right through the supply chain AND with shareholders. Lack of belonging is reflected in lack of faith in leadership, from influential shareholders including investment fund Artisan Partners and activist investor Bluebell Capital.
Purpose - what we're here for - and Ethos - what we stand for - are indeed the core of belonging.
This is also the flywheel of action, motivation and productivity.
Danone has so much to be proud of in this field and has set standards very high. But - for some shareholders at least - it has failed to square the circle between Purpose and Profit which, arguably, Unilever under Paul Polman's championship of ESG, did manage. It's perhaps a holy grail of ESG and Sustainability.
In fact, sustainability is part of the argument from activists. Bloomberg reports that: "One of the shareholders that’s pushing for a new CEO -- Artisan Partners -- is devising a long-term growth plan for the company, which it says doesn’t involve a sale of the company or divesting entire business units."
So it's not entirely a conflict: it's how you manage the partnership, to show the long term benefits to profit and commercial stability from good management of ESG. Extending confidence that higher goals of purpose will also support commercial success.
And that's why this is an issue of Belonging.
Here are four ways in which ESG-led strategy and action can benefit both purpose and profit: but both rested on commitment from everybody, in a shared sense of belonging.
Make ESG the systemic basis of decisions, take shareholders with you
The first step is to get far beyond worthy fads or the CEO's personal 'halo'. ESG only makes a difference when it's right in the system, the basis of everyday decisions. Your company's Environmental and Social impacts may be way beyond your immediate work or products - so show how the dots join up, explain to shareholders the impact of your decisions today on consequences for tomorrow, including the consequences for shareholder value.
Remind all colleagues of their responsibilities for good Governance. Put this in the context of the company's overall purpose and relevance to people's work. When I run training sessions for managers using scenarios to examine governance decisions and 'Doing the right thing', there are always moments of realisation about how much one individual can influence ESG within the overall system. Share some of this awareness within investor relations also, to show how your people are thinking everyday to protect the company's goals alongside global impacts.
Put your purpose where your profit is: example from Unilever
More than well-meaning words or even legal status, shareholders are persuaded by action and financial results. Paul Polman made a direct harry in the conflict between purpose and profit when he said Unilever would no longer announce quarterly profits. By stressing this was in the interests of long-term sustainable value, and showing the impact of actions taken and decisions for longer-term impact, he was able to take shareholder confidence with Unilever's strategy.
Collective action, change systems to support purpose, profit and planet: example from Wallgreens Boots Alliance
Around 10 years ago, Boots in the UK committed to zero waste to landfill. A huge ambition, this meant changing not only their own systems and practice, but changing the way suppliers distributed products - in re-usable crates rather than cardboard, for example - colleagues worked in stores, and partnering local authorities in recycling waste. Their main production plant in Nottingham even converts waste into electricity. After great success in their first few years, WallgreensBootsAlliance has established its credentials and commitments to reducing energy use and emissions.
Direct involvement of employees: everyday actions for change
ESG is a great way to bond a sense of belonging between colleagues. It's in leadership style, it's in performance accountability. There are so many great examples like Boot's commitment to zero-waste to landfill, or large-scale fundraising through pay-packet donations, or changes in operations that reduce carbon footprint.
Here's another Unilever example, putting the slogan “Small actions can make a big difference” into action, in this case study from Stanford University's Social Innovation publication "Workers at the company’s PG tips tea factory in Trafford Park, England, had a bright idea. In Britain, most tea comes in paper tea bags. By reducing the end seals of each tea bag by 3 millimeters, 15 huge reels of paper could be saved every shift. Since its launch in 2015, this factory-floor suggestion has resulted in savings of €47,500 and 9.3 tonnes of paper (about 20,500 pounds)."
Deep commitment to ESG and sustainability is way beyond a poster campaign - it's in how we all do things, everyday, including nurturing healthy share performance.
And, clearly, it's in shareholder commitment too.
That's why ESG needs to be part of shareholders' sense of belonging, and the reason to support long term growth. As the Danone finds a new CEO and Chairman, the balance of long-heritage in ESG leadership alongside future strategy for profit, remains the pressing issue.
Leaders may come and go, but the whole point of sustainability is that the company is here to stay.
#Belonging #ESG #Purpose #ResponsibleCapitalism #ShareholderActivism #InvestorRelations #TurningValuesIntoValue #Sustainability
Love the image Isabel Collins