Stakeholder Capitalism ‘Is A Fact’

What gets measured gets managed. That’s a truism in business. But as companies move from “shareholder capitalism” to “stakeholder capitalism,” that truism also presents a challenge. We know how to measure shareholder returns — we’ve spent a century building up a giant accounting complex that specializes in it. But how do you measure “stakeholder” returns? How do you ensure that, when companies talk about their commitments to employees, to communities, and to the planet, it isn’t just so much talk?

One group that’s been working on that question for over a decade is the B Lab - B for benefit - whose goal is to “balance purpose with profit.” It has developed a rigorous certification process for companies to become “B Corporations.” To date, mostly smaller companies have been certified—Patagonia, Ben & Jerry’s, Eileen Fisher. But earlier this year, Danone—a global food company with nearly $25 billion in revenues—announced it planned to become a B Corp by 2025, committing to specific goals for its impact on health, the planet, its people and inclusiveness.

 Danone CEO Emmanuel Faber joined me this week on FORTUNE Leadership Next, to talk about that decision. My colleague Ellen McGirt also interviewed the co-CEO of B Lab U.S., Anthea Kelsick. If you want to understand how the business world is changing, this is an episode you shouldn’t miss.

I started by asking Faber why he was becoming a B Corp. His response:

“We want Danone to become a B Corp because we believe that in the world in which we live, and certainly in the world we are entering right now, there will be increased attention paid to the ethos of companies and of brands by consumers, governments, employees, civic society, and many more.”

In Faber’s view, the move toward stakeholder capitalism will continue whether businesses want it to or not.

“Look at the reality…there are many stakeholders jumping into the scope of our business, whether we like it or not. When governments are just shutting down borders, forbidding exports or imports, when they are forcing localization, when in Argentina you have nationalization of soy companies…When health authorities are closing channels and sending everyone home…these are all stakeholders.” Stakeholder capitalism “is a fact.”

Do you think more companies should join the B Corp bandwagon? Do you think they will? We’re eager to hear from all our LinkedIn connections. And if you want to be part of the CEO Daily conversation, sign up for my newsletter.