Capitalizing on sustainable engagement as a leverage for value creation: a return to the sources of entrepreneurship?

Climate marches, biodiversity summits, student protests, not to mention the “yellow vests”… The time has never been more conducive to action. All the indicators of a “citizens revolution” have gone green and bear witness to an emergency that has become institutional. However, with the inability of governments to make the necessary policy decisions and the distrust of citizens for institutions, this demand is aimed primarily at companies and especially their brands. Thus, in 2018, 64% of consumers report choosing a brand based on its commitment to major corporate debates *. Even if these good intentions are to be weighted according to the stakes, they continue to progress (+17% vs 2017). Today, being a quality brand means working on commitments.

 

To be committed, many brands are still not equiped…

So companies are on the front line and it’s a tremendous opportunity for them. However, such an opportunity does not go without homework. The CSR, the acronym which is essentially a constraint, remains unknown for many people (49% of the French) and outside the CAC 40%, the function is still under-represented in France (46% of the small companies and 19% of the SME’s). Moreover, for many companies, CSR still serves as an excuse, with a little philanthropy and perhaps some  misleading communication. At this game, the risk is great-take a look at “Conscious” by H&M. Communication is immediately assimilated to greenwashing and criticised by the consumer. One must look beyond the regulatory or communication.

 

How to reconcile economic performance and sustainable development?

To affirm a position on sustainable development is above all accepting to question its model. From traceability of purchases to the carbon footprint,    with internal and external stakeholders, the issues are huge and involve a mobilization of energies, resources and a real willingness to change. However, it is the whole myth of economic theory that liberalism has created a negative correlation between profit and social performance.  

The good news is the demonstration by Barnett and Salomon, which, in 2012, that creates a link between value creation and KLD scores (integrating the main issues of sustainable development). This demonstration opens the way for new models of “conscious capitalism ” and reconciles both worlds on the assumption that a respectfully treated ecosystem generates a strong commitment from both employees and customers.

New performance indicators that integrate other dimensions than those of profit, from CSR to VPE (shared value of the company) are emerging. It is also the same conviction that underlies the PACT law, a clear encouragement to develop mission-based enterprises.

 

But in practice, can virtue really create value for businesses?

Studies are beginning to measure the impact of sustainable development on company results: France Strategie assessed the positive deviation at 13% in 2016. Of course, improving goodwill is an essential part of it. But, most importantly, the ability to attract and retain employees is strengthened (70% of employees are more loyal when their firm engages in sustainability, according to the same study).

So how do we do it in practice? First,  go beyond the stage of pure communication, both inadequate and risky, with actions, it is above all what individuals expect. But beware, not

any old act.  Actions that are consistent and coherent with the raison d’être of the company, its vision of the world.

This reflection on the “why”, according to the expression of Simon Sinek, is often the prerogative of the new brands born in the digital age. They are defined first by the meaning and the raison d’être applied at the outset to integrate the development of sustainability in their DNA. This is the case of Veja,  built up as a counter-model of Nike, or Jimmy fairly with the “buy one give one”, or even Chobani.

However, the brands from the old world can also prosper. Patagonia stuck to its  original mission of respect for the planet. This commitment is now its main source of added value by capitalising on the lifetime of its products (+ 30% turnover in 2012 after the launch of the “Common Thread” program) and on innovation (development of new materials “hardshell” “with advantages for both the consumer and the planet). A virtuous position that has created value for nearly the last 50 years….. Patagonia has never been in such great shape.

In the same way,Danone has moved from communication on its philanthropic actions to a true journey of commitment brand by brand, activity by activity. Fron the BCorp certification to the reduction of its carbon footprint: an approach initiated by a

customer-centric reflection on the future of its business (increasing the power of organic, tracing of traceability, questioning on plastics), becoming a company commitment project with strong implications for governance.

 

Sustainable commitment, innovation engine and transformative leverage

Opening the way to sustainable change is therefore not only desirable but possible-even necessary! Of course, this is not an easy path because it concerns transformation and vision. Thus, when questioned, the new directors of CSR, themselves members of COMEX, confirm this: it is less a question of resources than of will. This will must anchor itself in a sustainable way for the company and driven at the highest level, like Emmanuel Faber for Danone.

Such leadership is indispensable for changing mentalities and the rules of the game at all levels of management by integrating sustainable development as a goal to be achieved at parity with financial objectives, evolving models of governance,  greater transparency, integrating responsibility issues into all innovation processes… The other key point to this approach is the active participation of employees who find pride in belonging by responding to their quest for meaning, a fundamental expectation for all employees and even more Millennials towards more employee-centricity.

 

A raison d’être that exceeds not only the objective of financial performance, a vision of the world that does not stop at business, but a view of the long term… What if we were simply re-inventing the nineteenth century model of companies ?

 

Sophie Romet, Associate Director and Kim Hartmann, Strategic Planner