{"id":5485,"date":"2021-10-12T10:28:00","date_gmt":"2021-10-12T08:28:00","guid":{"rendered":"https:\/\/escp.eu\/thechoice\/?p=5485"},"modified":"2021-10-12T10:27:59","modified_gmt":"2021-10-12T08:27:59","slug":"the-case-of-danone-does-not-show-that-esg-and-profitability-concerns-are-incompatible","status":"publish","type":"post","link":"https:\/\/escp.eu\/thechoice\/tl-dr\/the-case-of-danone-does-not-show-that-esg-and-profitability-concerns-are-incompatible\/","title":{"rendered":"\u201cThe case of Danone does not show that ESG and profitability concerns are incompatible\u201d"},"content":{"rendered":"\n

Emmanuel Faber\u2019s dismissal from his position as CEO of the food-products global giant Danone<\/a> sounds like a punishment: is it possible to lead a large group along the path of sustainable development without displeasing shareholders?<\/strong> To what extent does his dismissal have to do with sustainability concerns?<\/p>\n\n\n\n

As soon as the Danone group published its press release, the observation was quite simple<\/a> for most of the economic press: the shareholders of a group are ready to move towards greater sustainability and to put forward ESG (environmental, social and governance) criteria… as long as this does not jeopardise the financial performance of the company! However, to implement a policy aligned with the UN\u2019s sustainable development goals (SDGs), a company must necessarily commit money, which will therefore impact its short-term performance<\/mark>. Danone’s shareholders therefore faced criticism for two things: on the one hand, for not having had the patience to wait for medium-term performance from a societal and environmental policy; on the other hand, for not having been able to see beyond the quest for financial profitability alone.<\/p>\n\n\n\n

The risk-return-sustainability tripod shows sustainability concerns did not play much of a role in the shareholders\u2019 decision to dismiss Emmanuel Faber.<\/p><\/blockquote>\n\n\n\n

Some shareholders seek to maximise their profits, according to the risk-return ratio, without worrying about any other criterion (we can call them \u201cmaximisers\u201d); in contrast, other investors are prepared to include a third environmental and societal dimension in their choices. This means that this latter category no longer reasons solely on the basis of risk-return, but rather seeks the balance of a risk-return-sustainability tripod<\/strong>. In other words, this category of investors can accept a lower profitability if this is compensated for by more ESG-oriented projects (we can call them \u201coptimisers\u201d).<\/p>\n\n\n\n

In the case of Danone, the activists did not particularly criticise Emmanuel Faber for his strategies towards more sustainability<\/mark>. They focused their arguments on the group’s poor financial performance compared to that of its two main competitors:<\/p>\n\n\n\n