Danone CEO Emmanuel Faber, a vocal advocate for corporations to work to address global environmental and social problems, is at the forefront of Business for Inclusive Growth (B4IG), a new, business-led coalition set up to try to tackle inequalities. He talks to Ben Cooper about why businesses need to play a leading role on the issue.
It is perhaps testament to the greater engagement of big business over recent years in addressing social and environmental issues that the Business for Inclusive Growth (B4IG) coalition, launched last week in collaboration with the Organization for Economic Cooperation and Development (OECD) with the overall aim of tackling inequality, does not sound like anything particularly new.
By the same token, what then differentiates this new platform from, say, the World Business Council for Sustainable Development, or the Coalition for Inclusive Capitalism, or from countless interventions from the World Economic Forum and the Consumer Goods Forum aimed at addressing social and environmental challenges?
Leading the latest initiative is Emmanuel Faber, CEO of France-based food-to-bottled water conglomerate Danone. Faber is an outspoken advocate of the need for corporations to take a leadership role in addressing global environmental and social problems, which has at times placed him at odds with some quarters of the investment community.
The 34 multinational companies so far signed up to the B4IG initiative have pledged to tackle inequality and promote diversity in their workplaces and supply chains but, speaking to just-food, Faber stresses for major corporations such as Danone “fighting inequalities is not a matter of ideology, it’s a matter of sheer realism”.
Pragmatic purpose and the middle class
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While corporations have signed a pledge to take action to ensure the benefits of economic growth are shared more widely, it is the focus on how better wealth distribution leads to growth in the middle class that, Faber contends, marks out the starting-point for this initiative.
Pointing to evidence real incomes in 30% of middle-class households across OECD countries have decreased since 2005, Faber suggests companies have a strong vested interest in addressing rising inequality. A growing middle class has been a fundamental pillar of the vast market economy on which global conglomerates have built their success, and it is now shrinking.
Added to this, as companies have found in relation to other social and environmental issues, rising inequality is both more visible and less socially acceptable in today’s highly connected world.
“A number of inequalities that were not visible 15 years ago are now fully visible instantaneously anywhere in the world because of the Gen X social media nativeness and fluency, which means they are moving the needles in terms of what is acceptable, from the social consensus, and what is not as we speak.” Inequalities, Faber adds, “should not be addressed by business on the basis of trying to do good but simply because it’s a matter of staying relevant as a business”.
Rather than relating it to the changing values and the growth in conscious consumerism are driving the need for new thinking, Faber is at pains to present the motivation behind this coalition in pragmatic business terms, rather than the values a company’s leaders or workers might share with consumers.
“For businesses to stay attractive to their employees, to their clients, customers, consumers, stakeholders, governments etc, fighting inequalities is not a matter of ideology, it’s a matter of sheer realism,” Faber says. “It’s looking at signals that some might see as weak, some might see as ideological, some might see as values-based, and I look at them super-pragmatically as being the evidence that the world is changing. We have all been large companies because we are able to address a growing middle class, and we are now living in a world that is fragmenting super-fast and we need to address that.”
Another key differentiator for the B4IG initiative, Faber adds, is the involvement of the International Labour Organisation (ILO) and other external stakeholders in the initiative. Along with other key figures from public and civil society sectors, ILO will be represented at an annual board meeting for the initiative when progress and lessons from B4IG programmes will be shared.
Three-year programme of work
At the heart of the initiative is a pledge by the 34 signatories “to strengthen equality of opportunity, reduce territorial inequalities and promote diversity and inclusion and reduce gender inequality”.
The OECD will manage and evaluate a three-year programme. Companies have identified some 50 existing and planned projects, representing more than EUR1bn in private funding. These include projects relating to childcare and increasing women’s participation in the workforce, supporting small businesses and accelerating the integration of refugees into the workforce. Coalition members will seek to accelerate, scale up and replicate already existing projects, while significantly expanding their social impact.
The programme will be underpinned by the B4IG Incubator, a platform where companies can incubate, share, scale-up and replicate new approaches, and an Inclusive Growth Financing Forum, aimed at building greater synergies between private, public and philanthropic funding streams.
The business benefit for Danone, Faber adds, can be seen in the fact that the ongoing work on inequality it was already engaged in with OECD, is now “suddenly enriched with the experience of 50 different projects, hugely bigger with bigger visibility and resources, that hopefully will move the needle”.
In tacit acknowledgment perhaps that not all CEOs would go as far as he advocates in terms of engaging on social and environmental issues, Faber adds the involvement of 34 companies – along with “quite a few more that want to join” – means there will be “some hard-nosed CEOs around the table”, ensuring “the case for sustainability and case for inclusion is measured in an independent and material way”.
Faber believes participating in the B4IG programme will support Danone’s journey towards gaining B Corp status, as well as general progress towards establishing metrics and key performance indicators (KPIs) relating to social factors.
In setting out environmental and social goals for Danone, Faber has spoken about establishing an “ecosystem of partners” with whom the company can collaborate in fundamentally changing the global food system. He believes the B4IG coalition offers further potential for such partnership.
“This initiative is contributing to create this ecosystem of partners because we know that health companies, insurance companies, finance banking, of course agricultural companies, food companies, communication companies, tech companies can be part of the solution for food tomorrow. And, if we work together, that allows us to have a better inclusion of our farmers, the people that recycle packaging for us. If we work together for governments, it will be supporting the mid-term transformation of the company.”
In fact, food is relatively well represented in the coalition, with Mars, Unilever, Agropur and Sodexo among the signatories. Faber says he received “positive responses” when he discussed the formation of the coalition with other food companies during the Consumer Goods Forum summit in Vancouver in June and expects “more to come”.
As access to food is such a fundamental and vivid indicator of global inequality, it is perhaps not surprising food manufacturers have been drawn to the initiative, and Faber agrees this gives food companies a particular onus to engage on the issue. “I think at the point of time that the UN has declared the right to water and the right to nutrition as a basic human right, and so many countries have voted to ratify that right, I think an increasing number of the new generation of CEOs is seeing that as a fact that we have to take into account.”
Corporations and CEOs exposed on equality
In general, however, the credibility and goodwill global multinationals and their well-remunerated CEOs may be afforded when offering solutions to global inequality may, to say the least, vary considerably. Many of the Millennials and Gen X consumers Faber believes it vital for CEOs to listen to would suggest global conglomerates have built their wealth on exploiting global inequality. Meanwhile, in relation to food particularly, campaign organisations have long criticised multinational food manufacturers for failing to return sufficient value to primary producers in poorer countries.
When asked how global corporations might be judged in terms of addressing global inequality, Faber again refers not to the moral question but to the practical challenge and risk that declining equality represents to businesses.
“Beyond a certain level, inequality starts to become damaging to economies and therefore to business,” Faber states. “I don’t know if companies are best placed or well placed [to tackle inequality]. The initial success, let’s say, of this attempt here with Business for Inclusive Growth, is related to the fact that CEOs realise that there is something at stake here, which is about the resilience of their business tomorrow and the relevance of that business for their stakeholders. And equality, or fairness, is a matter which goes back to the matter of trust. The lack of trust placed in large companies, and in governments as well, is super low now, and this is a signal that apparently a number of large companies have decided to read loud and clear.”
On how the issue of CEO pay might feature in any critique of a business-led coalition to address inequality, Faber understandably treads carefully. There is currently no consensus on the issue, he suggests, but adds: “I would not be surprised if this point about CEO compensation would reappear sometime, somewhere in the dialogues between companies that have chosen to look a bit further down the road.”
With the G7 Biarritz Summit forming the backdrop for the official launch of the B4IG coalition, Faber stresses how international cooperation among companies is all the more important at a time when the idea of collaboration and partnership among countries is under threat.
“I am concerned about the fact that global cooperation and multilateralism is where it is today, as a business person, as a citizen of the world, and I think therefore it’s useful to have companies, real people, CEOs, committing their own companies to have a high-level dialogue, and create bridges that can last over time, however the political situation in each of the given countries might evolve.”