Better Capitalism in Action - Emmanuel Faber and Paul Polman
Previously on this blog, we shared with you how exciting it is to see aspects of better capitalism in action. For example, we spoke of Peter Stavros of KKR and the life-enriching results of his employee ownership approach. Other CEOs are finding ways to improve the lives of their employees and suppliers in addition to shareholders. We're here to throw the spotlight on two of these admirable leaders and give them further well-deserved recognition.
Image Credit: Change NOW | Emmanuel Faber, Paul Polman, Katie Hill, Lisa Kingo
The first of these forward thinking and innovative company heads is Emmanuel Faber, former CEO of the French food company giant, Danone. We mentioned Faber briefly in CE-Ok, That's More Reasonable Compensation. Under Faber's guidance, Danone had operating margins over 11% and a return on equity of 11.7%. The company's fresh dairy segment, specialized nutrition, and bottled water divisions all held dominant global market shares. As CEO, Faber refused raises for the seven years he was in leadership and took a 30% pay cut during COVID. Faber also converted Danone into a "Enterprise à mission," or a purpose-driven company. As a part of this reclassification, he formed Danone Communities, a social business initiative providing funding to bring nutrition and water access to vulnerable communities, as well as the Livelihoods Venture, which provides funding for ecosystem restoration and the development of sustainable farming in emerging economies.
As a current member of The B Team, a group of international business and civic leaders co-founded by Sir Richard Branson and Jochen Zeitz, Faber is helping to shape the vision of a new way of doing business. His statement on their website sums up their mission and his own: “Without fairness, there is no way we can create an economy that will tackle our collective challenges of today: inequalities, health, migrations, and climate." A 2021 Forbes article stated that "Emmanuel Faber will enter history as one of the leading executives promoting stakeholder capitalism and centering core business units around ESG (Environmental, Social, Governance) objectives." Faber is indeed leading in a way that reflects the Partnership Economics ethic of mutuality with profitability.
Called a standout CEO of the past decade by the Financial Times, Paul Polman has also demonstrated a better way of doing business for all involved. During his time at Fortune Global 500 company Unilever, he increased shareholder returns by 300% while ensuring the company ranked #1 in the world for sustainability for eleven years. Polman achieved these numbers by setting goals to improve the company's social impact in multiple areas affected by its products and production, including:
sustainable sourcing, which addresses delivering positive outcomes in terms of nourishing the soil, increasing farm biodiversity, improving water quality, and improving livelihood;
fairness in the workplace, which focuses on raising living standards, tackling harmful social norms, and pioneering new employment models, and;
inclusive business, which set a goal to improve living standards for low-paid workers and ensure that everyone who directly provides goods and services to Unilever earns at least a living wage or income by 2030.
And these initiatives are not just lip service. By the end of 2020, 67% of the company's agricultural raw materials were sustainably sourced, compared to 14% when Polman launched Unilever's Sustainable Living Plan in 2010. In addition, 100% of their direct employees were paid at or above a living wage by the end of 2020, and Unilever also enabled around 832,000 of their smallholder farmers and 1.83 million small scale retailers to access initiatives aiming to improve their agricultural practices or increase their incomes.
In Polman's book, Net Positive: How Courageous Companies Thrive by Giving More Than They Take, he rejects the limiting ethic that business' only function is to maximize profits. Instead, he endeavors to show corporate leaders how to make their companies "Net Positive"—thriving by giving back more to the world than they take. According to his book, companies can unleash innovation, build trust, attract the best people, thrill customers, and secure lasting success, all by helping create stronger, more inclusive societies and a healthier planet. Heal the world first, he says, and you’ll satisfy your investors - including profitability - as a result.
Next, we feature two CEO-led organizations that are making a difference. We trust you'll join us for a look at more leaders who are having a positive impact by applying Partnership Economics ethics in their spheres of influence to create better capitalism.
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