France Reaches Out to Mission-led Companies

Full house at Station F’s French Tech Center for the May 14 debate on the pros and cons of mission-led companies in France. In the light of a just-released survey - co-sponsored by HEC’s Society & Organizations Center, Viavoice and Prophil -, academics, politicians and entrepreneurs discussed a strategy devoted to the convergence of philanthropic and business models that could be beneficial for all parties. The study comes as the Macron government debates the PACTE bill which includes a redefinition of the social objectives of French companies.

“This is an opportunity to build a European capitalism which makes the questions of environmental and social impact more central than what we see in US and Asian economies.” The words of debate co-organizer and S&O Academic Director Rodolphe Durand, echoed an ambitious revolution afoot in France, encapsulated in the notion of “mission-led” businesses (“entreprise à mission”). This relatively new proposal for French companies seeks to make economic return and social impact converge, usually by addressing critical social problems outside of the familiar social sector legal forms. “It’s a notion which is gaining ground in Europe, as well as in Latin and North America,” states Geneviève Ferone Creuzet, co-founder of Prophil. “In the UK, 20% of new businesses are putting mission-led directives in their statutes. For the past five years, we have been working to emulate such results in France. And, now, we can see that we have the backing of the country’s leading company directors.”

Indeed, the first-ever national inquiry on management attitudes to mission-led enterprises, released before the debate, corroborates Ferone Creuzet’s statement. Of the 623 business leaders questioned, 68% say they would back judicial and fiscal directives integrating mission-led policies. 69% are convinced this would allow sustainable development to be placed at the heart of the company’s strategy, and it would answer societal challenges. Finally, almost three-quarters believe that being a mission-led firm improves the employers’ brand. “This study gives a very different signal to the one you read in the press,” insists Ferone Creuzet. “It shows that there is an appetite and desire for mission-led legislation which goes much farther than the faint-hearted tendencies which dominate perceptions and which is not very constructive. Today’s exchange was a pedagogical act which shows that, even if we are a small devoted circle of initiates, we have built a capacity to sow seeds that resonate into the national public arena.”

Strong Political Resonance in the PACTE

Prophil’s motto is “beyond philanthropy”. It first demonstrated its ability to resonate further than its academic circles a year ago with the publication of a 96-page study called “Mission-Led Companies”, bearing the subtitle “International Overview of Hybrid Legal Forms Serving the Common Good”. This comparative global study, also the first of its kind, underlined how much ground France needs to make up on nations like Italy and the USA which implemented far-reaching mission-led legislation years ago. A year later, and they see their fingerprints all over the bill the National Assembly is preparing to debate, called PACTE (the Action Plan for Business Growth and Transformation).

One could say the same for HEC Paris. Several of its alumni have been involved in promoting or monitoring mission-led legislation. The PACTE bill aims at modifying France’s Code Civil, notably article 1833 which dates back to 1804. One HEC graduate, Stanislas Guerini (H06), has been pushing for a statutory change ever since he entered the LREM majority last year. The deputy for Paris’ 3rd circonscription opened the debate at Station F by calling all present to use mission-led objectives “to reconcile French society and its citizens with enterprise”. Guerini worked on the PACTE’s section called “Division of value and companies’ societal engagement” which necessitated over 80 auditions. To loud applause from the floor of over 100 people, he insisted that entrepreneurs are eager for a legally-binding bill and only asked for the administrative regulations to be simplified. “Let us contaminate France’s business world with this ‘soft’ law that allows no fiscal advantages but which will give our industry new impetus.”

Fellow-LREM representative, Pierre-Alain Raphand, was also present on one of the two panel discussions, stressing the fact it was his doctoral research on mission-led companies was his way-in to politics. “My research was picked up in 2016 by the-then Minister of Economy Emmanuel Macron,” he said after the debate. “It’s the best way to improve both human and economic conditions for the French.” The young deputy for Essonne acknowledged the degree of suspicion towards mission-led companies which has put France in a paradoxical position: on the one hand, it is a world leader in what Rodolphe Durand terms “socially responsible capitalism” and in CSR; on the other, it lags far behind in applying it to the world of business where popular suspicion subsides. “It’s one of the reasons why it’s so hard to get off the ground,” says Raphand. “It’s a real change of culture, there’s no tax reduction if you apply it, but there is research proving companies can profit economically by implementing the policies. The traditional business leaders don’t seem to be aware of this, but the employees, the youth, the young entrepreneurs have evolved: they are looking for a meaning in work that the older generations just didn’t have.”

Danone Leading the Way with Whitewave

At the Station F debate, representatives from Schneider Electric, Danone, Decathlon, the MAIF and other top French companies insisted on their companies’ engagement towards mission-led policies. Decathlon founder Michel Leclercq shared a story of an emotional meeting with a cashier in the chain store’s Shenzhen branch that reflected the key concept behind mission-led enterprises, “generosity” which, he said, “freed up creativity”. Many other CEOs have already instigated mission-led measures, following the lead of the CAMIF and Nutriset which have formalized their statutory engagement since November 2017. The former is run by HEC graduate Emery Jacquillat (H93) who has galvanized his company ever since taking the helm in 2009, largely thanks to his devotion to a positive impact model.

Other companies, like Danone, have found themselves at the very forefront of mission-led industry thanks to its purchase of WhiteWave a year ago. The organic-foods producer already had acquired the status of world number one Public Benefit Corporation (PBC). “The purchase meant Danone inherited this position,” explains Geneviève Ferone Creuzet, “and they are now incubating it for their other subsidiaries, with all the obligations linked to this status. This convergence between the US and France is inspiring!”

“Suicide or Mission-led Economies: Make Your Choice”

According to Rodolphe Durand, clients are prepared to pay more if it means a greater societal and environmental commitment from industry. “Our studies show they accept to finance the extra cost, something between 2 and 6%,” he told the audience. Later he insisted on the advantages for enterprises guided mission-led objectives: “These companies complement the range of possible statuses, fitting snugly between pure profit and social and solidarity economies.” (ed., what the French call “entreprises sociales et solidaires (ESS),” a term which doesn’t appear to be coined in English legislation.)

Geneviève Ferone Creuzet is adamant the time has come for the notion of “entreprise à mission” to be accepted by French business. “You have to be mad or completely cynical to not see that we are at the end of a cycle,” she said after the three hour debate. “We are at an extremely precarious moment in time where we have a choice between suicide and the invention of something new guided by mission-led economies. And we are convinced that the financiers are aware of the risks they would be taking by staying in the old world. I’m optimistic they’ve heard our call.”