Last week FD journalists wrote "With the fall of Emmanuel Faber in mid-March, the last of the most vocal advocates of sustainable business has disappeared. The French dairy giant Danone CEO fell victim to two activist investors who took their chance due to a lagging stock market price. So much for the new capitalism?"
Activist shareholders curse and bless?
The departure of Emmanuel Faber led to an almost 5% higher price the day after. The interesting question is what that course will do in the long term. Time will tell. That sounds like pretty sad news. It seems that CEOs of multinationals with a high social ambition are losing out to a purely profit-seeking hedge fund, in this case with a stake of 3% each. This suggests that the other shareholders with a 94% stake tacitly agree to this. If it is true that small shareholders can have significant influence, then there will be difficult times for parties such as Shell. They are dealing with the opposite version: activist shareholders such as Follow This demand that organizations become much more sustainable.
Short-term objectives (profit for the shareholders) and long-term objectives (such as social return) conflictwith each other due to the time difference. Indeed, it looks pretty logical to enforce this partly through legislation. Twenty-five professors, led by Professor of Corporate Governance Jaap Winter, have already written the bill together. The bill advocates including responsible corporate citizenship in the statutory duties of executive and supervisory directors. As a result, directors are obliged to participate in society as a responsible organization and establish their guiding principles and report on the company's impact on human, social and natural capital. A kind of GDPR, but for social policy. We are For, including the capital letter.
Short versus long term results
Alan Jope, Paul Polman's successor at Unilever, recently stated that brands associated with sustainability grow faster and attract better talent. The transition from shareholder value to social value requires bridging from the short to the long term (Harvard research confirms Jope's story).
Dreams, dreams, dreams
Would sustainable policy lead to structurally better results? We certainly believe it. Obviously, it is a matter of perspective. We see it as our mission to inspire organizations with different perspectives. To help dream big and make those dreams come true. In a time of enormous change, our mission is to create a different perspective (we see a different way) and to realize it (we do differently). And we can't think of anything more inspiring than that. We believe the world will be a better place for CEOs who dare to dream aloud and pursue those dreams. Shall we?
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