Food giant Danone is planning to become the world's largest international 'benefit corporation' by 2030
- Food giant Danone is planning to become the world's largest international benefit corporation by 2030.
- A benefit corporation is a legal recognition by most US states and a few other countries. It indicates that the company's operations include benefits to society and employees, in addition to increasing shareholder value, as part of its legal goals.
- Danone's North American subsidiary is already the world's largest B-Corp, and CEO Emmanuel Faber says it has benefitted the business.
- This article is part of Business Insider's ongoing series on Better Capitalism.
French company Danone is one of the world's largest food producers (best known in the United States for its Dannon yogurt brand), with a market cap of around $47 billion.
It's also on track to become the world's largest benefit corporation - one that legally binds itself to goals that benefit society and employees in addition to shareholders - by 2030. Its North American subsidiary is already the largest, among more than 2,600 in the world.
So far, benefit corporations are fully recognized by 33 American states and Washington, DC, as well as Italy and Colombia, with movements in several other countries, like Canada and Australia. Since 2006, nonprofit organization B-Lab has been granting B-Corp certification, which qualifies a company to apply for the benefit corporation designation.
Danone CEO Emmanuel Faber recently spoke with Business Insider's Sara Silverstein on an episode of our daily news show Business Insider Today, explaining that it was a risky decision but one that he feels will be very beneficial in the long term, especially in competition with smaller, socially conscious companies stealing their market share.
"Many people are walking away from the mainstream food system today because they don't trust that system to serve their interests, and basically there is a fear that big business is here to serve the interests of big business and of shareholders," Faber said. "There is absolutely no doubt that shareholder value is part of the equation. But it cannot be the ultimate purpose of a brand that serves the purpose of a food revolution."
Danone first approached B-Lab in 2015, and began a certification process for several of its American and European brands, as test cases. Then, last year, it began a three-year plan for Danone North America. It finished early, receiving certification this past April.
In its registry, B-Lab wrote it was "an ambition the company met nearly two-years ahead of schedule thanks to the passion and perseverance of a cross-functional team of more than 120 employees who saw the tremendous opportunity to not only codify the company and its brands long-time responsible business practices but also make a meaningful commitment to continuously improve."
Faber noted that the process was not as difficult as it otherwise may have been due to a social impact initiative Danone had begun 15 years earlier.
He said that the certification has received tremendous employee support and won over skeptical investors. He said that Danone's plan helped it renegotiate a 2-billion-euro syndicated banking loan with 12 major banks, at a lower cost. "So this is basically recognizing the fact the credit rating of Danone is better as a B-Corp than not being a B-Corp," he said.
And when you consider that, "you suddenly understand that it can have a major impact on the risk and return aspects of a business model."