Combining financial and societal performance is part of our DNA

What challenges do you face in your role at Danone?

I am part of the department defining and implementing the nutrition and health strategy for Danone. Among other tasks, my team leads the reporting of Danone's health performance, and we develop ways to measure, amplify and communicate Danone's contribution to public health to our stakeholders.

In a context where the food industry provides most of what we eat and drink every day, but current food systems contribute to exceeding planetary limits and are one of the main risk factors for deaths and disability worldwide, we believe it is key for food companies to better integrate their social and environmental impact in their business model.

At Danone, combining financial and societal performance is part of our DNA and history. Our mission is to bring health through food to as many people as possible, and we make it our challenge to ensure that our everyday business decisions are driven by the positive impact we want to have on nutrition and health.

We also want to show this societal contribution to our external stakeholders, including investors and the broader finance community. This is fully related to the multiple public and private initiatives that aim to make the reporting of companies on extra-financial topics both mandatory and standardized (e.g., ISSB, CSRD in Europe). Many initiatives are ongoing to define methods and metrics, mostly on environmental topics for now (especially carbon), but some also tackle other topics (such as consumer health) and try to estimate the ‘total value’ created by a company. Research is still in its infancy though, and pragmatic but scientifically robust approaches are still needed.

What research has Danone supported at TSE for the past two years?

We designed a project in two complementary parts with Sophie Moinas and Sébastien Pouget (professors of finance) and Céline Bonnet (professor in industrial organization, specialist in food & health economics).

First, we explored how classical tools in economic and financial decision-making (such as net present value) could be extended to integrate corporate societal impacts. As a proof-of-concept, we applied this approach to the impact of sugar in the portfolio of various food companies.

Then we also studied more precisely this impact in the specific context of fresh desserts in France. Using demand and supply models, TSE researchers could refine impact estimates by considering the associated consumer and market reactions (which can conceptually be related to the consequential approach of Scope 4 GHG emissions).

What is the impact of this research for Danone?

This project enabled us to better understand the connection (and its limits) between financial and extra-financial accounting tools, as well as the associated modelling assumptions and requirements in data and transparency that a robust standard of ‘total value’ would entail.

Along with other research projects we have been supporting, the work done with TSE could help to challenge and refine the ongoing initiatives led by various public or private stakeholders.

The results also help us to refine our ambition on extra-financial reporting and give very interesting insights on the connection between financial performance and societal impact. It reinforced our conviction that with the right portfolio, market leaders can have a significant and positive contribution to nutrition and health.

Can the findings and recommendations be applied to sectors beyond the food industry?

We focused our work on consumer health (using the example of sugar), an impact which is quite specific to some sectors (such as food or health industry).

However, the approaches developed by TSE teams are broader, and could be applied in most industry sectors, when considering other sustainability dimensions: the integration of social impact in standard financial tools has been designed irrespective of the dimension or sector, and ‘only’ require robust estimates of the impact. The feasibility and added value of including consumer and market reactions when computing a social impact would also be very interesting to explore in other sustainability areas.

Which research areas should be given priority to help companies improve their social impact?

First, there is still a lot to be done to improve current methods and metrics that estimate the sustainability impacts of companies beyond carbon. On social topics such as consumer health, new or refined models are needed along with public and private data. Here, collaboration is needed between economists, modelers, and topic specialists (for example epidemiologists). A clear and actionable expression of both financial and societal value also remains to be investigated, as monetization raises a lot of ethical and technical issues and may limit and bias the the complex art of business and investment decisions.

Second, in order to drive transformation across the industry, it would be interesting to keep demonstrating the reward for companies and investors that is associated with the creation of societal value. This could extend beyond the standard financial effects (such as on revenues, dividends or share price) to structural benefits (e.g., resilience) or more qualitative and intangible assets (for example, sense of purpose for employees).

More broadly, I believe economists can be strong contributors to create a policy and market environment that is primarily aiming at a societal impact. Building on the developments for instance in ecological economics, or ‘doughnut’ and ‘regenerative’ economics, there is a lot to be done to implement concrete approaches that (re)position finance and economics at the service of the wellbeing of populations and the environment. Research is needed for instance to analyze initiatives such as Wellbeing Economy Governments, and to provide concrete ways for public and private actors to implement a redefined concept of value.

Useful links : 

• TSE Health Center
• All the interviews

Interview published in TSE Reflect, November 2023