“From the beginning of the outbreak, I knew very well that it would be a watershed, and everything would be different before and after that.” Today, Emmanuel Faber, the former CEO of Danone, a French food giant with brands such as Atami, pulse and Evian, said in an exclusive interview with echo, a local media.
Xiaoshidai noticed that this was fan Yimou’s first public response to the hot issues concerned by the outside world 53 days after he suddenly left as chairman and CEO of Danone. He talked about the epidemic crisis, reasons for leaving, radical investors, transformation of Danone, mission oriented enterprises and other topics.
Now, let’s listen to the thoughts of the former CEO who has been in charge of Danone for seven years.
Echo: since you left as CEO of Danone on March 14, you haven’t spoken to the outside world. How is your life now?
Fan Yimou: Danone feels like home to me. I’ve spent 25 years in this team and I’m very grateful for that. I was moved by the speech of Antoine Riboud (founder of Danone) and joined Danone. When I met Frank Riboud, I told myself that we could do something different. We are like magnets: everything makes us relative depending on the direction of the poles, but everything keeps us together.
When I was managing the company at the end of 2014, Danone was facing a challenge, with sales slowing and net earnings per share lower than in 2008. We have to solve these problems. In the face of challenges, we need to take risks and make a strong transformation, so that we can become active actors in this food revolution, not be abandoned.
We have revitalized our team and doubled our innovation. We have invested in organic and plant-based fields and accelerated our transformation. Then, the COVID-19 crisis came, the blockade measures came, our main distribution channels were closed, and the birth rate of Chinese population decreased. All of these resulted in a decline in sales and our performance in 2020 declined.
Emmanuel Faber, former chairman and CEO of Danone (photo)
Echo: and caused your departure?
Fan Yimou: This is not the case! Six months before the outbreak, Danone’s share price had reached an all-time high. In the past five years, we have achieved a 50% growth in earnings per share, surpassing our major competitors. No, what really happened was that the crisis created tensions and disagreements. From the beginning of the outbreak, I knew very well that this would be a watershed, and everything would be different before and after that.
But not everyone agrees, including board members. Basically, there are two opposing views: one is to continue or even accelerate the transformation of Danone and support the implementation of “local priority” plan; The other advocates going back to the past.
However, Danone’s board of directors has made a decision
These differences have brought opportunities for radical investors, and some of their views are in line with those of some directors. After months of lobbying, I want the board to make a formal decision and get out of it.
Therefore, I am very glad that the board of directors has defined the new status of “mission company” at the general meeting of shareholders, confirmed the strategic roadmap we have implemented, and the plan to restore growth and achieve profitability by accelerating the implementation of the “local priority” plan. The reform of the board of directors still needs to be promoted… Now it has become the most urgent thing for Danone in the future.
Echo: in the face of crisis, intensified competition and profit pressure, is it realistic for companies to pursue “mission” in addition to pure profit?
Fan Yimou: the existence of a company is meaningful. A person working there is not only for making money, but also for self achievement, so it is not contradictory. I don’t think the company is such an economy: we can only use each other here to maximize profits. A company is a real transformation project.
Look at those examples! The birth of today’s large French companies corresponds to the emergence of the middle class: Utopia of national holidays, travel, democratization of consumption, etc. In 2020, Danone will be on the list of “companies welcomed by young graduates”, which has something to do with its values and mission. These are reflected in the projects we have formulated and the significance we have given to our actions.
I would also like to point out that in recent years, even in 2020, the external commitment of Danone employees has been increasing. Today, 100000 employees reflect the significance of the company through their daily work projects, which is a competitive advantage. It is not only possible, but also necessary.
Echo: is it compatible with market economy?
Fan Yimou: of course. I firmly believe in the virtue of market economy, which is the best mechanism for companies to carry out sustainable innovation. However, the market economy must be improved in the direction of improving resource utilization efficiency and social inclusion. Europe has an important role to play in this respect, which is different from the Chinese model or the Anglo Saxon model. We need to realize that if the new generation of market economy does not embrace social justice and climate justice, it will not last.
Emmanuel Faber, former chairman and CEO of Danone
Echo: is the so-called “activist” shareholder useful or harmful?
Fan Yimou: it all depends on who we are talking about. To answer this question, you must study the mechanism of financial market deeply. It has a “black hole”, passive investors follow the stock market index, the so-called “index investment”, they represent 20% or 30% of the capital of large companies, sometimes even more. These investors, who manage a lot of assets, are naturally blind to the trajectory of the companies they invest in. For them, it’s important to copy the benchmark index.
At the general meeting of shareholders, they are willing to lend shares to radical shareholders who will use them to influence the company’s strategy in order to maximize its short-term capital gains. The collusion between them is problematic. But on the other hand, there are also some radical investors with a long-term perspective who are really interested in the prosperity of the company, and the dialogue with these people can be fruitful.
Echo: do they encourage you to pay more attention to environmental factors?
Fan Yimou: more and more shareholders are concerned about this. Danone has always been a pioneer in this field. This is a crucial proposition: companies must integrate externalities into their financial books. Our revenue from surface and soil resources is reflected in the company’s accounts. Take oil: it’s free! What you pay for is the cost of its supply, not for the hundreds of millions of years that nature has spent producing this oil.
We should see the soil itself as an asset. The damage of intensive agriculture to the soil is not reflected in any company’s balance sheet, but we find that production is falling everywhere. We have to take all this into account in the statement of accounts.
This is what we did in 2020. We released “carbon emission adjusted” earnings per share, which is equivalent to telling our shareholders that if we pay dividends higher than this standard, it means that we do not invest enough in the future, and the agricultural model that will still bring dividends in three to five years or ten years will not last forever. It is under such conditions that capitalism can reconcile short-term and long-term priorities.
Echo: what do you think of your future?
Fan Yimou: in the past few weeks, I have been deeply moved by the thousands of support messages I have received inside and outside Danone. I admire the dedication and enthusiasm of 100000 Danone employees, which will continue to inspire me.
The mission I’m dedicated to will be for a lifetime. As for the way, when and with whom – it’s too early for me to think about that. Now, I am eager to spend time again in as many places and environments as possible to meet, listen and learn more freely, to see the world from other perspectives and to imagine the future together.