The Pacte Law and the Bris Rocher Report: Between fears and solutions, a change is taking shape

Leadership
Article Icon Article
Carl Azar
1月 12, 2022
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Leadership
Executive Summary
The number of mission-driven companies is growing in France, but purpose-driven leadership is already a necessity.
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With the 2019 Pacte law (action plan for the growth and transformation of companies), France wanted companies to take their responsibilities at a societal level. 

It has given them the opportunity to include a raison d'être (reason to exist) in their bylaws, and even for the most willing, to transform themselves into mission-driven companies.

The issue of corporate governance continues to receive a lot of attention today: shareholders, creditors, and employees are demanding more responsible governance, particularly on environmental and societal issues. This ethical awareness has particularly developed and materialized during the health crisis: the number of companies with a mission has thus quadrupled in a year, reaching 206 mission-driven companies in June 2021.

In reality, this interest in social and environmental issues is directly linked to financial and management challenges: companies can no longer ignore the demands of their investors. Some 1,400 investment funds, managing $60,000 billion, have integrated environmental factors into their investment decisions. And these same factors are now part of the evaluation criteria of powerful rating agencies.

However, while a significant number of small or medium industrial companies and mid-sized companies are lagging behind in taking social and environmental issues into account, others are embracing this trend by setting up a mission, if possible differentiating and in line with the company's roots and DNA.  

The condition for success is to not sacrifice financial performance in return: the abrupt departure of Emmanuel Faber, CEO of Danone, last March, has stopped some projects of formalization of raison d’être or mission-driven companies.

Through the Bris Rocher report, several proposals seek to reassure. The report agrees that the "mission committee" should work in a "collaborative" manner with the management and administrative bodies. Secondly, the report wants the government to clarify the scope of intervention of the OTI (Independent Third-Party Organization), which must verify at least once every two years the fair execution of social and environmental objectives. 

Other bodies, such as the Community of Companies with a Mission, are also working on recommendations, even advocating that a company, in its capacity as a community, would be the owner of its mission, with the shareholders owning the company in its capacity as a legal entity.    

The debate is open, but in any case, this trend must be supported by leaders with a more "responsible" and "sustainable" leadership: an intrinsic motivation to optimize the people, planet, and profit aspects at the same time, a spirit of systemic thinking, an ability to build relationships with all stakeholders with a long-term vision. 

If you wish to extend the reflection on the subject of "purpose-driven leadership" I invite you to have a look at our interviews with two ex-CEOs who are models in this field.

Why Purpose-Driven Leadership Matters Now More Than Ever: A Q&A with Paul Polman

Purpose-Driven Leadership: Fireside Chat with Clarke Murphy and Hubert Joly