DANONE: LEADING CHANGE BY REJIGGING PURPOSE?
CASE STUDY SOLUTION
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SYNOPSIS
Sa
In March 2021, faced with emphatic calls from a minority group of dissatisfied investors who were worried
about Danone S.A.’s (Danone’s) poor financial performance, the board of directors asked Emmanuel Faber,
Danone’s chair and chief executive officer (CEO), to step down from his leadership position.
n
Danone had a long history of being a purpose-driven company, and Faber’s personal values mirrored the
company’s values. He had fiercely advocated the need for companies to go beyond the pursuit of
tio
maximizing shareholder wealth to consider stakeholder value. Under his leadership, Danone was working
toward becoming a B Corporation company and its shareholders voted, almost unanimously, to pursue
designation as an entreprise à mission, implying that Danone would be run with regard to the social and
lu
environmental impacts of its business activity. Faber had also initiated a new financial metric at Danone,
called the “carbon-adjusted earnings per share,” which would be reported in addition to the traditional profit
So
The Case Solution Starts From page 6
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ASSIGNMENT QUESTIONS
1. Why was Emmanuel Faber, the purpose-driven chief, ousted from the role of chair and CEO of Danone,
a purpose-driven company?
2. What is the conflict between a company’s pursuit of profits versus purpose?
3. How can Faber and Danone’s board of directors defend the strategy of pursuing purpose?
4. Does Faber’s ouster signal Danone’s rejection of responsible capitalism and change in its purpose?
5. What should Danone’s new CEO do now? How should they manage the dual mandate during the
pandemic-led economic downturn? What should the CEO do after the pandemic?
The Case Solution Starts From page 6
,ANALYSIS
1. Why was Emmanuel Faber, the purpose-driven chief, ousted from the role of chair and CEO of
e
Danone, a purpose-driven company?
pl
Reasons students
give for his dismissal may revolve around Danone’s relative underperformance compared to rivals Unilever
m
plc and Nestlé SA and allegations of lack of governance.
Sa
• Did Danone underperform during Faber’s leadership at Danone?
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• How does Danone’s financial performance under Faber compare to that of Danone’s rivals, Unilever
and Nestlé?
tio
• Was Faber’s pursuit of purpose at variance with the company’s vision, mission, and values? In other
words, had Danone committed to maximizing wealth for its shareholders—a path that Faber was not
following?
lu
• How did Danone perform on the ESG parameters before and during Faber’s leadership?
So
Did Danone underperform during Faber’s leadership at Danone?
“Danone Financials
1996–2020” in the accompanying Excel workbook. The analysis should compare Danone’s financial
performance from 1996 to 2013 (under Franck Riboud’s leadership) to its financial performance from 2014
to 2021 (under Faber’s leadership).
The average revenue during the first period was €14,968,278. The average revenue during Faber’s
leadership was €23,410,000. Average operating income during the two periods were €1,889,278 and
€3,262,571 respectively, while the average operating margins were 12.44 per cent and 13.89 per cent. The
The Case Solution Starts From page 6
, EXHIBIT -1: CALCULATION OF CARBON-ADJUSTED EPS
UNILEVER DANONE
2020 2019 2020 2019
Carbon Emissions (in tonnes)
Scopes 1 and 2 778,677 1,102,925
Scope 3 60,388,592 61,020,357
Total 61,167,269 62,123,282 Scopes 1, 2, and 3 26,100,000 27,200,000
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The Case Solution Starts From page 6
, EXHIBIT -2: DANONE’S ENVIRONMENTAL, SOCIAL, AND GOVERNANCE PARAMETERS
UNDER FRANCK RIBOUD AND EMMANUEL FABER
FRANCK RIBOUD EMMANUEL FABER
ENVIRONMENTAL
• The Danone Fund for Nature launched in 2008 to • 2016—Faber pushed for about half of Danone’s
help the group offset the carbon emissions of some products in the United States, representing about $1
of its brands, primarily Evian, by preserving and billion of yogourt sales, to be based on non-
restoring wetlands. genetically modified organisms (GMO).
• 2017—Danone adopted a new brand signature
reflecting the interconnectedness of the environment
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pl
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Sa
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tio
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So
The Case Solution Starts From page 6
CASE STUDY SOLUTION
e
pl
m
SYNOPSIS
Sa
In March 2021, faced with emphatic calls from a minority group of dissatisfied investors who were worried
about Danone S.A.’s (Danone’s) poor financial performance, the board of directors asked Emmanuel Faber,
Danone’s chair and chief executive officer (CEO), to step down from his leadership position.
n
Danone had a long history of being a purpose-driven company, and Faber’s personal values mirrored the
company’s values. He had fiercely advocated the need for companies to go beyond the pursuit of
tio
maximizing shareholder wealth to consider stakeholder value. Under his leadership, Danone was working
toward becoming a B Corporation company and its shareholders voted, almost unanimously, to pursue
designation as an entreprise à mission, implying that Danone would be run with regard to the social and
lu
environmental impacts of its business activity. Faber had also initiated a new financial metric at Danone,
called the “carbon-adjusted earnings per share,” which would be reported in addition to the traditional profit
So
The Case Solution Starts From page 6
, e
pl
m
Sa
n
tio
lu
So
ASSIGNMENT QUESTIONS
1. Why was Emmanuel Faber, the purpose-driven chief, ousted from the role of chair and CEO of Danone,
a purpose-driven company?
2. What is the conflict between a company’s pursuit of profits versus purpose?
3. How can Faber and Danone’s board of directors defend the strategy of pursuing purpose?
4. Does Faber’s ouster signal Danone’s rejection of responsible capitalism and change in its purpose?
5. What should Danone’s new CEO do now? How should they manage the dual mandate during the
pandemic-led economic downturn? What should the CEO do after the pandemic?
The Case Solution Starts From page 6
,ANALYSIS
1. Why was Emmanuel Faber, the purpose-driven chief, ousted from the role of chair and CEO of
e
Danone, a purpose-driven company?
pl
Reasons students
give for his dismissal may revolve around Danone’s relative underperformance compared to rivals Unilever
m
plc and Nestlé SA and allegations of lack of governance.
Sa
• Did Danone underperform during Faber’s leadership at Danone?
n
• How does Danone’s financial performance under Faber compare to that of Danone’s rivals, Unilever
and Nestlé?
tio
• Was Faber’s pursuit of purpose at variance with the company’s vision, mission, and values? In other
words, had Danone committed to maximizing wealth for its shareholders—a path that Faber was not
following?
lu
• How did Danone perform on the ESG parameters before and during Faber’s leadership?
So
Did Danone underperform during Faber’s leadership at Danone?
“Danone Financials
1996–2020” in the accompanying Excel workbook. The analysis should compare Danone’s financial
performance from 1996 to 2013 (under Franck Riboud’s leadership) to its financial performance from 2014
to 2021 (under Faber’s leadership).
The average revenue during the first period was €14,968,278. The average revenue during Faber’s
leadership was €23,410,000. Average operating income during the two periods were €1,889,278 and
€3,262,571 respectively, while the average operating margins were 12.44 per cent and 13.89 per cent. The
The Case Solution Starts From page 6
, EXHIBIT -1: CALCULATION OF CARBON-ADJUSTED EPS
UNILEVER DANONE
2020 2019 2020 2019
Carbon Emissions (in tonnes)
Scopes 1 and 2 778,677 1,102,925
Scope 3 60,388,592 61,020,357
Total 61,167,269 62,123,282 Scopes 1, 2, and 3 26,100,000 27,200,000
e
pl
m
Sa
n
tio
lu
So
The Case Solution Starts From page 6
, EXHIBIT -2: DANONE’S ENVIRONMENTAL, SOCIAL, AND GOVERNANCE PARAMETERS
UNDER FRANCK RIBOUD AND EMMANUEL FABER
FRANCK RIBOUD EMMANUEL FABER
ENVIRONMENTAL
• The Danone Fund for Nature launched in 2008 to • 2016—Faber pushed for about half of Danone’s
help the group offset the carbon emissions of some products in the United States, representing about $1
of its brands, primarily Evian, by preserving and billion of yogourt sales, to be based on non-
restoring wetlands. genetically modified organisms (GMO).
• 2017—Danone adopted a new brand signature
reflecting the interconnectedness of the environment
e
pl
m
Sa
n
tio
lu
So
The Case Solution Starts From page 6
