Decisions based on sustainability need to offer financial returns to ensure they attract investors, Danone's chief financial officer has said.
Jurgen Esser’s comments are a departure from those of other executives in the industry.
Generally, investors have tended to gloss over the need for sustainability strategies to deliver financial returns.
Danone’s efforts to be more sustainable include changing the way it runs its facility to reduce energy consumption.
Esser said this change has led to “a significant payback” for Danone, but he did not give details.
He added, “On top of that, it drives competitive advantage: it allows us to come to our customers and partners and say, ‘you asked us to help you decarbonise – here this product is now with 20% less carbon emissions.’”
Sustainability Goals
From restaurants to retailers, companies are racing to cut emissions in their third-party supply chains – known as scope 3 emissions – in an effort to meet lofty sustainability goals.
These companies rely on the firms that supply them with food and other goods to help them meet these targets.
Esser said, “The reality is you need to find a different way to create an incentive to invest into sustainability.
“There’s no other way to do it without competitive edge, because investors do not compromise on financial returns.”
Portfolio manager at Janus Henderson, Robert Schramm-Fuchs, said he agreed with Esser’s position.
Schramm-Fuchs said, “Things are not sustainable if there’s not a positive commercial impact behind it.
“If you do things that put your company in a disadvantaged position, others will take market share – your employees, your stakeholders will lose to outsiders.
“There’s no point in doing things to disadvantage your company competitively.”
Danone is hosting an investor conference in Amsterdam on Wednesday and Thursday to discuss a number of topics, including sustainability measures, with shareholders.
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