In the light of the crisis, what meaning does purpose take on for companies?

Antoine Frérot and Bernard Sananès share their view of companies’ role and purpose in times of crisis and beyond.
Published in the dossier of May 2020

Under pressure from citizens as well as a regulatory framework in certain countries, companies have been doing some soul-searching for the past few years when it comes to their purpose and contribution to a more responsible capitalism. The brutal, unprecedented crisis into which the Covid-19 virus has plunged the whole world is catalyzing and crystalizing these reflections. This turbulent period will undoubtedly reveal the sincerity of companies’ approaches. Over and above the health crisis itself, organizations’ ability and aptitude to mobilize society for the reconstruction period are already appearing as new issues at stake in the post-crisis landscape.

With the current global health crisis on an unprecedented scale and its economic, social and societal — even ethical — consequences, can and should companies rethink their growth model?

Antoine Frérot CEO of the Veolia Group

“By defining the company’s role and place in society, purpose undoubtedly contributes to the emergence of a more responsible, more patient capitalism.”

“This crisis is a ruthless litmus test. It reveals how the company is able to carry out its missions, even when operating at a reduced level, how it divides its efforts between its various stakeholders, how it manages to maintain long-term objectives despite the pressing shortterm demands.”

Antoine Frérot : This violent global health crisis has suddenly thrown us into a different economic and social reality. Companies must adapt their growth model, and for some of them this will involve a radical rethink. In the short term, in order to best maintain their business, bear the shock of the drop in earnings, and prepare to bounce back when they come out of the crisis. In the longer term, by increasing their agility and resilience, diversifying their supply chain, tightening up their critical functions, and rebuilding stocks of products and equipment indispensable to their operations, etc. All the more so as other crises of this kind are likely to occur. In principle, they are foreseeable; in their nature, timing and scope, they are not. The area of the threats has expanded and the response time shrunk. These changes heighten the risks; however, one of the characteristics of a good growth model is risk management.

Bernard Sananès :Companies have always included an element of the unexpected when drawing up their plans. However, in the current situation, this unpredictability has taken hold globally and systemically. This brutality is what differentiates it from other crises that we have experienced. There is no doubt that this crisis will call economic models into question. It is an open question as to how “the post-Covid-19 world will be different than before.” The jury is out between a scenario that demonstrates our ability to adapt to this uncertain period versus one that puts forward a more in-depth change to our societal model.

What role could companies play in a world with an increasing number of crises, in which we will not only have to face them but also rebuild afterwards? Do you think that this is a driver for achieving “responsible capitalism” in the 21st century?

A.F. : In an extreme crisis, you quickly lose all your bearings. The standard procedures and usual reflexes suddenly become obsolete. In this upheaval, many points of reference are shifting: some remain, particularly purpose, which reminds companies what is essential. One of its benefits consists in grounding the company’s actions more deeply in the long term, and therefore looking toward the post-crisis period. By defining the company’s role and place in society, purpose undoubtedly contributes to the emergence of a more responsible, more patient capitalism.

B.S. : Over the past five years, the movement toward a more responsible form of capitalism, particularly with regard to environmental questions, was already very much in progress. This corresponds to a societal expectation.

Before the crisis, eight in ten French people thought that we had to change our habits, adopting a more restrained lifestyle and reducing our consumption. The question now arises: “Will environmental issues remain in French people’s top three concerns or, on the contrary, will jobs, social concerns and health become a priority?”

Bernard Sananès President of the market research and consultancy firm Elabe

“Civil society and public players already exert and will continue to exert a kind of pressure. Nowadays, companies can no longer ‘simply’ do their jobs. Society expects a great deal from them.”

“Which company demonstrated by its action — not its communication — that what it proudly proclaimed in its purpose wasn’t just empty words?”

For several months, the economic crisis and its impact on unemployment and precariousness will undoubtedly bring social and economic questions back to the forefront of priorities. However, in the long term, I really believe that most citizens will lastingly come to grasp the link between health and the environment and the search for new balances will become established as the key to individual and collective wellbeing.

How can we ensure that purpose is not a hollow and empty shell? Does this imply it being accompanied by a strategic plan? If so, how do you see this strategy being crafted, incorporating the 3 Ps (People, Planet, Profit)?

A.F. : I’ll answer you, taking the example of Veolia. We have taken several measures to ensure that our purpose is effectively implemented. First of all, our Board of Directors will take this purpose into account in its decision-making and assess how it is applied. Then, each year, using a performance scoreboard, our Group will draw up a review of its multifaceted performance with our five main stakeholders: employees, clients, shareholders, the planet, and society in general. Finally, a Stakeholder Committee, made up of experts from civil society and representatives from clients, suppliers, employees and future generations, will advise Veolia’s management to allow the Group to successfully fulfill its purpose.

B.S. : More than ever, the question will be: “Is the company making its purpose a guideline, an objective around which all its policies converge?” This is a real challenge for companies. In the surveys that we conducted in June 2019, we saw that there was a certain amount of skepticism in people’s views regarding the sincerity of the commitments companies have made in terms of purpose.

Embracing a purpose can make companies more credible if it’s not just a matter of communication, if, when put to the test by the crisis, it seems to be genuinely implemented in the everyday choices made by the company, and if its impact is objectively assessed.

A company like Veolia (a utility) already inherently has a “purpose” for its client (climate, environmental responsibility, etc.). In what way does Veolia’s approach confirm its long-standing mission or reassure its stakeholders?

A.F. : Our purpose is entirely in line with our Group’s mission and its history. When our company was born, there were one billion fewer inhabitants on the planet. Today, it is home to over seven billion people. The challenges of the past were cholera prevention, supplying cities with drinking water, and collecting wastewater and waste. Today, they are a scarcity of water, energy and raw materials, treating toxic pollution, access to essential services for all, the energy transition, climate change, etc. Few tasks are as essential as helping overcome these major challenges that are affecting humanity as a whole.

Our stakeholders are well aware of the significance of our actions and support them. They were also closely involved in drawing up our purpose, which strengthens their role, affording equal attention to each of them.

In what way does Veolia’s mobilization in the face of the Covid-19 virus epidemic reveal the sincerity of the Group’s initiative to embrace a purpose that “imbues” its entire corporate strategy (Impact 2023)?

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A.F. : This crisis is a ruthless litmus test. It reveals how the company is able to carry out its missions, even when operating at a reduced level, how it divides its efforts between its various stakeholders, how it manages to maintain long-term objectives despite the pressing short-term demands. It shows how, beyond its sincerity, our purpose is deeply rooted at the heart of our company, down to shaping its internal organization. Our crisis units have been activated, our continuity plans triggered, our organization has been adapted, and our resources mobilized to meet the vital needs of communities in terms of water, energy and waste management, as well as maintain the economic activity of our industrial clients, in accordance with the measures taken by each country. This health crisis must not kill economic life. On the contrary, it is indispensable to maintain it as far as possible.

Are you willing to let civil society and public (general interest) players help direct a company’s strategic choices (the leader’s twofold mandate)? Do you not think that this poses a risk to its development?

B.S. : Civil society and public players already exert and will continue to exert a kind of pressure. Nowadays, companies can no longer “simply” do their jobs. Society expects a great deal from them, for instance, in areas such as employability, career management, training, youth employment opportunities, and reducing social inequality.

A.F. : A company prospers because it is useful, not the other way round. Also, listening more to the voice of society does not distract it from its mission or make it lose its competitive edge; on the contrary, this helps it become a more useful company, in other words a better company. Being itself a player in society and only living through it, a company cannot not get involved in the social and societal realm. The real risk for its development would be not to get involved, because it would become misunderstood and therefore contested.

What lessons are you drawing from this crisis and its impact on the strategy of groups that had already been identified by governments as having an essential activity and that we are finding are up against it?

A.F. : Three lessons may be learned. Firstly, this epidemic illustrates the devastating power of domino effects: a local health crisis has become global, economic and social, while also remaining health-related. Secondly, this major and atypical crisis highlights our inability to imagine worst-case scenarios and exceptional events. It propels us into another space and time, which operate according to other rules. Finally, this epidemic confirms that “in times of crisis, imagination is more important than knowledge,” as Albert Einstein observed last century. And it’s thanks to its collective inventiveness and exceptional mobilization that our Group is successfully assuming its responsibilities in such a destabilizing period.

B.S. : We are seeing that companies are on the frontline in the crisis. They often take over from governments who sometimes seem ineffective. They have agile processes, respond rapidly, and demonstrate a commitment embodied by leaders and staff alike. The crisis that we are experiencing could accompany this movement to rehabilitate companies and bring French people closer to companies, as it will have demonstrated that quite a few of them stepped up to the plate, filling in the gap or working alongside governments.
One thing is clear: there cannot be a single solution to the exceptional crisis we are going through. Numerous collaborations between public and private, between different players, could emerge in the post-crisis period.

This crisis also highlights how our economies are interconnected. All the same, are we really going to profoundly rethink our production models? What role could companies play in the future, in the light of the crisis experience?

B.S. :In all likelihood, the crisis will rebalance globalization. There is going to be a tendency to relocate industrial activity as well as consumption. The example of masks in France symbolizes one of the lessons that we can draw from the crisis: certain activities are now going to be reconsidered as strategic because they are essential to everyday life.
More generally, each company, at its level, regardless of its size or business, can show its true colors in the crisis. Some companies have a more impactful mission than others. But for those whose mission seems less essential in the crisis, there are other actions in terms of commitment to staff and solidarity.
Beyond this, in the post-crisis period, each political, economic and societal player will be scrutinized regarding its activity and we will collectively ask the question: “Who was there?”* Speaking only of companies: which company demonstrated by its action — not its communication — that what it proudly proclaimed in its purpose wasn’t just empty words? Who, in an economically difficult time for everyone, behaved like a socially responsible link in a large chain, like a fair employer, someone that protects its suppliers, that continues or increases its socially responsible actions? 

I see two challenges for companies. First of all, playing an active role in successfully coming out of the lockdown, particularly by guaranteeing optimal safety for their employees and clients. Then, playing an active role in mobilizing society in the reconstruction period that we will go through.

The lockdown period has revealed new inequalities: the option of working from home or not, exposure to the health risk, or even lockdown conditions. Do you think that these issues will continue after the crisis?

B.S. :Crises always accelerate injustices on several levels. Generally speaking, will we feel that everyone has been protected in the same way when it comes to health, or economically in the future?

Then, two work-related issues may arise. First of all, working from home. It may be experienced as a new form of inequality between those who have access to it — for these people, it’s a form of emancipation — and those who do not have access to it — for this group, it’s a form of injustice instead.
The other issue is employee risk exposure. There are sectors of activity where some employees are more exposed to occupational accidents but, on a daily basis, for most people going to work is not seen as a risk. At the end of lockdown, if it takes some time before we have a vaccine or a treatment, there is a risk that employees are either afraid of losing their job or afraid of the health risk.
Finally, when it comes to the regions: will they all feel like they have been treated equally — both in terms of managing the health crisis and the economic recovery? Will certain regions, which are now seen as neglected, be rediscovered as good places to live because they have been slightly protected due to their low population density?

Veolia’s employees have demonstrated unfailing commitment on the ground all over the world during this crisis. Does this not indicate an extraordinary sense of responsibility on the part of your teams as well as the assimilation of the Group’s purpose?

A.F. : We should praise — and I’m the first to do so — our employees’ exceptional mobilization in these difficult times to maintain the continuity of our activities. They are giving their all, because our services are indispensable for everyday life and must be delivered, despite the disorganization that the lockdown is causing in various places. Our clients, hospitals, public authorities, and communities are counting on us. Our staff are very much aware of this and are striving to live up to such a great mission. Our purpose is natural for Veolia staff. Providing essential water, energy and waste management services is part of their everyday tasks. As our purpose is directly linked to this, they easily identify with it, whatever the circumstances.

* See also the opinion piece published by Bernard Sananès in Les Echos, April 1, 2020, : "Pendant la crise : qui aura été là ? "