Business school teaching case study: How does a multinational become a B Corp?

The author is a climate economist at Columbia Business School

Danone’s story of looking for a larger purpose beyond short-term profits seemed to come to an ignominious end in 2021. The then-chief executive Emmanuel Faber was removed by the board of directors following pressure from activist investors who claimed that prioritising environmental, social and governance issues hurt the company’s financial returns.

Others argued that the relative underperformance was driven by market conditions unrelated to ESG spending, but the activists had a point about Faber going all in on ESG. The year before his firing, Danone became the first listed company to adopt a new French legal status, formally embracing société à mission — its status as a mission-driven company.

That mission is complicated by the fact that there is no one-size-fits-all solution for sustainable food. Danone’s global supply chain both affects and is directly affected by everything from climate change to biodiversity loss and water scarcity.

Food systems account for approximately 20 per cent of greenhouse gas emissions, mostly through livestock production. Deforestation and monocrops destroy critical wildlife habitats, reduce carbon storage, and fragment ecosystems, feeding a vicious feedback loop where biodiversity loss and climate change exacerbate each other.

In wealthier countries, decarbonising proteins means shifting diets: less meat and dairy, more plant-based options. In lower-income regions, where livestock supports nutrition and livelihoods, the focus is on improving efficiency through better feed, smarter grazing, and more resilient breeds to reduce emissions without undermining food security.

Danone, with dairy at its core, is taking a dual approach: cutting methane from livestock while rapidly growing its plant-based portfolio. The group has an ambitious methane reduction target of minus 30 per cent by 2030. It is investing in better manure management and feed additives that reduce methane emissions such as Bovaer, the first FDA-approved enteric methane inhibitor, and Symbrosia, a start-up developing seaweed-based additives. It also has a regenerative agriculture programme to improve soil health and carbon sequestration.

In addition, the company is investing heavily in plant-based alternatives. Following its $12.5bn acquisition in 2017 of WhiteWave Foods (parent company of Alpro and Silk), Danone is now a market leader in non-dairy beverages and plant-based yoghurt.

Emerging technologies such as cultivated meat and methane inhibitors hold promise, particularly if they can overcome the hurdles of cost, regulation, and consumer scepticism. But to scale up, they’ll need significant investment in research and development, supply chains, infrastructure, and market development.

Danone is pursuing all of this despite Faber’s sacking. In fact, his successor, Antoine de Saint-Affrique, has since reaffirmed the company’s commitment, seeking to become the largest “B Corporation” by the end of the year. That pursuit, too, is not without controversy.

It is one thing to build a sustainable B Corp, when it is a small, founder-led company with full visibility into supply chains and day-to-day operations focused on a niche product. It is another to do it at the scale of Danone, a multinational with almost 90,000 employees in more than 55 countries, and generating €28bn in sales last year.

Non-profit B Lab, issuer of the B Corp label, had to adapt its own processes to make them work for a company of that scale. That began in France, where collecting racial data is illegal, which would have made it impossible to check certain diversity boxes in B Lab’s prior standards.

Including multinationals has come with plenty of pushback, and not just from profit-seeking shareholders. When coffee pod company Nespresso, owned by Nestlé, obtained B Corp status, a coalition of previously certified coffee companies wrote an open letter accusing B Lab of greenwashing.

In response, B Lab revisited its standards and procedures, but it ultimately considered the trade-offs worth the effort to expand the movement. While multinationals made up only 2 per cent of Certified B Corps in 2022, they accounted for almost 30 per cent of employees working for certified companies.

Indeed, employees are a core stakeholder in the B Corp process and it is often easier to sell the commitment internally than externally. Helene De Laguiche, Danone’s B Corp global manager, explains it: “We’re still working on effectively communicating the value of being a B Corp to customers and investors. While our employees are invested in the process and recognise the value, we need to do more to educate our external stakeholders.”

The company has embraced a broader purpose for decades. In 1972, then-CEO Antoine Riboud delivered a speech decades ahead of his time. He argued that a business should be accountable not just to its shareholders, but to its workers, communities, and the environment. He was advocating for “stakeholder capitalism” before it had a name.

This would pass for standard ESG corporate speak in 2025. But in the 1970s, the age that gave us Milton Friedman’s shareholder primacy, the argument that a company’s social responsibility was to increase its profits, it was a radical position.

All this raises some crucial questions around the value of B Corps and of anchoring a broader mission in a company’s DNA. What is the role of ESG and looking beyond short-term profits in today’s political climate? Is the debate between shareholder and stakeholder capitalism merely a matter of degrees, or a fundamentally different way to view corporate goals and strategy?