CEOs Need Help Navigating The Sustainability-Oriented New World

Lorna Davis, advisor to Danone’s CEO, says this new era requires chiefs to step outside their traditional boundaries for collaboration.

The emergent environmental sensibilities in today’s C-suites require new kinds of CEOs who are willing to establish far-off goals for their companies that they won’t personally accomplish—and who seek unaccustomed and sometimes uncomfortable collaboration with other business leaders.

That’s the view, anyway, of Lorna Davis, a veteran chief of consumer packaged goods brands. Davis’s most recent stint was as senior advisor to Danone CEO Emmanuel Faber to help him push the Paris-based giant to the forefront of the sustainability revolution in the food and beverage industry. Davis also is a global ambassador for the B Corp movement, a private certification of companies that endorses their embrace of broader, “purpose”-oriented objectives above pure profit and shareholder returns.

“There’s this moment now when CEOs have to realize that the important stuff is out of their control,” Davis told Chief Executive. “That expresses most obviously in climate-related goals for a company. If you do what’s in your own scope—your own factory, goals for your own office, for example—it’s easy. But everything else has got real impact upstream and downstream of that.” In Danone’s case, for instance, that’s because “cows are eating, and people are eating.”

Davis, a former brand chief for Kraft and Mondelez International and former chairwoman of DanoneWave, the B Corp that resulted from Danone’s acquisition of White Wave Foods in 2017, also authored the second version of the Danone Manifesto, which spells out the company’s purpose-oriented commitments.

She helped Faber to see that, in this new era, “as CEO you immediately get into the space of needing to impact things that you don’t directly control, and therefore you end up in the world of collaboration and alliances and connecting with other people.

“This is important,” said Davis, “because the old way for CEOs was that they tackled only goals that they could control: ‘my people, my factories, plastic containers’ and so on. But Danone has said this is a big and important problem that we can’t solve alone.”

For Faber, this has meant, among other things, pledging Danone to become entirely carbon neutral by 2050, surely long beyond his tenure as chairman and CEO that began in 2017. He also has been collaborating with other companies that have taken an environmentally purpose-driven approach, such as fellow Europe-based CPG titan Unilever; Mars, the U.S.-based confectionery leader; and the Paris-based NGO group, the Organization for Economic Cooperation and Development.

And Faber “continues to align himself with people, reshaping the entire conversation,” Davis said. At Danone, for instance, under Faber, Davis helped create a Facebook site for employees “where people can gather around promoting zero waste or carbon neutrality or other topics, so you get into groups within the corporation that push” on such issues.

Besides adopting a collaborative orientation on sustainability issues, Davis said, another part of the related challenge for CEOs is to refrain from trying to address the problem for their company by simultaneously sloughing part of the responsibility off on to others. This is an inflection point prominently identified by Paul Polman, former CEO of Unilever, Davis said.

“If you’re as woke as you pretend,” Polman would tell other CEOs, according to Davis, “you could sell some businesses [because of concerns about their sustainability] and then you look shiny—but you just dump the problem on someone else.”

For Danone, Davis said, taking this high road means, among other things, trying to hybridize cows and change their diets so that they don’t emit as much methane—rather than, for example, selling off Danone’s dairy business.

And, of course, CEOs of “legacy” companies such as Faber must heavily weigh the human components of that legacy.

“It’s easy to throw rocks from the outside,” Davis said. “But if you take Tyson Foods, for example, they’ve got something like 130,000 workers—these are humans with jobs and families and lives. So you might want to wish the chickens and cows away, but they’re there. No one of us might have started the journey that way, but we’re in it. So the question of how CEOs migrate from one place to another is where the subtlety comes in.

“So I have way more compassion and passion for standup CEOs than for startups,” she continued. “If you’re a startup, you have no legacy. But if you are Emmanuel Faber or the guy who runs Tyson or Unilever, you’ve got shareholders, you’ve got retailers, you’ve got employees. You can’t just magic them away, and if you simply stop doing [environmentally unsustainable] stuff, the [consumer] demand doesn’t necessarily go away either. So there’s a dance involved with educating consumers as well.

“It’s a complicated business now. That’s where new leadership needs to be excellent. I’m watching to see who’s going to be amazing at it.”