Published on 05 November 2018

CSR

[Focus CSR] Veolia’s "critical friends" committee challenges company strategy

How can companies better diffuse CSR (Corporate Social Responsibility) internally and throughout its ecosystem? This is the question all committed companies are asking. Novethic has identified good, achievable, and proven practices that have been put in place by major economic leaders. This week, Novethic engaged in a stakeholder dialogue with Veolia's “Critical Friends,” the “trouble-making” experts, who are moving the company forward on the path of responsibility. Novethic spoke with Antoine Frérot, CEO of the company.

Veolia listen its critical friends when it cames to environemental and social strategy
@Veolia

Since 2013, a dozen international experts have voluntarily met twice a year at Veolia. They come from associative, institutional and academic sectors or even development and micro-credit banks. They are experts in environmental and social issues, though most remain anonymous. Only the name of their president, Michel Severino, former director of the AFD (French Development Agency) is known (1). They are invited to give their opinion, without taboo and in all confidentiality, concerning various themes or projects that "link corporate strategy and sustainable development". To do this, the doors of the sites are open to them, serving as the documents necessary to understand such issues.

Strategic help

The initiative was born during a critical moment for the group, says Frérot. "At the time, Veolia was experiencing economic difficulties in its traditional markets. So I decided to offer solutions for industrialists too. But that was not easy. We have been accused of complicity with polluting industrialists, in that we helped them to clean up what they had already polluted." The stakeholder committee was decisive on this issue: "they clearly helped us to position our offer, by setting a framework, and limits, to avoid being labeled as accomplices," said Frérot.

Their opinion was also crucial when the group started to process nuclear waste and dismantle nuclear facilities. A highly sensitive subject, that was very much exposed in the media. "Again, they helped us define a scope for our offer and explain exactly what we were doing to our different stakeholders so as to not seem questionable," explained Frérot.

Finally, when coal became the target of major divestments, Veolia again turned to its “Critical Friends”. "They told us not to be cowardly", meaning, not to sell their coal-operating heating network all at once, regardless of who would buy in return, explained Frérot. "The planet would win nothing because those who buy rarely care about the climate...,” suggested Frérot. However, when it’s time to develop a strategy, it is a real dilemma for the company.

Towards a stakeholder committee standard?

The board of directors was divided, with some expressing a desire for a total and immediate sale to avoid any reputational risk. The CEO once again turned to the “Critical Friends”. "They told us to be 'responsible' by progressively providing technical solutions, (renewable energies, gas, carbon capture, etc.) allowing for the eventual replacement of all coal. And it is the chairman of “Critical Friends” himself who presented this idea to the Board of Directors. After debate, this position was finally adopted," Frérot said.

This type of stakeholder committee is now being established in a growing number of companies, with much success. So much so that ahead of debates concerning the French Pacte law, the Notat-Senard report on "The company as an object of collective interest", advocated for the institutionalisation of such a committee for companies of all sizes. "The creation of a stakeholder committee is probably one of the most effective methods to enable the company's management to aim for self-interest and consideration [of environmental and social aspects]". However, this proposal is far from unanimous amongst employers, and it was not taken up in the early stages of the Pacte law.

As for the place of this committee vis-à-vis the board of directors, which is a highly sensitive subject, Frérot is in favor of integrating the chairman of the committee with the board. This is a vision that is not yet shared by all of his peers who fear a serious stakeholder takeover in the strategy of the company.

Béatrice Héraud @beatriceheraud

(1) Michel Severino, former Director General of the French Development Agency and Vice-President of the World Bank is currently head of a fund management and technical support company for SMEs in Africa

 

 


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