KNOWLEDGE.ESSEC.EDU ESSEC KNOWLEDGE REVIEW

Building a better 2021

JUNE world Together EDITORIAL

“As for the future, your task is not to foresee it, but commitments, to provide solutions to the most to enable it.” pressing problems facing the planet; social and regional commitments, to contribute to the Antoine de Saint Exupéry fight against social inequalities; and societal commitments, to spark positive change within the We are living in a world full of changes. More than business school ecosystem and, more broadly, that: we are living in a world that demands changes. in our societies. Research in these areas is key to From the climate crisis to rising socioeconomic understanding and giving momentum to this inequality around the globe, our societies face transition. The articles selected for this special unprecedented challenges. Here at ESSEC, we see issue all highlight our pedagogical and academic these challenges as an opportunity to build a better commitment to this transformation. world together. Twenty-two ESSEC professors shared their insights The ESSEC motto is “Enlighten. Lead. Change”. We for this special issue: experts in management, are dedicated to training the leaders of tomorrow social innovation, operations research, finance, and to conducting innovative, high-quality research economics, workplace management, public that takes on important societal questions. We and private policy, economics, gender equality, believe in harnessing the power of knowledge and and information sciences. They provided their curiosity to make a difference in the world. expert analyses on topics ranging from the responsibility of business schools to make a We also believe that it is our responsibility as difference (a topic naturally very close to our a business school to take part in facing global hearts), building a philanthropic strategy, challenges and contribute to building a more corporate sustainability initiatives, responsible inclusive, just, and sustainable society. To that end, innovation, the transformation of the agri-food we launched our RISE strategy in October 2020, industry, sustainable city logistics, green finance, with three foundational pillars: Together, a strategic gender equality, and the future of offices. The initiative for social and environmental transition; research looks at how topics like equality and the Metalab, a multidisciplinary ecosystem at the the environment permeate different areas of intersection of data, technology and society; and business and our daily lives, and how these issues Enlightening Entrepreneurship, a platform for can be addressed in myriad ways across sectors. supporting and training the next generation of entrepreneurs. With this special issue, we aim to spark a conversation on how social and environmental In this special issue, ESSEC Knowledge explores issues can be tackled using research and innovation. the issues addressed in the Together initiative. The world is changing quickly, and we all have a role Designed to guide ESSEC through its social and to play in building a better future. environmental transition, Together provides opportunities for staff, students, and professors to actively contribute to the transition of the school. Julia Smith, Editor-in-Chief of ESSEC Knowledge It has a three-pronged approach: environmental Together Initiative

KNOWLEDGE/3 TABLE OF CONTENTS

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TAKING THE LEAD IN MAKING BUILDING A PHILANTHROPIC SOCIAL ENTREPRENEURSHIP A DIFFERENCE: THE ROLE OF STRATEGY Stefan Linder BUSINESS SCHOOLS Anne-Claire Pache and Arthur Department of Accounting Laurent Bibard and Stefan Gröschi Gautier and Management Control Department of Management Department of Public & Private Policy

18 22 26 SOCIAL ACCOUNTING BUSINESS FOR GOOD: WHAT ANTICIPATING IN A WORLD Adrian Zicari PLACE DOES SOCIAL IMPACT HAVE OF UNCERTAINTY- HOW TO Department of Accounting and IN CORPORATE VALUE CREATION? RESPONSIBLY INNOVATE Management Control Jean-Marie Peretti Xavier Pavie Department of Management Department of Operations Management

4 /KNOWLEDGE 30 34 38 AGRI-FOOD: A WORLD DOING GOOD WHILE DOING SUSTAINABLE CITY LOGISTICS OF TRANSITIONS WELL: THE CASE OF BUSINESS Claudia Archetti, Ivana Ljubic Olivier Fourcadet and Frédéric Oble IT INITIATIVES and Laurent Alfandari Department of Management, Yan Li Department of Information Systems, Department of Marketing Department of Information Systems, Decision Sciences and Statistics Decision Sciences and Statistics

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MAKE BUSINESS GREEN AGAIN: NON-FINANCIAL RATING: SUSTAINABLE INVESTING: THE ROLE OF FINANCIAL A FINANCIAL TECHNIQUE SHAPING THE FUTURE OF MARKETS THAT SUPPORTS CORPORATE FINANCE Romeo Tedongap SUSTAINABILITY Francis Declerck and Sofia Ramos Department of Finance Hugues Bouthinon-Dumas Department of Finance Department of Public & Private Policy

54 58 62 GENDER EQUALITY IN FINANCE WOMEN ON BOARDS: STATE WHAT WOMEN WANT Francois Longin and Estefania OF AFFAIRS IN FRANCE AND (FROM THEIR OFFICE SPACE) Santacreu-Vasut EUROPE Ingrid Nappi Department of Finance, Viviane de Beaufort Department of Public & Private Policy Department of Economics Department of Public & Private Policy

KNOWLEDGE/5 TAKING THE LEAD IN MAKING A DIFFERENCE: THE ROLE OF BUSINESS SCHOOLS

eamwork makes the dream work: improving society requires the T contributions of private businesses, government, and private citizens alike. The global pandemic is amplifying the challenges facing our society, from socioeconomic inequality, to healthcare accessibility, to gender equality, and more. To date, the impact of many private Laurent Bibard is a professor of Stefan Gröschi is a professor at businesses have been limited to corporate management at ESSEC Business ESSEC. He is widely known for his social responsibility initiatives, but there School. He holds PhDs in both Socio- expertise in responsible leadership, is an opportunity to make a greater economics (EHESS) and Philosophy sustainability, diversity management, difference. To that end, Stefan Gröschl (Université Paris IV Sorbonne). Laurent international human resources and Laurent Bibard of ESSEC and Patricia was at the head of the Edgar Morin management, and organizational Gabaldon of IE Business School explored Chair on Complexity from 2014-2019. His behavior. He has shared this expertise how business schools can contribute in a research examines gender, focusing on in academic and public arenas and chapter 1 for the Research Handbook of gender-related political stakes, as well has published books on responsible Global Leadership. as on how high reliability organizations leadership, diversity management, manage for resilience. and international human resources management. His research has been What kind of difference Written with Julia Smith, published in chapters and articles in are we talking about? Editor-in-Chief of ESSEC Knowledge. the international trade and academic press. His research and teaching have It’s no secret that the advances society taken him to a range of academic has made in the last century have institutions around the world. He been a double-edged sword: while is an editorial board member and technological advancements and reviewer for numerous international economic growth have flourished, academic management journals. this progress comes with serious Stefan has worked with governmental organizations and companies in the private sector and has developed 1 - https://www.elgaronline.com/view/edco and conducted training programs for ll/9781782545347/9781782545347.00029.xml firms in France and internationally.

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consequences for wealth distribution out, “If the very existence of a corporation more by market and image needs and the environment. While these depends on society, the social demands rather than a sense of moral obligation. factors used to be dictated by the actions and expectations of society should be More progress might be seen if legal of sovereign states, globalization and considered as proper business goals obligations are established to regulate technological developments have themselves.” Other commentators company actions. But what can be done created a situation where corporations postulated that businesses should take in the absence of such obligations? have a powerful influence on shaping responsibility as they form a social our world. This means it is critical to contract with society and as such, they understand the role of these actors and need to hold up their end of the bargain Taking a lead in making a how business schools and educators can by benefiting the common good. Others difference prepare the leaders of tomorrow. explain the responsibility of private businesses using the polluter pays This brings us to the role of business The world is facing complex, layered principle and the extended producer schools. We all have a role to play in problems, but to simplify matters, let’s responsibility: in a nutshell, the party that improving our world, and we believe consider these two main goals to keep damages society or the environment that individuals have the power to make in mind when trying to make a difference: should be held accountable for this, and a difference. Organizational leaders 1. Decoupling environmental destruction it is their moral imperative to act. Many can change institutional constraints, and economic growth. private companies, like multinationals, modify organizational norms, commit 2. More equitable distribution of wealth . wield significant financial and soft to sustainability, and connect with power: for example, researchers noted future generations to ensure continuous Of course, these are complex, multi- in 2016 that Walmart has deeper pockets change. To do so, these leaders need to faceted problems, ones that have existed than Spain and Australia (1). What’s understand the complex issues facing for decades and that have irreversible more, the organizational structures of our world and feel empowered to dare consequences on a global scale. So what private businesses might allow for more to make a difference. This calls for a kind of responsibility do private businesses flexibility and less bureaucracy when new type of leadership, and openness have, and what role should they take? implementing strategic decisions and to change is a key trait. So is courage: sustainable policies, and their actions making a change requires bravery. have the capacity to go beyond land Why should businesses borders. The next generation of leaders will contribute? include graduates of business schools Indeed, many private businesses do and of the higher education system. That businesses have a duty to society is engage in sustainable actions at the It is our responsibility as educators to not a new idea. As the researchers point global level; but these are often driven reconsider how we train these future

KNOWLEDGE/7 References 1. https://theconversation. com/who-is-more- powerful-states-or- corporations-99616 2. Gröschl, S., Gabaldón, P., & Bibard, L. (2020). Taking the lead in making a difference: the role of business schools. In Research Handbook of Global Leadership. Edward Elgar Publishing.

leaders. Traditionally, universities have At ESSEC, we are guided by our values: But the work cannot stop here: business emphasized the economic side: how humanism, innovation, responsibility, schools should encourage a humanist to maximize profits, how to outdo the excellence, and diversity. One of our perspective. The United Nations competition, how to cut costs. Now, strategic pillars is Together, an initiative Brundtland Commission identified a we need to center the “human” in the that focuses on our environmental and “triple bottom line” comprising the equation and teach students to evaluate social transformation. As of fall 2020, economic, social, and environmental not only the economic terms but also all students will be trained in these stakes at play: these need to be the social, ethical and moral ones. To do social and environmental challenges. combined with other disciplines to so, we should encourage students to We are not the only university that nurture said humanist perspective. For reflect on their purpose and their guiding recognizes the important role we have example, this calls for more diverse values and their responsibilities and to play: many others have begun to scholarly activities, research, and contributions toward the common good. offer courses on business ethics, CSR, academic disciplines. Including activities social entrepreneurship, and more, such as the arts, philosophy, languages, There are frameworks in place already: highlighting the fact that traditional literature, and history confront students in 2007, the United Nations Compact business models and managerial roles with new ways of thinking and imagining, Developments and an international are being challenged. encouraging openness, creativity, task force introduced principles for and critical thinking: the tools needed responsible management education. for addressing our global challenges.

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Learning methods should also go think outside the box when considering The world is facing daunting challenges: beyond pure memorization and their own roles, purpose, and goals, and the global climate crisis and widening encourage understanding. To those of their future organizations. social inequality will not improve understand complex challenges, we without action. We cannot leave it up need to develop interdisciplinary This will only work if faculty members to politicians to take action: we need courses to offer a holistic perspective of are equally convinced that a change is private businesses to act, too, and that the issue and help students understand needed to face up to the changes facing includes universities and business their actions within and across systems our world. Faculty members should schools. Business schools can reply so that they can better understand how educate themselves and stay informed to this call to action by training future their decisions affect different parts of of the social and political problems of the leaders to be open-minded, flexible, a system and the system as a whole. times and that could face their students. and brave, through different strategies Many businesses recognize the role including broader course offerings and How can we go about this? One way that their employees play and react by challenging traditional ways of thinking. is to include individuals with different offering cross-disciplinary learning and experiences and perspectives, including development opportunities: business Does this sound a little too perfect? non-traditional business school profiles schools need to do the same. Maybe. But as Aristotle said, “let us build and people with liberal arts degrees and a utopia, and see how we can approach backgrounds. This can help students it with temperance”.

KNOWLEDGE/9 BUILDING A PHILANTHROPIC STRATEGY

n their new book «Vers une philanthropie stratégique» (Odile I Jacob), Anne-Claire Pache and Arthur Gautier adapt the philanthropic model developed by Peter Frumkin (University of Pennsylvania) to a French context and explain how to develop a philanthropic strategy that can optimise one’s positive impact on society. In this interview, they Anne-Claire Pache is Professor in Social Arthur Gautier Executive Director of share key insights from the book and Innovation at ESSEC. She is the chair the ESSEC Philanthropy Chair, Arthur is discuss how philanthropists, be they holder of the ESSEC Philanthropy Chair. Assistant Professor at ESSEC Business beginners or experts, can make use of She graduated from ESSEC, holds an School in the Public and Private these takeaways. Because it’s not just MPA from the John F. Kennedy School Policy Department. He has taught in about “doing good”, it’s about “doing of Government (Harvard) and a Ph.D. in the Master in Management program it well”! Organizational Behavior from INSEAD. since 2015 and is the Academic Her research interests lie at the Director of the French Fundraising intersection of organizational theory Certificate since 2016. He holds a What do you mean and social innovation, with an emphasis Ph.D. in Business Administration from by “strategic on pluralistic environments, hybrid Conservatoire National des Arts et organizations, and organizational Métiers (CNAM) de Paris (2009) and philanthropy”? scaling-up processes. She has is an alumnus from ESSCA School of To start, it’s important to understand that conducted qualitative studies on social Management (2005). His research when we say philanthropy, we mean all enterprises, corporate philanthropy and focuses on philanthropy and more voluntary donations by private actors private foundations. She has published broadly on private initiatives for the (individuals or organizations) for the in prestigious journals such as Academy common good, from organizational, common good. The word “philanthropy” of Management Review and Academy sociological, psychological and generally refers to an organized of Management Journal, Journal historical perspectives. He studies the approach (for example, the creation of of Business Ethics, and Leadership emergence and the institutionalization a foundation or substantial, repeated Quarterly. She is currently Associate of individual and corporate donations). When we talk about giving Dean for Strategy and Sustainability philanthropy, both as concepts and to others, we often think of emotion, of and was previously Dean for Academic practices. spontaneity, of reacting to requests. The Programs (2014-2017). She is Associate idea of “strategic philanthropy” offers Editor at Journal of Organization Design.

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another vision of generosity by applying the notion of strategy to a domain where such a concept is rarely used.

The concept of strategy has its roots in the military and is widespread in management. In its simplest form, it consists of defining goals and finding the means to achieve those goals. While there are countless books on business strategy, until recently there were virtually none that tackled strategy for charitable or nonprofit organizations.

This changed with the publication of Peter Frumkin’s book, The Essence of Strategic Giving, that we have now adapted to a French context.

The main thesis of our work is that to be “strategic”, philanthropists must answer five main questions:

1. What has value, for society and for me? 2. What kind of interventions would have the biggest impact? 3. What level of engagement and visibility do I want to have? 4. When and how frequently should I donate? 5. What kind of vehicle should I choose to channel my giving?

KNOWLEDGE/1 1 What does such an coherent approach to giving: his values foundations, which are confronted with approach look like? and personality aligned with the simple challenges regarding the effectiveness, and discreet style in which he acted, accountability, and the legitimacy of What are examples of and the present-focused timing of his their actions within a democratic society. strategic philanthropy? philanthropy was reflected in the logic model and the vehicles he set up at There is no one strategy that is better Atlantic Philanthropies. How can one get than all others and that can be replicated involved in a strategic everywhere. The central idea of the book is that there are many ways to Why is it important to be philanthropic approach? build a strategy that satisfies those “strategic” when giving? What are the steps five main dimensions. The way that to take for those who philanthropists think of and develop Is there a problem with their strategy to address each dimension giving spontaneously want to optimise their is just as important as the strategy they and without a defined philanthropic impact? ultimately adopt. strategy? Strategic philanthropy is an ongoing An interesting example we discuss in the In 2019, the incredible outpouring of process and a path upon which a person book is that of Atlantic Philanthropies, generosity following the Notre-Dame can embark at any time. That being said, the foundation created by Chuck fire in Paris was swiftly followed by it is easiest to ask yourself these five Feeney, an Irish-American entrepreneur controversy surrounding the donations questions before making commitments who became a billionaire in the 1980s given by the wealthy and corporations: that may be harder to change later on, with the sale of his company Duty was it not too much money? Are there such as creating a foundation with a Free Shoppers. By nature modest not more urgent causes, in which human specific mission. The five dimensions and discreet, Feeney anonymously lives are at stake? Can we be certain that that we discuss in the book do not have supported progressive causes until these pledges will be honoured and if to be considered in any particular order. 1997, when his identity was revealed yes, when? Who will receive and use Some philanthropists may start with a by a New York Times article. Convinced the money, and to fund what exactly? very precise idea of the general cause that the causes he supported (human Aren’t these billionaires above all they want to support, while others start rights, social injustice, public health…) searching for fanfare and positive press? with a clear vision of the visibility that immediately required help before they These questions recall the five central they want to have. deteriorated further, he adopted an dimensions of our book: value, logic approach called “giving while living”: model, style, time horizon, and vehicle. What matters is to think through each spending his foundation’s assets during dimension and then how to build a his lifetime, rather than donating only The critics appear when a philanthropic coherent approach that will address the revenues from these assets and engagement seems hasty, poorly all five. In the end, developing such letting the foundation survive him. To planned, or likely to have negative a strategy requires time and energy, that end, he decided in 2001 to donate effects on the beneficiaries and and it is thus important to share the the entirety of his fortune progressively society. The critiques may not always work with others: close friends and until 2016 and to permanently shut hold water, but they do sometimes family, other donors, professionals with down his foundation in 2020. Atlantic point to a lack of strategic thinking. expertise in one or more dimensions, Philanthropies distributed more than Certainly, not all philanthropy needs to etc. Philanthropy isn’t just a solo eight billion dollars, which permitted be strategic: the world will always need adventure, it can benefit from collective it to finance “big bets”: ambitious spontaneous donations, inspired by intelligence! gambles on a few high-impact projects. moral principles or in reaction to natural catastrophes. However, adopting a Reference While Chuck Feeney was extraordinary strategic approach is important when given the sums involved and his you want to maximize your impact and Frumkin, P., Pache, A., & Gautier, A. (2020). Vers une philanthropie unusual choices, he illustrates the when there are substantial resources at stratégique. Odile Jacob. idea of philanthropic strategy with his stake. This is the case for the majority of

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KNOWLEDGE/1 3 SOCIAL ENTREPRENEURSHIP

mproving society requires a collective philanthropy, and sustainability? Saebi, effort, and social entrepreneurship Foss, and Linder focused on identifying I aims to do its part: it refers to commonalities among the existing individuals and organizations that use definitions. business to tackle a societal issue. The concept has been around since the They found that social 1950s, but has only begun to garner entrepreneurship’s hybrid nature sets significant research attention in the last it apart. Commercial entrepreneurship decade. The rapid growth and emerging focuses on the economic side of creating Stefan Linder is associate professor nature of social entrepreneurship value: opportunity identification, at ESSEC’s Department of Accounting research, coupled with the fact that social resource mobilization, etc. In social and Management Control. He teaches entrepreneurship builds on different entrepreneurship, profitability goes in the BBA Program, the MiM Grande disciplines and fields (entrepreneurship, hand-in-hand with solving a social Ecole, Executive Education, and sociology, economics, ethics) have led to problem. Ph.D programs. In his research, he a disjointed literature without dominant studies the role of management frameworks. Similarly, social entrepreneurship differs accounting and control (MAC) systems from CSR in that the latter is an extension for intrapreneurial behaviors, for Professors Tina Saebi (Norwegian of a firm’s traditional business activity (the prevention) of undesirable and School of Economics), Nicolai Foss to reach out to its stakeholders and unethical behaviors, and for the well- (Copenhagen Business School) and increase profit. Charitable and not-for- being of managers and employees Stefan Linder (ESSEC Business School) profit organizations are also different, subjected to exactly these MAC systems analyzed existing research to develop a because their funding is usually from and how a non-maleficent, humanistic framework and outline future directions, external sources. Consequently, their internal control can be designed. His highlighting the need for a holistic social initiatives do not compete for work has been published, among others approach. resources with profit-seeking ones. in, European Accounting Review, IEEE Engineering Management, Journal of As such, the researchers explored the Banking & Finance, Journal of Business What makes social idea that “the dual mission of social and Ethics and Journal of Management. Prior entrepreneurship economic value creation reflects the core to returning to academia, he worked as characteristic of social entrepreneurship” a management consultant. unique? (Saebi et al., 2019, p.22). What sets social entrepreneurship apart from other related phenomena like CSR,

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Classifying social entrepreneurship

Social entrepreneurship can be classified according to its social and economic missions.

The social dimension is whether or not the beneficiaries are active participants in the social entrepreneurship’s model. Aravind, which offers free vision care in rural India, is an example where social value is created for the beneficiaries. In the other model, value is created with beneficiaries, such as Unicus, a Norwegian consultancy that employs people diagnosed with Asperger’s syndrome.

The economic dimension is the extent youths in his restaurant and funded the of integration of social and commercial Figure 1. A typology of social training program with the revenue. In activities. For example, commercial entrepreneurship. Quadrant C, the beneficiaries are paying activities may subsidise social ones. customers. Last, in Quadrant D, is when Alternatively, social activity captures In Quadrant A are social enterprises the beneficiaries are both internal and economic value, as in the case of award- with a ‘two-sided value model’, such external customers—VisionSpring sells winning Grameen Bank, which provides as TOMS shoes, which gives one quality eyewear at affordable prices collateral-free small loans to the rural pair of shoes to a child in need for and also employs them in sales and population in Bangladesh. every pair purchased. In Quadrant B, distribution. enterprises employ beneficiaries to Combining these two dimensions produce goods or services sold in the To shed light on the multi-faceted creates a four-quadrant matrix, commercial marketplace. For example, nature of social entrepreneurship, illustrated in Figure 1. British restaurateur Jamie Oliver the researchers examined 395 trained and employed disadvantaged articles, focusing exclusively on social

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entrepreneurship and excluding With this framework, the research Breaking down articles on sustainable, developmental, team linked the effect of the macro- the levels of analysis institutional entrepreneurship, or environment and the individual’s goals entrepreneurship in general. The and beliefs (situational mechanisms), At the individual level, theory suggests researchers identified the factors the effect of these goals on individual that a key trait of social entrepreneurs is that affected social entrepreneurship behavior (action-formation a prosocial personality (the inclination at three distinct levels—individual, mechanisms), and the effect of these to empathize with others), coupled with organizational, and institutional—and in bringing about broader changes qualities that promote an entrepreneurial gaps in the research. (transformational mechanisms). spirit, like self-efficacy and work history with social organizations. As management phenomena are often These describe the relationships that multidimensional, the researchers affect the three levels of analysis. The difference is between action and developed a multistage and multilevel Pursuing these mechanisms further, intent. Social entrepreneurs need to framework to integrate the various levels both before and after the venture’s seek resources, gain support, and act to of analysis. Drawing on theory, this is creation, is necessary to fill existing form their ventures. It is also of interest divided into 2 stages—before and after research gaps and to find out what to study how the entrepreneur creates the venture is formed. makes social enterprises tick. value after getting the go-ahead by examining organizational-level factors at the venture formation phase.

16/KNOWLEDGE Other questions include the link between The pre-launch process is only the the type of venture model and the legal beginning. As such, more research and and organizational structure, venture practical knowledge are needed on management, the choice of a particular the relationships between individual model, and the impact of model choice motivations and the social value on venture success. created, especially given the decision and resource conflicts that can arise Research shows that when the private from the model’s hybridity. It is also key sector does not meet societal demands, to analyze how other incentives, such as social enterprises are formed. These certifications for ventures that conform tackle a wide range of problems, to high standards, may affect motivation. including reducing poverty, empowering women, and inclusive growth. As these ventures require teamwork, it is important to study social Measuring the impact of different entrepreneurship on the organizational kinds of social ventures varies between level, for example, using an ethnographic ventures, but all social ventures share perspective. This means studying issues the same broad goal: addressing a social that shed light on the human side, like problem while remaining profitable. To organizational hierarchy, communication this end, it is imperative to develop a skills, and task delegation. common framework to gauge and assess the effectiveness of such enterprises. This void can be filled by institutions, The big picture which social enterprises can work in and with, and thus establish key metrics More work is needed to understand accepted by academia and applicable to potential negatives to social multiple contexts. entrepreneurship, but we must not lose sight of the bigger picture: social ventures exist to improve society, one What’s next? step at a time.

Individuals can have a big impact, To this end, research should also look and they are influenced by personal at if and how these ventures change experience, which impacts the role they society by creating value rather than want to play, the problem they want redistributing it from one group to the Organizational-level analyses have to solve, and their ability to identify other. The framework outlined here focused on the ability to finance a an opportunity and take action. More provides a basis for future research venture, the importance of networking, research is needed to understand how and for social enterprises to help and marketing capability. Given the exactly an individual impacts a venture build our understanding of social case-based nature of this research, little and the process they follow. entrepreneurship. is known about the common features that can make or break a social venture, Research has largely focused upon and whether these factors are different individuals rather than entrepreneurial Reference for commercial ones. teams. This leaves a gap in research on how team dynamics affect the kind Saebi, T., Foss, N. J., & The hybrid nature leads to rifts that of social mission selected, design of Linder, S. (2019). Social entrepreneurship research: need to be addressed for the venture to the social venture, motivation, and the Past achievements and thrive. This can be done in various ways, ability to secure funding and translate future promises. Journal of such as hiring managers who embrace thought into action. It’s also critical to Management, 45(1), 70-95. this hybridity. Social entrepreneurship’s study how different levels, like individual mandate requires examining existing and organizational factors, interact with A version of this article was kinds of social ventures and potential each other. first published in the Council of Business and Society. problems.

KNOWLEDGE/1 7 SOCIAL ACCOUNTING

orporate social responsibility these indicators are not measurable is an increasingly popular topic in financial terms, so practitioners of C in the corporate world and social accounting need to go beyond beyond, highlighting a need for best conventional accounting and gather practices and a stronger understanding information from different sources. This of what it really means to be a requires a significant investment. As a sustainable business. For this to occur, result, social reports are more common we need ways of measuring corporate in bigger companies. sustainability: social accounting is one Adrian Zicari is Teaching Professor at way of doing so. Adrian Zicari, professor Dr. Zicari explored five issues (1): ESSEC, and Academic Director for the at ESSEC, explains its merits, as well as 1. The motivation behind corporate Council on Business & Society (CoBS). its limitations, in a recent chapter in the disclosure of social & environmental His research interest lies in corporate Handbook on Ethics in Finance. information social responsibility and its implications 2. The use of social accounting internally on both reporting and financial control. First, a primer: social accounting refers for management purposes He has published in the Journal to the measurement of an organization’s 3. The link between social accounting of Business Ethics, Comptabilité- social and environmental performance, and financial performance Contrôle-Audit, Social & Environmental recognizing the need to go beyond 4. Whether or not regulation contributes Accountability Journal and Journal measuring economic impact only. to sustainability of Cleaner Production., among There are a number of indicators 5. The potential that social accounting others He has written three books: that can be used, for example the has for contributing to sustainable Responsabilidad Social Empresaria, disclosure of pollution information practices Fondos Eticos and Análisis Financiero, or the composition of the company’s all them published by the Consejo workforce, among others. The list Profesional de Ciencias Economicas de of indicators goes on, as assessing Disclosure on social Buenos Aires, Argentina. He is honorary social and environmental information and environmental representative for Buenos Aires City in is a complex matter. This makes the Paris. scope of social accounting quite information broad, and also leads to the question Today, the disclosure of social and Written with Julia Smith, of balancing comprehensiveness and environmental information is usually Editor-in-Chief of ESSEC Knowledge. comprehension: more information is voluntary, though some European not necessarily better, as it can make countries have recently implemented reports hard to understand. Many of regulations. For instance, some

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companies in France have to present and stakeholders: companies law”, legally-binding regulations. One a “déclaration de performance extra- may not disclose all information, example of this is the Directive 2014/95/ financière”. This means that in many cases, while stakeholders may seek more EU of the European Union, under which companies can pick and choose what, transparency. companies with over 500 employees how, and when they disclose. This makes disclose non-financial information. Some it difficult to compare companies, as there initial research suggests that this could are many different frameworks in use. Should disclosure be have a negative impact on information mandatory? quality, as companies prefer to share If it is not mandatory, why do companies good news (4). disclose this kind of information? One Corporate social responsibility reason is to show their legitimacy, i.e. initiatives and social accounting alike Increased regulations on social reporting living up to social expectations. Others are typically voluntary, but there are could help, but regulation alone may have a more “defensive” strategy increasingly calls for more mandatory will not ensure disclosure, nor does in play, like if they are under fire from reporting. This would be beneficial in increased disclosure lead to increased environmental agencies. If they do that it could increase comparability, sustainability. This suggests that while produce social reports, their motivations standardize reporting, boost the scope regulation could be useful, it does not may impact the content. Researchers of information shared, result in better- replace the need for stakeholders to have noted that companies with poorer informed consumers. advocate for sustainability. environmental performance tend to talk more about their environmental projects One way to increase regulation is (2) and use more optimistic language (3). through “soft-law” initiatives, meaning Using social the use of frameworks that are voluntary, accounting internally In other words, companies tend to be but provide structure, like GRI, SASB, and strategic when deciding what they Integrated Reporting. If a company says Much of the discussion has focused share and how they share it, and their that it complies with one of those, then on disclosure to external parties. motivation is often based on protecting it has to abide by that and provide the What about the goings-on inside the or enhancing the company’s reputation. according data. This could also boost company? Internal indicators can help This does not necessarily mean that stakeholder engagement by providing managers make decisions that align companies are acting in bad faith, but it a reference point and also make it easier with CSR indicators. However, since does mean that they may not disclose to compare companies, as currently the indicators can be hard to decipher, all their social and environmental comparisons are hindered by the managers may struggle to work with indicators. Dr. Zicari notes that this can many different frameworks out there. them, especially as CSR work can be lead to tensions between companies Another option is the use of “hard- siloed within the organization.

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Companies use different approaches What is the link between The research is mixed when it comes when using social accounting internally. social accounting and to how sustainability actually impacts An “inside-out” approach highlights financial performance; as a result, the use of internal social accounting financial performance? managers may be unsure about the information by managers in their Social accounting is not interchangeable profitability of sustainable policies, decision-making processes; this can with conventional accounting: how even if they think the ethical rationale is be combined with the “outside- exactly do they relate? Their scopes are strong. When measuring the situation, in” perspective, wherein external different, but there is a lot of overlap, both managers thus need to carefully consider stakeholders use report information to in content and in audience. For example, the framework they use, and whether or inform their decisions (5). Both of these perhaps a firm makes an expenditure not it is appropriate for the situation. perspectives are important in striving for to make a process greener: this will be sustainability. To facilitate this process reported in Profit and Loss Statements and also help managers interpret the (the cost) and in social reports (the effect Can social accounting information, CSR discussions should be of the green initiative). An investor may lead to organizational integrated into corporate performance read both these statements, as the and dealt with across the organization, financial statements help evaluate the change? rather than being the responsibility company’s potential and social reports Even if the link between sustainability solely of a specialized team. show its environmental impact. and financial performance is unclear,

20/KNOWLEDGE sustainability remains a worthy goal. incremental improvements, these Key points This means that social accounting, could inform long-term changes and takeaways too, is useful, as a tool for achieving to conventional business practices. sustainability. What can it actually For example, mining: by definition a • Tension exists between companies achieve? polluting activity, but nevertheless and stakeholders, as the former may one that is necessary for industrial not share all information and the latter Some scholars (cf. 6) suggest that social production. Using social accounting seek greater transparency. accounting can inform better decision- could give managers and stakeholders • Regulation could improve report making and facilitate teamwork. Others information that could help reduce the quality, but will not automatically are less certain (cf. 7), who argue that environmental impact as a short-term improve disclosure. it is mainly symbolic and may not lead strategy, while preserving the need to • Managers may find it challenging to to significant change. One thing is look for long-term solutions that are work with social and environmental true: realizing true improvements is better for the planet. indicators, leading us back to the first difficult, and the mere implementation point: some information may not of social accounting processes will not Social accounting is necessary and be disclosed because it is not well automatically improve sustainability. helpful for improving business models. understood or not readily available. Further, over-reliance on social Increased disclosure illuminates • We still do not have a clear picture of the accounting may lead to a focus on managers how the company can improve link between sustainability and financial the “small picture”, rather than truly and informs the company’s efforts to be performance. revisiting conventional business models. socially responsible. More transparency • We must be clear-eyed on the promise will benefit stakeholders and empower of social accounting. It can help improve While social accounting is not a silver the public. We need to remember that existing business models, but does not bullet, it has shown success; the KPMG social accounting remains a means create new ones, and managers should Survey of Corporate Reporting (2017) to an end, and it will be tested by how be encouraged to use complementary (8), studying reporting practices in 50 effectively it creates measurable change tools. countries, found that social reporting is in corporate practices. • All things considered: social accounting widespread, and there is a community is an increasingly helpful tool for dedicated to its improvement and managers and stakeholders, and can implementation. Social accounting help improve corporate sustainability. could also help with the “big picture”: while reports may highlight smaller,

References 1. Zicari A. (2020). The many merits and 4. Costa, E., & Agostini, M. (2016). 7. Rodrigue, M., Magnan, M., & Cho, some limits of Social Accounting: Why Mandatory disclosure about C. H. (2013). Is environmental disclosure Is not enough. Handbook environmental and employee governance substantive on Ethics in Finance, 541–557. https:// matters in the reports of Italian- or symbolic? An empirical doi.org/10.1007/978-3-030-29371- listed corporate groups. Social investigation. Journal of Business 0_14 and Environmental Accountability Ethics, 114(1), 107-129. 2. Cho, C. H., & Patten, D. M. (2007). Journal, 36(1), 10-33. 8. Blasco, J. L., & King, A. (2017). The The role of environmental 5. Burritt, R. L., & Schaltegger, road ahead: the KPMG survey of disclosures as tools of legitimacy: S. (2010). Sustainability corporate responsibility reporting A research note. Accounting, accounting and reporting: fad or 2017. Zurich: KPMG International. organizations and society, 32(7-8), trend?. Accounting, Auditing & 639-647. Accountability Journal. 3. Cho, C. H., Roberts, R. W., & Patten, 6. Burke, J. J., & Clark, C. E. (2016). D. M. (2010). The language of The business case for integrated US corporate environmental reporting: Insights from leading disclosure. Accounting, practitioners, regulators, and Organizations and Society, 35(4), academics. Business Horizons, 431-443. 59(3), 273-283.

KNOWLEDGE/2 1 BUSINESS FOR GOOD: WHAT PLACE DOES SOCIAL IMPACT HAVE IN CORPORATE VALUE CREATION?

n 2015, the United Nations outlined by its direct and indirect stakeholders. 17 sustainable development goals It can be both negative and positive, I to create a framework for building a and is inextricably intertwined with better future by 2030. These goals are: corporate value creation. Companies 1. No Poverty need to measure their social impact for 2. Zero Hunger many reasons, including addressing 3. Good Health and Well-being regulations, informing partners and 4. Quality Education stakeholders, communicating about 5. Gender Equality policies, and especially, sustaining Jean-Marie Peretti studied at ESSEC 6. Clean Water and Sanitation activities. and Sciences-Po Paris and has a PhD 7. Affordable and Clean Energy in the science of management. He has 8. Decent Work and Economic Growth In France, a positivity index was been a professor, researcher, advisor, 9. Industry, Innovation and Infrastructure established in 2015 to measure company executive and manager in France and 10. Reducing Inequality activity. Companies receive a grade abroad. He has been a professor at 11. Sustainable Cities and Communities between 0 and 100 that assesses 35 ESSEC since 1990, and he holds the 12. Responsible Consumption and indicators in 5 different dimensions: Change Chair and the "Managerial Production their environmental footprint, work Innovation and Operational Excellence" 13. Climate Action conditions, sharing value, research and Chair at ESSEC. He is also co-academic 14. Life Below Water training, and their long-term strategic director for the specialized degree in 15. Life on Land vision. The index focuses on long-term human resources and for the program 16. Peace, Justice, and Strong Institutions improvement and tracks progress. It is "Human Resources in the Executive 17. Partnerships for the Goals designed to be a universal tool that does Board". He is president of honour of not discriminate based on company size, the AGRH and the Institut International This serves as an agenda for relevant sector, or location. If companies want de l'Audit Social, and managing stakeholders, including businesses, to be recognized as having a positive editor for the journal "Question(s) de which are increasingly concerned with impact on society, they need to prove Management". He has written about a their social impact and value creation. As that they indeed have a positive social hundred books and numerous articles. such, corporations are duly recognizing impact, so they need valid, reliable social impact as a major challenge, measurement tools. Article written with Julia Smith, meaning what society would be like Editor-in-Chief of ESSEC Knowledge without the company, and assessed by To investigate further, Jean-Marie Peretti looking at the changes enacted by the (ESSEC Business School) and Soufyane company’s value creation chain and Frimousse (associated researcher,

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ESSEC Business School) consulted 70 reference, allowing companies to gather also president of the Institut Français experts in France and across the globe, data and measure progress. This shared du Leadership Positif (French Institute talking to researchers, consultants, reference will help companies set social of Positive Leadership) agrees with business leaders, and human resources and societal goals so that social value Dr. Gröschl that we need a leadership experts, asking them: What place creation can be measured. revolution: specifically, we need to does social (or societal) impact have in align leadership styles with corporate corporate value creation? As Dr. Stefan Gröschl notes, our society is social goals. He lists several questions facing urgent global challenges, making worth investigating: how does a leader’s Among the experts consulted were it critical for companies to consider their “raison d’être” drive the company’s professors and researchers from ESSEC. impact on society and the environment. transformation? Which leadership Professors Viviane de Beaufort and “Business as usual” cannot go on: let’s qualities help convince stakeholders, Stefan Gröschl provided their insight, as move toward business as unusual, and can we cultivate them? How do did researchers Yves Le Bihan (ESSEC and focus both on societal impact and we narrow the gap between what Change Management Chair) and Elena the bottom line. For this to happen, companies practice and what they de Preville (ESSEC Change Management companies need to prioritize decoupling preach? Chair). economic growth from natural resources and reducing socio-economic More work is needed to understand how Viviane de Beaufort asks: “Why do inequality. While this will be no easy leadership can impact transformation we still have to ask ourselves what feat, stakeholders and shareholders are and which tools are most effective in the place is of social/societal impact increasingly clamoring for sustainable change management. Elena de Preville in corporate value creation?” For Dr. business models, where profits are discusses the idea that some companies, de Beaufort, a company’s value lies in directed to serving societal good. This like B Corp certified organizations, seek their human capital, rather than in their will require leaders of a certain ilk, with to be not the best companies in the financial statements. Motivated, happy a strong vision, strong values, and self- world, but rather the best companies for employees are good for a company. awareness; creative leaders who have the world. Companies are increasingly What’s more, the generation entering strong critical thinking skills and are open reflecting on the best way to contribute the workforce now cares about the to change. In short, business as unusual to society, and consumers on whether values of the companies they work requires a paradigm shift in our priorities or not companies reflect their values. for, and they want to make sure that and the qualities we look for in leaders. Companies are recognizing that having companies practice what they preach. a societal purpose does not detract from While “value” is historically an abstract, Two researchers associated with the the bottom line, and in fact that having hard-to-measure topic, the UN’s ESSEC Chair of Change Management such a mission can improve productivity development goals provide a common also provided their insight. Yves le Behan, by boosting stakeholder commitment.

KNOWLEDGE/2 3 While the experts have different takes This suggests that committing to on the nature of social impact, there is having a positive social and societal a clear emerging message: companies impact is beneficial for the company’s Reference need to prioritize their social impact economic status. Through Dr. Peretti’s Frimousse, S., & Peretti, J. M. and actively measure it. What’s more, and Dr. Frimousse’s work, we can gain (2020). Impact social positif employees and consumers alike are insight as to how experts representing et création de valeur. Question paying attention to how companies a range of different fields see the future (s) de management, (1), 91-130. impact society, and may decide not to of corporate value creation and what work somewhere or shop somewhere steps we need to take to attain the if corporate values don’t line up with 2030 goal of a better society for all. their personal ones.

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KNOWLEDGE/2 5 ANTICIPATING IN A WORLD OF UNCERTAINTY- HOW TO RESPONSIBLY INNOVATE

ime is money. In our highly be integrated into both the innovation competitive reality, companies models and the decision-making T and managers, in order to survive, process. are often competing with time and running after money. They cannot take the chance to wait and see, to evaluate The Road to Opportunity the consequences of the innovations is Paved with Risks they introduce on the market. In this article, ESSEC Professor Xavier Pavie The word “innovation” comes from the Xavier Pavie is a philosopher, Professor reflects on the notion of responsible latin innovationem, noun of action from at ESSEC Business School, Academic innovation. innovare, in - novare: “in” for inside, Director of the Grande Ecole program for “novare” for change. It is important to Asia Pacific, Director of the iMagination know that innovation was initially seen as Center and Associate Researcher at Anticipation and the process that renews something that the Institute for Philosophical Research Awareness Are Key exists (or not) and is commonly assumed (IREPH). He has a degree in management as the introduction of something new. science and a PhD in philosophy from There is a plethora of innovation Newness often implies uncertainty and the University of Paris Nanterre with a opportunities out there just waiting uncertainty implies risks. Innovating Habilitation à la direction de recherches to be seized. It is true that scientific is good for business but innovation (Highest university-granted and higher and technological progress has made opportunities, while being numerous, education-sanctioned degree obtained them easy (or at least, easier) to grasp. might present a risk and threaten the post PhD). He is also a graduate of the Unfortunately, these opportunities do integrity of ecosystems upon which International Teachers Programme not necessarily benefit customers or human society depends. (HEC Paris). His research focuses on the society in the long run, given the fact that philosophy of responsible innovation they do not take into account the impact and emphasizes how the practice of and potential threat to society. Thus, Incremental and spiritual exercises can influence the developing a deeper understanding of Disruptive innovator's behavior in order to innovate responsibility in the field of innovation in a way that respects the environment. is crucial. In fact, responsibility should While incremental innovation has a not be limited to the scope of social minor impact on the market and does business and micro-projects, it should not radically change conditions of be considered by managers as a major use, disruptive innovation consists determinant to innovation; it should of designing for a different set of

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consumers. Disruptive innovations have • New-market disruption is about As far as incremental innovation goes, by nature an unexpected impact on the developing new markets. On the responsibility does not necessarily market. They usually imply a radical one hand, it is difficult to forecast the appear as an important feature to be technical or technological change. results, on the other, they can take us considered: it is indeed possible to by surprise. But one has to keep in mind anticipate the adoption of incremental that even if we knew if the product (or innovation using a traditional lifecycle Diffusing Innovations service) would be adopted, uncertainty and projections based on the result of as to the consequences of disruptive previous launches. However, if within 8 Trapped between visionaries (early innovations would remain. years we have more than 20 different adopters) and pragmatists (early iPods, it is legitimate to wonder whether majority), it is difficult to predict how the these products are sustainable due to “personal story” of a product (or service) The Knowledge Gap their shortened product life. will unfold. In order to penetrate the market, innovations need to be adopted Disruptive innovations rely on new by pragmatists. But pragmatists are techniques and technologies, for which Is Catalytic Innovation hard to convince, they need references scientific knowledge remains limited, the Answer? and they do not necessarily trust early and for which all consequences cannot adopters. always be foreseen. Catalytic innovations are a subset of disruptive innovations focusing on In terms of responsibility and for the sake Let us look at nanotechnologies. They social development. Let us look into of responsible innovation, two specific are widely used in many consumer the example of Eko in India. It reveals challenges have to be addressed as products even though, at this point, how using a very simple interface on far as the two categories of disruptive their health and environmental impact mobile phones provides access to basic innovation are concerned: cannot be measured. They are an banking services to a large part of Indian • Low-end disruptions allow a wide example of the dilemma innovators society. That is all very well but social range of people to access a product/ face: choosing between the economic innovations account for a very small part service they could not previously afford. potential of a technology and different of responsible innovations. Responsible However, this generalization could pose ethical guidelines such as the inability to innovations cover a much larger scope a threat to the global balance. This is just anticipate the consequences. It is urgent and social is definitely not a synonym of one example of many but is it really wise that responsibility become a key element responsible. to widen access to cars in developing of the innovation process. countries given the damages caused by CO2 emissions?

KNOWLEDGE/2 7 How Decision- • In the long-term, only 9% are they no longer devote enough makers Understand able to anticipate the social time for in-depth study and impacts and 8% those on the review before making choices. and Implement environment. Unfortunately, if they do not act, Responsibility: someone else will. Results of a Survey Despite the decision-makers’ inability to anticipate the precise Among the top leadership The results of the survey [1] show social impact, even in the short- qualities, creativity is ranked at that decision-makers have a term, almost 47% of them choose the top position, followed by clearer vision on the potential to innovate anyhow no matter the integrity and global thinking. impacts of innovations launched environmental impact. Focus on sustainability, humility by their company in the short- and fairness stand at the bottom term rather than in the long-term. of the list (IBM 2010). The more Harder, Better, creative the leader, the quicker • In the short-term, 29% of Faster, Stronger the decisions and... the greater decision-makers declare they the need for responsibility to can anticipate precisely the Companies receive a strong counterbalance the negative impacts on society, and 23% the demand from markets for quicker effects. Therefore, leaders, being impact on the environment. product or service development. aware of time constraints and As CEOs and managers are market pressure, should keep • In the medium-term, only 16% rewarded for making quick(er) responsibility as a concern in the have a precise idea about the decisions in complex situations, process. social impact and 13% about the as they are selected for their environmental one. ability to act despite uncertainty,

28/KNOWLEDGE Nonetheless, three major issues can be identified and should be questioned: • Market demand and the mass Reference consumption of innovative products 1. The survey was initially sent to a large range of managers, as an accelerator of innovation mostly from French companies, and with an interest processes. in innovation. Over a period of 4 months, between January and April 2011, 62 people out of 78 respondents • The complexity of forecasting completed the entire survey. There were 5 “profile” and anticipation: an in-depth questions: Gender, Company size, Function, Sector of the analysis of all consequences company and Innovation decision-making involvement. should be performed before the implementation. Further reading The identification of new societal • Pavie, X., Carthy, D., & Scholten, V. (2014). Responsible risks: innovation can cause major innovation: From concept to practice. World Scientific. damage to the people and the planet. Pavie, X. (2020). Critical Philosophy of Innovation and the Managers should be able to step Innovator. John Wiley & Sons. back in case of adverse impacts. First published on 18/04/2019 © GettyImages - WaseemHaddad © GettyImages

KNOWLEDGE/2 9 AGRI-FOOD: A WORLD OF TRANSITIONS

he agri-food sector is currently facing several simultaneous T transitions. We can look at these as though we were physicists, and see each transition like a phase change, like how liquid changes to gas. In agri-food, though, we don’t yet know what their duration will be, what paths they will take, what their consequences will be… Olivier Fourcadet is co-director of Frédéric Oble is co-director of the or what the final phase will look like. the ESSEC Food Challenges Chair ESSEC Food Challenges Chair, Professor and teaches strategic management, of Marketing, and Academic Director for What do these transitions entail? In early competitive strategy and sustainable the Master's degree in international agri- 2021, we saw the dramatic consequences development. His research focuses on food management at ESSEC Business of alternating periods of warm weather the interactions between stakeholders School. With a diploma of agricultural and frost on orchards and vineyards. and the major challenges for the future engineer and agri-food industry from Climate change is the main transition of agriculture and the food chain. These the ENSAIA, third degree PhD on weighing on agriculture and the food challenges include climate change, applied projection methods for food industry. While the industry does demographics, ecosystems, technical market analysis, he carried out strategic produce greenhouse gasses, agriculture innovation, nutrition, genetics, consumer studies at the CREDOC (surveys CCAF) can also reduce atmospheric CO2 by behavior, and building trust. He is also a in 1988 and 1989 before joining ESSEC. increasing soil carbon sequestration. In guest lecturer and expert for BpiFrance addition to the initiatives to fight climate and FranceAgriMer, etc. Olivier holds a change, agriculture also urgently needs veterinary doctorate from ENV d'Alfort to adapt to climate change as it risks and a Ph.D. in Agricultural and Applied jeopardizing access to affordable food Economics from the University of for much of the population. For example, Wisconsin at Madison. national wheat production in France was at 42 millions of tonnes in 2015 and lowered to 29 millions of tonnes in 2016, a decrease of around 30%. [1]

The second transition is demographic. The countryside and agriculture jobs

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don’t attract young people - but around France, wine producers are witnessing In such a situation, what stance do 50% of farmers will be retiring over the their vines dying of thirst. To avoid companies take? The first stance is one next 10 years. [2] Dietary and nutritional evapotranspiration, some are covering of denial and hope, based on a belief that transitions are also in motion. The dietary their vines with solar panels (e.g., www. existing problems are only temporary transition is typically a slow-moving ombrea.fr) and will disappear from one day to the phenomenon: it has taken us from a next. Those with this stance use history hunter-gatherer diet to one heavy in Agri-food companies face many to back it up: “We have already been beef, and shifted the balance between challenges. In 2017, a study on potential impacted by drought. It’s nothing new, animal and vegetable proteins in favor of consumer habits in France in 2025 and we’ve survived it before”. In other the former. While some countries made identified 16 consumer trends, like a words, we just have to wait patiently for this transition over several centuries preference for local producers and the calm after the storm. We have the - in 17th-century France, King Henri vegetable proteins, but also authentic impression that this stance is increasingly IV designated poule au pot (chicken traditional products. [3] One could argue uncommon. stew) a national dish - the transition was that with so many trends, there aren’t much faster in China and occurred over really trends as such. The consumer Others go a step further and are getting the course of a few short decades. The compass that companies usually rely ready for the next storm by increasing nutritional transition refers to eating on to direct their strategy is not working their resilience. They believe that it is not differently to maintain one’s health; it is as well as it did before. These combined possible to continue business as usual. ongoing, as obesity remains prevalent transitions create uncertainty for agri- It’s true, but what should we do? Here, in many countries. Other transitions are food stakeholders, who are impacted too, we’ve observed different strategies. also underway: a social transition (for in different ways depending on their The first consists of developing a example, preferring local products), a position in the food chain, from farm transformation plan, founded on technological transition (using digital to fork. Distributors, who can change strong convictions and with ambitious technologies in the food industry) and an their offerings most quickly, are usually environmental and social objectives. energy transition. An energy transition the least impacted by sudden changes Such is the case for three of the partners refers to the production of green energy. than farmers, who have less flexibility. of the Food Business Challenges Chair, Livestock farmers are potential energy A dairy products brand could imagine namely Bel, Lesaffre, and METRO. Where producers: by transforming manure transitioning to vegan cheeses, but for there’s a will, there’s a way! into methane via methanation and then a Sisteron-based lamb producer who is burning the methane, they produce AOP-certified, (controlled designation The second strategy consists of not electricity, heat, water, and carbon of origin, a French certification offered putting all one’s eggs in the same basket: dioxide, the latter three of which can to certain products) transitioning poses in other words, intelligently diversifying be used in greenhouses. In the south of more of a difficulty. one’s activities. By intelligently, we

KNOWLEDGE/3 1 mean something like growing a variety of plants that react differently to environmental hazards. This is the References strategy that the geographer Gould observed in 1960s Ghana. A region in 1. Source FAOSTAT - Compilation par les auteurs. Ghana experienced enormous variability 2. Source AFP - Conférence de presse de la Mutualité Sociale Agricole du 19 juin 2019. in precipitation in the 1960s; traditionally, 3. Étude prospective sur les comportements alimentaires de demain (Blezat the region’s main crops were yams, Consulting, Crédoc, Deloitte Développement Durable), disponible sur le site millet, maize, cassava, and certain types agriculture.gouv.fr of rice. Unfortunately, all of these crops 4. Lire: Olivier Fourcadet, La coopération affecte-t-elle la résistance des entreprises are sensitive to climatic conditions. membres aux chocs exogènes? Colloque International sur la diversité et la durabilité For example, yam production varies des modèles coopératifs dans un contexte de crises de la mondialisation, Paris, 6-7 by a multiple of 8 between dry years novembre 2012 - Disponible auprès de l’auteur. and those with optimal precipitation. 5. Jean-François Loiseau, L’agriculture ou l’avenir combinatoire, publié le 15 décembre In response, local farmers decided to 2020 sur Linkedin Pulse. vary their crops by also planting species that like rain, species that thrive in drought, and species that react poorly under extreme conditions but do well in intermediate conditions.[4]

The third approach uses an intensive experimental phase. Jean-François Loiseau, President of the cereal cooperative Axéréal and partner of the Chair, shares the same ambition as our other three partners. However, for a large agricultural cooperative with members spread out over different regions, the first step is finding solutions. There is no single best solution: the key is to prepare for a “diversified future”. “To get there, we will need to create, compare, make mistakes and, above all, discover… sometimes giving up old habits”. [5] A process that our colleagues at the ESSEC Center for Entrepreneurship and Innovation would likely class as entrepreneurial! For our part, we compare this statement to the approach of Amazon’s Jeff Bezos, a pro in experimentation, and who essentially says: “Today, we need to take chances. Some will pay off, others won’t. But in all cases, we will still win, because we will learn from our failures”.

All these challenges fueled the creation of the Food Business Challenges chair, and continue to fuel our drive to support companies in the many transformations facing the food industry!

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KNOWLEDGE/3 3 DOING GOOD WHILE DOING WELL: THE CASE OF BUSINESS IT INITIATIVES

ow can organizations do good comes at a high environmental cost. (help the environment) while Organizations’ reliance on IT has led to H doing well (boosting economic increased computing power and the growth)? While both worthy goals, they development of large data centers that can be at odds with each other, creating provide analytics and cloud computing a dilemma for organizations who wish services. These result in increased energy to both contribute to environmental consumption, higher carbon emissions, sustainability while maintaining and more electronic waste. This has economic growth. led to the development of green IT Yan Li teaches in a variety of programs initiatives to address the environmental at ESSEC. Her current research interests Yan Li (ESSEC Business School), Xue consequences, meaning IT products include digital transformation and big Yang (Nanjing University) and Lele and services that reduce the negative data analytics. Her research papers Kang (Nanjing University) looked at impact and improve sustainability. The have appeared in top-tier information case studies of eight organizations in existing research supports the idea that systems conferences and journals China and Singapore and identified three launching green IT efforts can improve such as Journal of the Association of types of strategic drivers that influence sustainability outcomes, for example by Information Systems etc. She has been the green IT decisions that organizations managing energy consumption. Other giving master classes to the public and make. They also found that the two goals examples of green IT initiatives include at renowned universities and providing become aligned when considering short- powering data centers with renewable executive training for enterprises such term investment and long-term benefit, energy sources, reducing waste from as Singapore Press Holdings, Resort designing an appropriate strategy, and out-of-date computing equipment, World Sentosa, Danone and senior reacting in response to external pressure. and encouraging telecommuting/ managers from Singapore, Hong Kong, This information can help organizations remote administration for reduced Malaysia, Arabic Gulf region, France, plan their sustainability initiatives more transportation-related emissions. There China and Mauritius. Yan has also been effectively. are a number of ways to go about a very actively involved in industrial green IT initiative, but they all require a consulting projects and a number of her concerted effort from staff and involving cases about innovative business models All that glitters IT processes and IT products. in Asia have been adopted by CEIBS is not green MBA Case Library. This is likely to be a significant Information technology (IT) is a technological trend with wide-reaching Written with Julia Smith, major driver of economic and social social implications. However, all that Editor-in-Chief of ESSEC Knowledge. development, but such advancement glitters is not green, and implementing

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green IT measures comes with IT-related industries. All eight were large Looking at the results, the researchers complications such as disruption to companies with over 3000 employees, found that green IT practices were seen existing systems, unpredictable returns and all eight were pioneers of green as essential strategic considerations and market demand, cost, and how technology. The research team used a for these companies. They also stakeholders will react. This leads to the multi-prong data collection approach, found that organizations did not dilemma between doing good while conducting interviews and clarifying always manage to reconcile the gap doing well: while companies may wish information via emails and phone calls, between sustainability and profit to do good by implementing green IT field observations, and archival data. through meeting the objectives of initiatives, they may have legitimate competitiveness, legitimation, and concerns about how this will affect They looked at both internal and ecological responsibility. For companies their bottom line (doing well). Indeed, external drivers, separating them into that noted a significant amount of much of the research has focused on the three categories: competitiveness, government pressure, an external driver, sustainability implications and less on legitimation, and ecological only a middling level of reconciliation the economic ones. responsibility. Internal drivers, or was achieved. Organizations tended to organizational drivers, include factors have one main driver, like government This dilemma led the researchers to like stakeholders’ attitudes, economic pressure for Chinese companies and examine the drivers that impact an considerations, and technology skills. corporate social responsibility for the organization’s motivation to adopt External drivers include factors like Singaporean companies, but were also green IT initiatives and their link to this policy and industry pressures, like motivated by the other drivers. Overall, reconciliation between sustainability regulations on waste disposal and the organizations tended to be most and profit. energy consumption. Breaking it motivated by cost reduction, market down further, competitiveness is the drivers, government pressure, and link between ecological actions and corporate social responsibility. What drives this process? long-term profitability; legitimation is the organization’s drive to align For reconciliation of sustainability and To explore this question, the researchers its actions within a certain set of profit, the researchers found that the conducted a qualitative study on norms or regulations; and ecological time frame matters: while IT initiatives eight organizations in China and responsibility refers to an organization’s tend to require a short-term investment, Singapore, as it is crucial to explore thoughts about its duty to society and they will bring long-term benefits that how green IT implementation plays its values. surpass the initial investment. The out in the real world as opposed to an strategy deployed also plays a role: experimental setting. The companies one company invested in hybrid cloud operated in telecommunications and computing, which set them apart from

KNOWLEDGE/3 5 the competition, which will ultimately improve profits. Having a green image is also a competitive advantage, as it can boost customer satisfaction. Additionally, the dilemma becomes less of an issue in cases where companies experience external pressure, like from the government or external stakeholders. If going green is essential for market success, the financial investments become less of a consideration and more of a requirement. This shows that the dilemma can play out in different ways, and it is important to consider how both internal and external factors will impact the implementation of a green IT strategy.

Takeaways

IT services are ubiquitous in business and management, meaning that organizations and managers need to prioritize the implementation of green IT. Organizations may have different motivations for doing so, motivations that may fall into the categories of competitiveness (economic pressure), legitimation (shifting norms) or ecological responsibility (doing the right thing). These categories can include both external and internal factors.

In practice, this highlights two main ways to motivate companies to implement green IT practices:

1. A combination of pressure from the government and corporate social responsibility obligations

2. Aligning green IT measures with the goal of improving profits by satisfying market demand and reducing operating costs

The researchers note that the latter is more sustainable, but that the former may be able to stimulate progress by implementing incentives (tax breaks) or punishments (high energy costs).

The climate crisis is increasingly urgent, and helping the environment requires an “all-hands on deck” approach. With soaring IT needs and their accompanying environmental consequences, green IT processes are likely to be a trend that won’t go away any time soon. With this research, we gain a better understanding of what motivates organizations to take on green IT initiatives and how they can reconcile “doing good” with “doing well”, enriching our understanding of the drivers of business IT initiatives, an understanding that can help organizations seeking to take such initiatives themselves.

36/KNOWLEDGE Further reading Yang, X., Li, Y., & Kang, L. (2020). Reconciling “doing good” and “doing well” in organizations’ green IT initiatives: A multi-case analysis. International Journal of Information Management, 51, 102052. © GettyImages - 4X-image © GettyImages

KNOWLEDGE/3 7 SUSTAINABLE CITY LOGISTICS

Claudia Archetti is Associate Professor Ivana Ljubic is a Full Professor at Laurent Alfandari is a Full Professor in Operations Research and a Full ESSEC Business School, where she is at ESSEC Business School, in the IDS Professor from September 2021. the academic director of the ESSEC & Department. He has published in She is a member of the Operations Mannheim EMBA program. She teaches international journals such as European Management & Operations Research Decision Analytics, Optimal Decision Journal of Operational Research, Annals (OMOR) Research Cluster. She teaches Making, Operations Research, and of Operations Research, Computers and Decision Analysis, Optimal Decision Supply Chain Management. She has Operations Research, Transportation Making, Advanced Optimization been a professor or visiting scholar at Science, Omega. He teaches Operations and Math Refreshing in ESSEC MSc the University of Vienna, the Robert H. Research and Decision Analytics. and PhD programs. Prior to joining Smith School of Business, TU Dortmund, He is Co-Director of the ESSEC- ESSEC in 2019, she was appointed at TU Berlin, and Dauphine University. CentraleSupélec Master in Data Sciences the University of Brescia as Assistant Ivana teaches and researches the role of and Business Analytics. He is the Professor in 2005 and as Associate Business Analytics in decision-making in Coordinator of the Operations & Data Professor in 2014. Her research interests the era of Big Data and AI. She obtained Analytics concentration of the ESSEC include models and algorithms for a PhD in Computer Science from the PhD program. He did consulting studies vehicle routing problems; mixed integer Vienna University of Technology, and for SNCF, Babcock-Wanson, ESSEC mathematical programming models for a habilitation in Operations Research BS, Aid-Impact. He was in the research the minimization of the sum of inventory from the University of Vienna. Ivana team ranked #4 for the ROADEF-EURO and transportation costs in logistic has published more than 50 articles in international Challenge proposed by networks; exact and heuristic algorithms leading scientific journals in operations EDF in 2010 and participated in the for supply-chain management; research and management science. 2012 Google Challenge. He was Vice- reoptimization of combinatorial President of the French Society of optimization problems. Operations Research & Decision-Aid from 2012 to 2015.

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hat are emerging revenues and obtaining customer loyalty. Stakeholders are starting to develop and technologies for urban On the other hand, this means reducing propose solutions for this huge issue [8]. W and last-mile deliveries? consolidation opportunities and time for They range from sharing strategies,like delivery planning. crowdshipping and freight deliveries on public transit systems, to green How can optimization The main consequence is a massive distribution means, like electric vehicles, and AI-powered analytics increase in the number of commercial robots and drones. vehicles going around road networks for help reduce the pollution deliveries: given the short delivery time Whatever is the means to tackle the & congestion caused by requested by customers, parcels are sent issue, optimization and AI-powered freight transportation in out as soon as they are available, with little analytics can help, and might even be to no consolidation. This means having crucial, in reaching the goal through the urban areas? a lot of almost empty vans on roads, development of technologies enabling E-commerce has experienced which leads to pollution, congestion, the proper management of the tools exponential growth in the last few years. and deterioration of quality of life. A envisaged. How does it work? We Recent statistics have shown that, while big portion of this traffic is condensed describe it here. retail e-commerce sales were around 1 in urban areas, and, consequently, the billion dollars in 2014, they are estimated negative outcomes explode in this to reach 5 billion dollars in 2021. While context. These booming e-commerce Crowdshipping this represents a huge business activities (representing, 8.4% of annual opportunity for companies in almost growth in France, source: https://www. The “sharing economy” is a term that all fields, it also raises dramatic issues statista.com/outlook/dmo/ecommerce/ identifies emerging activities, services in terms of managing the operations france), along with the increasing and initiatives, whereby people and related to satisfying customer orders on demand to reduce CO2 emissions within organizations share their available time. In particular, focusing on the last city boundaries, are inevitably inducing resources with potential users to obtain leg of the supply chain, the e-commerce a paradigm shift in the daily operations a mutual benefit. This also happens in explosion has put a spotlight on last-mile of logistic service providers (LSPs). LSPs city logistics where ordinary people, i.e., delivery. In fact, customers are becoming are looking for innovative strategies not professional drivers, offer their time more and more demanding in terms of and business models for improving and resources to provide transportation delivery speed. On one hand, offering the status quo and making last-mile services. This phenomenon is called services like ‘same-day delivery’ or deliveries environmentally friendly and “crowdshipping”. One prominent ‘delivery within the next day’ represents sustainable. example is Amazon Flex, which was a prime opportunity for increasing introduced in 2013 and, nowadays, is

KNOWLEDGE/3 9 widely used in the US and starting to be distribution plan needs to be foreseen CY Initiative of Excellence [1], we propose used in Europe. Crowdshipping is also in order to avoid wasting the benefits leveraging existing public transportation associated with the term uberization coming from fixed-cost savings. services during off-peak hours, when the which means that ordinary people make Optimization technologies represent the vehicles are typically under-utilized, to available their time and resources (car, right tool: while taking into account all help LSPs deliver packages in the urban fuel, ...) to other transportation services demand and service requirements, they areas. This novel logistics concept of (either for transporting people or freight). can build the most effective distribution integrating goods and passenger Indeed, Uber has launched two projects plan (9, 10). flows to promote higher utilization associated with freight transportation: rates for the public transport network Uber Freight and Uber Eats. is known as Freight on Transit (FOT) Freight on Transit (FOT) [2,3]. In FOT, public transport operators Why is crowdshipping becoming so cover the “first leg” of transportation popular? The main reason is that it is In 2014, freight deliveries accounted for which is then combined with green cost-effective: indeed, companies can 15% of urban traffic. With the explosion modalities performing the “last leg”. In cut down fixed costs related to hiring and of same-day delivery service in the last a promising FOT pilot project launched wages, while paying just for the service few years, we can expect this statistic by Monoprix in Paris (2007-2017), the provided. It thus represents a great to have increased dramatically. As the company used the RER line D business opportunity. However, this foundational piece in building a smart to transport goods does not come for free: the organization city, city logistics plays an important role between their of the distribution process becomes in reducing the fossil fuels consumption distribution much more complex when dealing with caused by freight transportation. crowdsourced drivers that reveal their availability shortly before the service In our Sustainable Smart City Operations needs. As a consequence, an optimized (SISCO)1 research project funded by the

1 - https://sites.google.com/a/essec.edu/sisco/home

40/KNOWLEDGE center in Combs-la-Ville and the city may also involve the third party logistics Last-mile delivery with boundary of Paris (Bercy) [4]. providers operating with drones/robots, low-emission vehicles, micro-logistics operators, or individuals A fleet of around 20 natural gas trucks (crowdshipping). drones and robots was then used to perform the last-mile In 2016, the cost of global parcel delivery, delivery, and distribute goods from Due to its complexity and the traditional excluding pickup, line-haul, and sorting, Bercy to around 60 Monoprix shops organizational structures, the adoption totaled approximately 70 billion euros. inParis. According to the company’s of the FOT may be a challenging task According to the McKinsey report [5], estimations, this produced remarkable for the two major stakeholders. To over the next ten years, market volumes environmental gains: annual CO2 overcome these barriers, the goal of our in Germany and the US might reach 5 emissions have been reduced by 280 project is to provide decision making billion and 25 billion parcels per year, tons, and around 10,000 truck deliveries tools which can be used to estimate respectively. The biggest share (often (on an annual basis) have been replaced expected environmental impacts, and higher than 50%) in total parcel delivery by the train. to answer important strategic, tactical cost goes to last-mile delivery. This is or operational questions, such as why the large and highly dynamic parcel The Monoprix project showcases great which lines should be used for freight delivery market is constantly being potential for other LSPs in implementing transportation, which stations should disrupted. Innovative last-mile concepts a similar FOT concept. Besides the two be the entry and exit points, the size have been proposed to cope with the major stakeholders (i.e., the public of the required fleet, and how to route increasing demand for logistic efficiency transport operators and LSPs), the packages for the last-mile delivery. and competitive prices. Among the last-mile delivery These important managerial insights will them, one can now find pickup points part help the decision-makers make informed networks, integrated public and freight decisions based on data, optimization transportation, deliveries directly into and analytics. the customer’s c trunk, crowdshipping, and more recently, the use of unmanned aerial vehicles (drones) and self-driving autonomous robots. © GettyImages - Petmal © GettyImages

KNOWLEDGE/4 1 From a regulation point of view, the own self-driving delivery robots, called (namely, Benders decomposition) that adoption of drones has been rendered Scout (Amazon, 2020). FedEx tested a can find optimal strategies and enable increasingly difficult around the world six-wheeled, autonomous robot, called to explore insightful what-if scenarios due to the adoption of stricter rules the SameDay Bot, in summer 2019. (with respect to impact of robot speed, concerning their operation and safety, robot range, network structure) that are especially in urban areas. In this context, In this context, several operational relevant for practitioners and companies. self-driving robots have an advantage decisions and network design problems For example, increasing the speed of as they are designed to operate at low arise. One is the selection of robot robots from 5 km/h to 15 km/h, results speeds, e.g., pedestrian speed, so that stations for the last-mile delivery of in annual savings of 675 kg CO2, for a they can safely share existing sidewalks parcels via robots and the optimal routing single urban area represented by a 10 and bike lanes with people. Self-driving of the truck transporting parcels to these km square grid considered in our study. delivery robots were introduced much selected stations from a central depot For the given instance the truck route later than drones, nevertheless, many (Alfandari, Ljubic, Melo da Silva, 2020) is reduced by more than 50%, whereas initiatives can now be found where [6,7]. This paper proposes mathematical the average distance traveled by robots robots are deployed for deliveries. models and methods to optimize Quality increases by 45%, and fewer facilities are For example, the self-driving robots of Service (which means to minimize visited. Increasing the coverage radius developed by e-novia (2020), Starship tardiness relatively to customers’ due of robots from 30 to 60 minutes has the (2020), and Twinswheel (2020) have dates). Given the complexity and large highest environmental impact with 750 been tested in many cities around the problem size (tens of potential robot kg annual CO2 emissions savings for world. More recently, Amazon also stations and hundreds of customers), the 10 km square grid considered in our announced the development of their the paper proposes efficient methods study.

References

1.  SISCO - Sustainable Smart City Operations: Research 6. Alfandari L., Ljubic, I., Melo da Silva, M. (2019). Optimal project funded by the CY Initiative of Excellence (grant Vehicle Routing with autonomous devices for last-mile "Investissements d'Avenir" ANR-16-IDEX-0008). delivery. In: 2019 Workshop of the EURO Working Group Website: https://sites.google.com/a/essec.edu/sisco/ on Vehicle Routing and Logistics optimization (CeRoLog home 2019),

2. Ozturk Onur: Freight on Transit as a new concept for 7. Alfandari L., Ljubic, I., Melo da Silva, M. (2021). A city logistics, https://aqtr.com/association/actualites/ tailored Benders decomposition approach for last- freight-transit-new-concept-city-logistics mile delivery with autonomous robots, Optimization Online, http://www.optimization-online.org/DB_ 3. Keith Cochrane, Shoshanna Saxe, Matthew J. Roorda HTML/2021/03/8279.html, European Journal of & Amer Shalaby (2017) Moving freight on public Operational Research (to appear). transit: Best practices, challenges, and opportunities, International Journal of Sustainable Transportation, 11:2, 8. Archetti, C. , Bertazzi, L. (2021). Recent challenges 120-132, DOI: 10.1080/15568318.2016.1197349 in routing and inventory routing: e-commerce and last-mile delivery, Networks 77, 255-268. 4. Antoine Boudet: Monoprix choisit Fret SNCF pour approvisionner ses magasins parisiens, Les Echos, 5 9. Archetti, C., Savelsbergh, M., Speranza, M.G. (2016). juil. 2007, https://www.lesechos.fr/2007/07/monoprix- The vehicle routing problem with occasional drivers. choisit-fret-sncf-pour-approvisionner-ses-magasins- European Journal of Operational Research 254, 472-480. parisiens-534433 10. Archetti, C., Guerriero, F., Macrina, G. (2021). The online 5. Joerss, M., Schroder, J., Neuhaus, F., Klink, C., & Mann, vehicle routing problem with occasional drivers. F. (2016). Parcel delivery: The future of last mile. Computers and Operations Research, 127, 105144. McKinsey&Company, . McKinsey Report on Travel, Transport and Logistics.

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KNOWLEDGE/4 3 MAKE BUSINESS GREEN AGAIN: THE ROLE OF FINANCIAL MARKETS

he effects of climate change has become a source of innovation and the associated natural and growth. Despite this tendency, T disasters, consequences of companies which work towards a pollution and human overexploitation sustainable economy see their stocks of the environment, have probably in a difficult position. “Green” stocks never been more obvious. Cities, states, have generally lower returns than and companies all around the world are stocks issued by traditional firms, i.e. taking steps towards a sustainable future firms whose strategy does not include for our planet. environmental awareness. The latter do Professor of Finance at the ESSEC not and will not hesitate to exploit natural Business School Paris-Singapore, resources for profits. Consequently, Roméo Tédongap is an experienced Green is the New Black, these “dirty” stocks generally present academic expert in empirical asset or... Is It? higher returns than green stocks. It pricing and portfolio choice. He holds a may seem absurd but this process Ph.D. in Economics from the Université Europe is working hard to cut down is self-feeding, i.e. dirty stocks have de Montréal. Professor Tédongap is very its greenhouse gas emissions while higher returns, which implies that the active in the fields of macrofinance, encouraging other nations and regions firm has more value, more capital, and financial modeling and econometrics, to do likewise. Government officials in more opportunities to keep using dirty where he has published in several top- many countries took turns in suggesting resources, which again will make the firm rated scientific journals. His current increased environmental taxation. even more profitable. work focuses on asymmetric investors’ It appears that both consumers and attitude towards risk in the presence investors are showing a rising interest But what if another scenario were of economic uncertainty and systemic in sustainability and environmental possible? What if there were a way changes, and their implications for asset impact of firms. To address the problem, to make green stocks more attractive prices and investment decisions. Many the European Environment Agency than dirty stocks? What if stocks were applications relate to the evaluation of introduced the carbon emission market. taxed according to the environmental ultra-long investments such as public Going green appears to be trendy in impact of the firm? In other words, infrastructure, climate, and energy today’s market. The fact is that green what if environmental awareness were transition. Professor Tédongap currently products have never been as attractive introduced earlier in the process, way serves as editorial board member of the to consumers as they are today, before the “introduction” of consumer Pan-African Scientific Research Council which implies a rapid development of education? (PASRC). environment-friendly industries. As a result, the market for green products This is what professor of finance Roméo

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Tédongap suggests in his research classified instead according to their time a stock with a bad rating is sold, project. The idea is simple and relates to sustainability. This label would not be the buyer would have to pay not only the existing classification of consumer based on the energy efficiency of the the stock but also an environmental tax products according to their level of final product but it would capture the depending on the stock’s GREEN label, energy efficiency. For instance, a fridge Environmental Impact (EI) of the firm making the asset less attractive in terms using small amounts of energy is a business ranging from the inputs used, of returns. Conversely, if an investor class A whereas a less efficient fridge the technology employed, all the way buys a stock with a good GREEN rating, will obtain a lower rating such as B, C to the ecological quality of the final i.e. the underlying firm is respectful of or D. As we all know, products that are product or services. By introducing the the environment, the buyer should be rated A are the most expensive. This tax upstream, the EI of a firm becomes a compensated for example in the form of means that consumers have to pay the key determinant of the stock returns of a lower tax rate on dividends, whereas additional cost if they want to be greener, that company. The EI may be assessed the dirty stock dividend should be i.e. the cost of environmentally-friendly through an Environmental Performance subject to a more important taxation. behavior is put on the end consumer. Index (EPI) that would account for the The tax surpluses could either serve as At the same time, firms keep having an Global sustainability strategy of the firm, a subsidy for green technologies or face incentive to produce cheap and energy the Resources it uses (renewable vs. non- real negative externalities on society. inefficient products as lower prices are renewable), the Energy efficiency of the In either case, the tax would represent more attractive to consumers. Bottom production process, the Ecosystem of the a wealth transfer from the financial line, consumers are currently being firm and the Non-harmful exploitation of markets to the real economy. We know financially penalized for wanting to join the environment. This is what he calls the that financial markets react quicker than the green side of the force. GREEN criteria. In practice, these criteria the real economy. In short, the GREEN could be established and evaluated by an label would not only allow the transfer independent agency. of the tax burden but would also improve Getting around the reactiveness to the tax policy. the System More precisely, an upstream taxation would compel profit-driven investors The climate crisis is increasingly urgent, Professor Tédongap suggests that to reallocate their portfolio towards and needs to be addressed by all the financial burden should be laid on more sustainable companies. Consider sectors. Innovative solutions, like the one the company producing the product for instance a firm whose stock has a proposed by Dr. Tedongap, are critical in instead of the consumers. Thus, instead low GREEN rating. The firm business the fight to protect our environment and of labeling the final products according is clearly bad for the environment. our society. to their energy efficiency, Professor Each time this stock is sold, the buyer Tédongap advocates that firms be should pay a tax. In other words, each First published on November 30th, 2018

KNOWLEDGE/4 5 NON-FINANCIAL RATING: A FINANCIAL TECHNIQUE THAT SUPPORTS CORPORATE SUSTAINABILITY

on-financial rating, or ESG rating Two conceptions (for Environmental, Social, and on non-financial rating N Governance), highlights the way that a technique originally conceived Non-financial rating was developed as a for traditional finance can be used to consequence of two distinct concerns. support companies in improving their corporate social responsibility behavior. Some investors realized that an organization’s profitability (long-term Rating, i.e. the evaluation and granting profitability implies the company’s Hugues Bouthinon-Damas is a law of a given indication (note, label, longevity) relied not only on financial professor at ESSEC, where he teaches categorization, etc.) by an external factors (profitability, sustainable debt, in the Grande École program, in the organization to the evaluated entity, is a sufficient cash flow) but also on non- BBA, in Cergy-Paris and Rabat and in technique that has become established financial factors, like its ability to attract continuing education. A graduate of for analyzing credit risk. In concrete and retain employees, management the École Normale Supérieure, a holder terms, companies, financial institutions quality and effective corporate of an agrégation of economic and and public authorities wishing to finance governance, and its risk management social sciences and a doctorate in law themselves by issuing bonds must policy, including management of social (HDR), his research work focuses on first have the securities and the issuer and environmental risks. These investors business law (corporate law, business evaluated by credit rating agencies, so wanted to be sure that not only could the criminal law, governance...) and on that investors know the risk they are company make money, but also that it the relationship between law and exposing themselves. The rationale of could do so without its social practices, its economic, social and geopolitical this rating was originally strictly financial. impact on the environment, and environment. With Antoine Masson, governance hampering its development. he co-directs the European Center for Given the extent of debt (of Law and Economics (CEDE) the "Law, corporations, but also countries and local There are also investors (especially in Management and Strategies" (DMS) governments) in today’s economy, the socially responsible investing - SRI) program. role of credit rating agencies has entered and interest groups that are principally public discourse. One doesn’t need to be concerned with the company’s impact a finance expert to know that the loss of on its natural, human and/or institutional a “triple A” rating or the classification environment. They want exemplary of a government bond as “speculative” companies in which it is possible to can have significant consequences on a invest and thus contribute positively country’s economic policy. to diverse causes (empowering

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women or minorities, animal wellbeing, traditional regulation, the government The conditions of renewable energy, etc.). Conversely, is increasingly looking to influence credible and useful the stigmatisation of companies with behavior using disclosure. Companies poor environmental, social or societal are required to share their practices and non-financial rating performance tends to force the affected non-financial performance, for example For this virtuous dynamic to produce the companies to change their strategies by publishing data on their social policies, anticipated effects, information on the and practices. their energy consumption, or their waste situation and non-financial performance production, which complements the must be reliable and usable. This is not These two justifications of non-financial accounting and financial data. always the case because companies may rating coexist today and can result in be tempted to disclose information that different rating practices and methods. When company stakeholders are makes them look good, regardless of We can thus distinguish non-financial properly informed about a company’s whether this presents the whole truth. rating that integrates itself into a broader reality across all dimensions, they can The ghost of greenwashing hovers conception of financial rating, and non- make decisions based on the company’s close by. It is not always easy to compare financial rating that pursues a non- situation with regards to the criteria the information given by different financial goal. they deem pertinent: whether or not companies given different rating shareholders will invest, whether or not frameworks, so stakeholders may have the stock exchanges will include the a hard time making informed decisions. A virtuous company in specific qualitative index, In concrete terms, the extra-financial dynamic based on partners will decide if they want to information must be produced, work with them, customers will decide processed, synthesized and, at the non-financial rating if they want to consume the goods or very least, audited by third parties who In the current climate, companies services, employees will decide if they are sufficiently independent from the know the advantages of presenting want to work there… All of these actors entities being assessed and who have themselves as virtuous actors, if only to could “vote with their feet”, based on a the resources (access to data, capacity avoid being singled out in the media or company’s ratings, and therefore to put to process and analyze data, robust and in the courts, which would damage their pressure on them: but they must have relevant methodology, etc.) to do a good image. the freedom to do so, which is not always job. the case. In addition, governments are careful to However, the situation of non-financial promote “good behavior” by companies rating agencies is quite different from through the use of incentives rather that of financial rating agencies. The than coercive measures. Beyond financial rating market is monopolized

KNOWLEDGE/4 7 by a few international agencies (S&P, In contrast, non-financial rating agencies Their relative fragility impairs their Moody's and Fitch). These agencies appear vulnerable today. The market independence. The diverse methods are paid by the rated entities, which is fragmented, and agencies tend to they use and the heterogeneity of their in practice can hardly access bond operate in a limited geographical region results damage their credibility. financing without using their services. or on a particular theme. Their economic The credit rating agencies are thus models are diverse and fragile. It is rare At a time when sustainable finance recognized, powerful and very that they are directly compensated for increasingly needs to use secure, usable profitable companies. This situation their rating by the issuers. Most of the non-financial ratings, it is essential consolidates their independence from time, they need to provide additional to strengthen non-financial rating issuers. Following their involvement services (advice to issuers, running agencies. This support could come from in the subprime crisis, credit rating a stock market index, managing the market or from regulation. agencies are now regulated, which has investment funds, disseminating not weakened them. They remain key economic information, monitoring Quite logically, the non-financial players in finance. controversies, analyzing portfolios, etc.) rating industry is undergoing major which can lead to conflicts of interest. changes, driven by the growing use of

48/KNOWLEDGE © GettyImages - sarayut © GettyImages new technologies (AI, Big Data, etc.), authorities, such as the AMF, have begun Further reading and market consolidation, notably to to think about strengthening the non- the benefit of credit rating agencies financial data supply industry through H. Bouthinon-Dumas, « Les agences de or players dominating the financial a regulation that could guarantee the notation extra-financière et le droit », information market. The French non- quality and transparency of ratings and in H. Bouthinon-Dumas et alii, Finance financial rating agency Arese, which thus strengthen the base of independent durable et le droit, Editions IRJS- became Vigeo, merged with the Belgian European players. Sorbonne, 2020, pp.147-174. agency Ethibel, then merged with the British agency Eiris before the Moody's group took control in 2019. There is therefore a risk that the non-financial rating agencies integrated into the large traditional financial groups will give up part of their vocation. Aware of these issues, some European regulatory

KNOWLEDGE/4 9 SUSTAINABLE INVESTING: SHAPING THE FUTURE OF FINANCE

Doing well while doing good” is the new mantra in finance. “ After years and years of piling up risky and no value-added investment practices, taking excessive risks, and being a burden for taxpayers, the finance sector seems to be back to basics, the efficient allocation of capital to promote the sustainable development of the Francis Declerck teaches Corporate Sofia Ramos is Associate Professor of economy. Finance and Agricultural Futures Finance at ESSEC (Paris-Singapore). Markets. He co-moderates the She is associate editor of the European agrifood track and the Energy and Journal of Finance. Sofia Ramos holds a A tectonic shift in society Commodity Finance track (ECOMFIN) PhD in finance from the Swiss Finance for the Grande École program. Francis Institute - University of Lausanne. Sustainability is shifting finance just as is academic director for the Aristée Her main interests are in the field of it is changing consumption. Millennials' program of general management for mutual funds, portfolio management, consumption habits reveal that they the farm cooperatives' paid executives. responsible finance, energy finance care about sustainability, whether His research interests focus on finance and international finance. Her work has they are buying recycled sneakers or applied to the food business dynamics. been published in various internationally making financial investments. Studies He wrote a book on the Champagne recognized journals. She is co-director like Schroders’ Global Investor Study business. He co-authored a handbook of the chair "Shaping the future of 2020 (September 2020) find that a vast on farm cooperatives and agri-food finance" and Academic Director of the majority of investors are not willing to commodity futures markets. In addition Global MBA. compromise on their personal beliefs to his academic work, Francis manages when putting their money to work, even numerous assignments and traines if returns are higher. executives from several international food companies and institutions. He is The year 2020 was a record year for co-director of the chair “Shaping the funds that use non-financial criteria such future of finance”. as environmental, social, and governance (ESG) criteria to generate financial return and a broader societal impact. 2020 was also a year where financial investors

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showed great interest in social and green measures enforcing the consideration Fighting Greenwashing bonds and more governments and of sustainability when making financial corporations committed to investments decisions. As sustainable investing has become with an environmental and social impact. increasingly mainstream, the appeal of In March 2021, Italy raised a record greenwashing grows. Unfortunately, €8.5bn from green bonds. The bond Market imperfections statements in reports or websites saying was 10 times oversubscribed. During to be solved and ESG that a firm cares about stakeholders or the second half of 2020, USD 178bn the environment does not represent (€149 bn) worth of green bonds were criteria a true commitment. Investors and added, almost double that of the first Markets are great tools to allocate goods stakeholders ask for a clarification semester. Green bonds were issued in and financial securities, but they have of what is sustainable. The problem 24 currencies, and almost half were EUR shortcomings that lead to poor decisions. is worsened by the absence of clear, denominated according to data from Markets do not correctly incorporate agreed-upon sustainable investment Climate Bond Initiative. The pandemic, the cost of negative externalities, like definitions. along with climate change urgency alterations to common goods, air, water and the movement for racial justice, and land pollution, and the depletion Thus, besides giving strong direction have been and will likely continue to be of natural resources, etc. Furthermore, about the financing of the economy, catalysts for investors wanting to search in 2005, focused on CO2 emissions regulation is promoting disclosure, for investments with environmental and that account for 75% of greenhouse transparency and certification of social impact. gases, the EU set up the European sustainable products. Both non-financial Union Emission Trading Scheme (ETS), and financial companies have been The European Green Deal is another nicknamed the “carbon market” in order encouraged to disclose non-financial engine of the transformation as it aims to to go carbon-neutral by 2050. The information. But because there was make the EU's economy sustainable. The ETS is the first international emissions still too much ambiguity about what investment necessary for the transition trading system launched in the world, is a sustainable investment, the EU to make the EU-climate neutral by 2050 even though it reveals itself to be far taxonomy has given a step further is estimated at between €175 to €290 from perfect. The EU is revising its policy and provides a classification of what million in addition to yearly investments to fight climate change in completing constitutes a sustainable activity, in the next decades. Regulators want the ETS by launching a carbon border becoming a strong guide for investors' to ensure that both public investments adjustment mechanism (CBAM) in the decisions. and private investments are dedicated forthcoming months. to this goal. Therefore, the European Commission has published a set of

KNOWLEDGE/5 1 Is sustainable investing profitable?

The uttermost question is whether sustainable investing is profitable? Can we do well by doing good? As in other areas, the answer is not unequivocally a yes or a no. There are profitable and non-profitable sustainable investments. Like any other investment, sustainable investments have risks. There is nevertheless consensus that the acknowledgement and integration of environmental, social and governance factors can enhance returns and reduce risk, not only because of the growing materiality of non-financial risks but also because they can offer attractive returns. The green economy is en marche, and new investment opportunities are emerging.

Shaping Finance – the agenda

Recentering the attention of finance in the basics, the efficient allocation of capital is primordial. This time, the focus needs to be in creating value for all stakeholders and not only shareholders. The new approach in finance considers the impact of investing for society, in particular creating value for all stakeholders to make a resilient and inclusive economy. Efficiency and resiliency in the financial system is a source of positive externalities for society.

ESSEC chair “Shaping the future of finance”

The recently launched "Shaping the Future of Finance" Chair aims to attract talented students and train them as future responsible leaders to manage the income challenges. The chair partners are financial institutions that have a strong commitment and show a strong leadership in sustainable finance. They do not see sustainable investing as a trend but rather as an intrinsic part of their way of operating. The first partner is AXA IM Alts, a global leader in asset management.

The Chair aims at operating as a think tank to raise awareness on the importance of sustainability in finance, to identify the best practices in the financial industry to spread positive changes and to promote a long-term view of value creation.

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KNOWLEDGE/5 3 GENDER EQUALITY IN FINANCE

he fight for gender equality needs to happen on all fronts, including T finance. Gender inequality remains rife in the finance industry: a 2020 European Commission report noted that in 2018, venture capital backed tech companies with all-male founders received 93% of capital, with 5% going to mixed teams and 2% to Francois Longin is a professor of finance Estefania Santacreu-Vasut obtained all-female teams (1). While women are at ESSEC Business School. He pursues a a PhD in Economics from UC Berkeley. employed in the finance industry, they career in banking and financial by allying She is an associate professor of are underrepresented in top leadership consulting, research and training. He is economics at ESSEC Business School positions, with a 2020 Oliver Wyman a trusted risk management advisor to and THEMA. Her research focuses on study on 460 firms in 37 countries financial institutions and firms. François gender and institutions and has been indicating that women represent 20% of Longin's reserach interests include published in outlets such as the Journal executive committees and 23% on boards extreme events in finance and their of Development Economics, Journal of (2). To better understand the gendered applications for trading rooms and fund Economic Behavior and Organization, nature of finance, ESSEC professors management firms. among others. She is a consultant for the François Longin and Estefania Santacreu- OECD, co-founder of the project Gender Vasut established the Gender and & Finance and the co-author, together Finance project, aiming to shed light and with Tom Gamble, of the popular press share information on gender in finance. book `The nature of goods and the goods of nature: why anti-globalization is not the answer'. A tale of two CEOs

One of their research efforts explored the stock market reaction to the appointment of female CEOs (3,4). Stock markets tend to react poorly to female CEO appointments, and Longin and Santacreu-Vasut sought to better understand this phenomenon. They used

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a lab experiment in which participants threshold falls to 43% female, showing 2020 paper examining the global (business school students)1 used that the market gender bias is greater microfinance industry (5), co-written SimTrade, a simulation trading platform for female CEOs. This shows clearly with Israel Drori (Department of developed by Dr. Longin, and compared that women and men react differently Organization Studies, Vrije Universiteit how male and female participants to the appointment of female CEOS. Amsterdam), Ronny Manos (School reacted to the appointment of a male vs. of Business, College of Management a female CEO, i.e. whether they bought or These results highlight the impact of Academic Studies, Israel), and Amir sold stocks. Their experimental approach the market’s gender composition: as Shoham (Fox School of Business, was designed to “unblind” finance: the financial market is still dominated Temple University). In their recent since it was conducted in a controlled by men, a company’s stock could suffer study, they examined how the global environment, the researchers were following the appointment of a female microfinance industry determined able to identify the traders (and their CEO.It also shows that this could become its targeting strategy in cultures with gender), and able to control contextual a self-fulfilling prophecy: if stockbrokers different gender values, using male/ information like what they knew expect stock prices to behave in a female grammatical distinctions as a about the company and when they certain way after the appointment of proxy. Microfinance is an innovative learned about the CEO appointment. a CEO, they might decide to buy or strategy for combating inequality: it sell accordingly. This could perpetuate consists of providing financial services, Data analysis revealed that when a female gender stereotypes and gender like loans, to individuals who are CEO was appointed, female participants inequality. By raising awareness about unable to access traditional banking tended to buy stocks, while males tended this phenomenon, particularly in services. There is a particular focus on to sell stocks. The reverse occurred management education, it is possible to empowering women, the idea being following the appointment of a male combat stereotyping and bring about that it encourages entrepreneurship and CEO: women sold stocks and men bought positive change. therefore self-reliance and improved them. The researchers also calculated financial circumstances. It follows, the critical threshold that is required for then, that microfinance institutions a “neutral” market reaction: for a neutral The language will develop their targeting strategies reaction after a female CEO is appointed, of microfinance accordingly in order to adapt to the local a critical threshold of 82% female is cultural context and optimize their social required, whereas for a neutral reaction Dr. Santacreu-Vasut continued to benefit. after a male CEO is appointed, the critical shed light on gender in finance in a

1 - https://www.simtrade.com/

KNOWLEDGE/5 5 To explore this question, the researchers marking, meaning where speakers have project, Dr. Longin and Dr. Santacreu- looked at data from three sources: data to make male vs. female distinctions Vasut seek to understand the interplay on language and the gender index more frequently are associated with of gender and finance to identify and classifying gendermarking (6), data higher degrees of gender discrimination: debunk stereotypes and raise awareness on microfinance institutions, and data this method for measuring cultural in the leaders of tomorrow. Thanks to the on the countries in which microfinance values offers a methodologically sound microfinance research of Dr. Santacreu- institutions operate. All in all, the sample way to measure culture. These findings Vasut and her colleagues, we also gain included over 2200 microfinance show that microfinance institutions understanding of how cultural context institutions representing 101 countries adapt to best serve their overarching impacts how financial outreach unfolds over a 15-year period from 2003-2017. mission of empowering women, and in a real-world setting. Research on focus their efforts on contexts where gender and finance, like the studies The researchers found that cultural women are especially discriminated discussed here, provides insights for the values do influence the targeting against and unable to access traditional fight for equality. strategy taken by microfinance banking services. institutions, in that they do tend to target women in locations where they are especially likely to be excluded from Knowledge is power traditional financial services, and less likely to target women in regions where To combat gender inequality, we need to discrimination is lower. They found that understand how it plays out in different languages with higher degrees of gender settings. With their gender and finance

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Reference

1. Skonieczna, A., & Castellano, L. (2020). Gender Smart 4. Longin, F., & Santacreu-Vasut, E. (2019). Is Gender in Financing Investing In and With Women: Opportunities the Pocket of Investors? Identifying Gender Homophily for Europe (No. 129). Directorate General Economic and Towards CEOs in a Lab Experiment. Available at SSRN: Financial Affairs (DG ECFIN), European Commission. https://ssrn.com/abstract=3370078 or http://dx.doi. https://ec.europa.eu/info/sites/default/files/economy- org/10.2139/ssrn.3370078 finance/dp129_en.pdf 5. Drori, I., Manos, R., Santacreu-Vasut, E., & Shoham, A. 2. Jessica Clempner, Michelle Daisley, and Astrid Jaekel, (2020). How does the global microfinance industry Women in Financial Services 2020: A Panoramic determine its targeting strategy across cultures with Approach (Oliver Wyman, 2019) differing gender values?. Journal of World Business, 55 (5), 100985. 3. Longin, F., & Santacreu-Vasut, E. Stock Market Reaction to Female CEO Nominations: Is the Market Gendered? 6. Santacreu-Vasut, E., Shoham, A., & Gay, V. (2013). Accessed at: https://pdfs.semanticscholar.org/ Do female/male distinctions in language matter? f99c/2e04f7e1b90cc74b3ac43f9083234ded3446.pdf Evidence from gender political quotas. Applied Economics Letters, 20 (5), 495-498.

KNOWLEDGE/5 7 WOMEN ON BOARDS: STATE OF AFFAIRS IN FRANCE AND EUROPE

ender equality is a fundamental des entreprises, finding that the 15 value of France: it’s even companies with the highest proportion G alluded to in the national motto, of women showed growth of over 240% “Liberté, égalité, fraternité” (Liberty, over a ten-year period from 2009- Equality, Fraternity). It’s also one of the 2019, compared to 43% for the CAC40 17 development objectives outlined by companies (5). In other words, the more the United Nations. While we have made women in power, the more stock market strides in recent years, achieving true value. equality is still a lofty ambition, and work Viviane de Beaufort is a full professor needs to be done in all sectors. In France, of European law at ESSEC and an expert recent laws have led to change: Viviane The current state in public policy and lobbying, and a de Beaufort analyzes the effect of these of affairs recognized spokesperson on Women laws, recent updates in France and the Empowerment. She is the author of European Union, and next steps for the In 2011, the Assemblée Nationale in numerous books and articles on the path towards equality in the workplace. France adopted the Copé-Zimmerman institutional system and lobbying, in law, which imposed quotas to promote business law and corporate governance. balanced representation of women on Viviane runs the European Center for The cost of inequality corporate boards, which has applied Law and Economics (CEDE- Ceressec). to companies with more than 250 She is responsible for ESSEC's There is a wealth of academic research, employees since January 2020. While executive programs dedicated to the conducted in the United States and the implementation of quotas raised emancipation of women, including the more recently in Europe, too, that some eyebrows, the law has achieved Women Be Board Ready program, and points to the value of gender diversity its goal for the larger enterprises. The is the school's gender equality referent. for organizations: it has many benefits, question of quotas still makes some including to innovation, performance, people uneasy, with some pointing to Written with Julia Smith, and productivity but also in terms of the values of the Republic and the merit Editor-in-Chief of ESSEC Knowledge. good reputation and CSR issues (c.f. of meritocracy as reasons against it. 1, 2, 3). Employees also indicate that However, right now the focus should not they have a higher quality of life at work be on whether or not quotas are right: when women are in power according to it should be on finding a solution that a study of Fortune 500 companies (4). works. Quotas have proven themselves In France, Michel Ferrary created the to be just that. In France, women now SKEMA Observatoire de la féminisations make up 46% of big corporate boards,

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establishing France as a leader in of performance, competitiveness and companies with more than 1000 Europe. But if this law has worked for attracting talent. Otherwise, inequalities employees and the far-off deadlines large companies and especially listed will increase while our economy is (2028 then 2030), while others see it companies, the situation does not seem being rebuilt. Setting quotas is neither as an unacceptable and unenforceable to be the same for smaller companies: removing one domination to put another, measure. The details, as is often the case a study by KPMG in 2019, presented nor imposing women who do not have in France, will be settled by decree, and at the Assises de la parité in Paris (6), the skills. I am not asking for charity. There the devil is in the details, as is often said. establishes that on average only 25% of is talent and will in our country, and we Whatever one thinks of the text, let's boards of directors are female. However, must use it. " (7). This is one of the issues take it as the result of a compromise and these figures should be taken with of the proposition #EconomicEquality a possible legal lever for change likely to caution because outside the perimeter of adopted in the National Assembly and create the desired ripple effect, because the rating, the data is not provided. This is under consideration in the Senate. attacking the citadel of management one of the flaws of the law and enriching obviously requires that companies that the Pénicaud index with this data could have not done so, or that have done so be a way to create transparency. What should inadequately, rework their HR policy in the State do? terms of gender equality from A to Z. The Copé/Zimmermann law did Note that article 5 deals with the actions not have the expected effect on the The bill introduced by Marie-Pierre of the Grandes Écoles in terms of gender management bodies. There is only one Rixain, MP, and adopted on May 12th equality. What is the relationship? A close female leader of a CAC40 company at the National Assembly proposes a relationship: because if companies are (Catherine MacGregor, Engie), and the further step towards economic equality. able to recruit more young girls in so- proportion of women in management It includes, in addition to a series of called male fields and if stereotypes bodies is clearly insufficient. In the provisions relating to single-parent are not deconstructed, or at least made words of Elisabeth Moreno, Minister families, 70% of which are headed by aware, a virtuous spiral is established for Equality between Women and Men: women, and the implementation of between these female students and "The CAC40 is still a club for men in grey measures related to improved access their counterparts of the opposite sex, suits! (7) Unfortunately, this is also true to funding granted by the BPI funds who are the future managers. If the work for the SBF120. So what should we do? for projects led by entrepreneurs, and is carried out previously, the company's Let's quote Elisabeth Moreno again: "I increased reporting on establishing policy is facilitated. am in favor of a law. Without quotas, gender equality in management things don't change. Giving women positions with a quota of 30% raised to On a European level, the European the opportunity to sit at the strategic 40% later. Some criticize the text for a lack Commission has also launched the decision-making table is a question of ambition due to the scope concerned: Gender Equality Strategy 2020-

KNOWLEDGE/5 9 2025, listing political objectives and announced its commitment to ensuring For public policies: concrete actions. The key objectives that 40% of its senior managers are include ending gender-based violence, women by 2025, and has launched • Limit the length of board terms and the combatting stereotypes, and reducing a group called "SoTogether" which number of terms a person can hold at the gender wage gap. This strategy also supports equality at all levels of the any one time, to allow for change. advises that women be included in the company. Other large companies such • Be flexible, not lax, in the political response to the pandemic and as L'Oreal, Engie, and BNPP have made implementation of quotas, be able that the needs of women be considered significant progress recently. On a to make adjustments, especially in the response. This is both to preserve smaller scale, we can question the effect considering the plethora of challenges the gains of past decades, but also to of new fund policies that scrutinize facing companies today: COVID-19, create a more equitable world for both the gender mix of teams in SMEs and climate change, CSR… men and women. For President Ursula startups. One would have hoped that • Grant companies flexibility in defining von der Leyen, “women must be at the this progress would be the result of their management body and the center of the recovery”. proactive approaches. By encouraging qualification of management positions; this progress with a policy of equal • If there is a sanction, because it More data is needed to track progress opportunities proposed by the HCE, is necessary to be credible, the and keep companies accountable to which Viviane de Beaufort supports, punishment of non-compliance is internal and external stakeholders. More the State and the European Union could not the ultimate goal. In this respect, regulations and yes, quotas, would prove make considerable progress. Incentives creating incentives for those who are useful for small and medium enterprises. rather than sanctions! less impressive in terms of gender Since the data has revealed that regulations equality or those who objectively like quotas work, it is critical for both the have difficulties (size of the company French and European governments to Next steps and sector concerned) seems back new laws and initiatives that will pave more interesting. This is where ega- the way for equality. France has made significant progress conditionality is mentioned, which toward gender equality in recent years, but consists of granting advantages It should be emphasized that once again, there is yet more work to be done. Notably, or giving preference to exemplary the achievement of these objectives gender equality has taken a hit thanks companies for public contracts and the risks facing the absence of data, at to the COVID-19 pandemic, with many granting of subsidies. least outside the scope of the rating, women taking on a heavier load of the to establish the findings and monitor domestic burden and disproportionately progress. Hence, at the European impacting women in the workforce. For company policies: Union level, the idea of establishing Antonio Guterres, UN Secretary-General, a mandatory reporting on salaries warned that progress made in recent • Take stock of the situation by using the inspired by the French Pénicaud index. decades is at risk of being nullified thanks Pénicaud index as an opportunity to As the AFECA, Terra Nova and the HCE to the pandemic (8). Policy-makers inform and raise awareness. propose to enrich the Pénicaud index must prioritize gender equality in the • Set clear objectives for gender diversity with a status report on gender diversity post-crisis period through deliberate with a timetable and regularly share the in management positions, it does not legislation and policies that reshape results, progress and obstacles. seem absurd to propose to the European public attitudes and accelerate progress. • Recruit more women in so-called Commission to extend its future equal male fields or professions by adopting pay index in the same way. It is also important to integrate gender a proactive policy in schools and and an intersectional perspective into universities and a sincere and objective crisis stimulus packages: the post- "female friendly" policy (work-life How are companies crisis period should focus on green balance, remote work, flexible hours, etc.). reacting? initiatives and redistribute resources in • Facilitate access for women to an equitable manner. executive management programs such Companies are increasingly aware of as MBAs and EMBAs in order to catch the need to act, and although their Viviane de Beaufort and Martin Richer up on their careers (especially after a motivations may vary, many have of Terra Nova (9) have proposed several period of maternity)*. already taken steps to promote gender solutions for decision-makers to support • Develop in-house mentoring equality. Sodexo, which has long been and encourage gender equality in the opportunities and short programs on an exemplary company in this area, and workplace. soft skills to combat minority postures*. more broadly in its diversity policy, has

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• Encourage participation in women's The issue of gender diversity Additional resources or mixed professional networks, both systematically opens up to the broader internal and external, as women still issue of diversity, which is lacking in Loi quota Zimmermann-Copé ? L’heure neglect these career levers (due to lack France, where the elite leaders are du bilan Viviane de Beaufort, Journal of time). largely from the same background. Spécial des Sociétés 27/08/2018 • Ensure that promotion criteria counter Only a more inclusive and diversified gender bias and ask managers to leadership will allow us to take up the Les Femmes en 2049, Viviane de encourage women to apply for jobs. difficult challenges our world is facing Beaufort, interview de Dominique Nora, because it allows us to think out of the Nouvel Observateur, 13 avril 2021 *The starred measures are also strong box, it requires us to see, listen to others levers for improving socioeconomic, and accept each other’s differences AFTER loi Copé/Zimmermann au- cultural, and age diversity. rather than conforming to the same delà d’une Féminisation des Boards, mold. The COVID-19 pandemic is not just l’impératif d’un modèle global égalitaire, Gender equality has come a long way, a crisis, but an upheaval of the system Viviane de Beaufort, Journal Spécial des but now we must all be more ambitious. that has brutally accelerated. A recovery Sociétés - 10 mars 2021 – N°19 It is with inclusive, diverse leadership that can only be achieved by integrating CSR we can best face the complex challenges at the heart of all public and corporate our world faces as we emerge from the strategies. COVID-19 crisis and continue to battle the climate crisis.

References 1. Boulouta, I. (2013). Hidden 4. Richard A. Bernardi, Susan M. 7. « Élisabeth Moreno : Les préjugés ont connections : The link between Bosco, and Katie M. Vassill (2006) la vie dure », Le Figaro, 26 janvier 2021 board gender diversity and “Does Female Representation on 8. The impact of COVID-19 on corporate social performance. Boards of Directors Associate With women. (2020). United Nations Journal of Business Ethics, 113(2), Fortune’s “100 Best Companies to entity for gender equality and 185-197. Work For” List?”, Business & Society, the empowerment of women 2. Zhang, L. (2020). An institutional Vol 45, Issue 2, pp. 235 – 248 (UN Women). United Nations approach to gender diversity and 5. Michel Ferrary. Observatoire Skema Secretariat. Available https :// firm performance. Organization de la féminisation des entreprises, www. unwomen. org/-/media/ Science, 31(2), 439-457. 2019. headquarters/attachments/ 3. Bear, S., Rahman, N., & Post, C. 6. La féminisation des instances sections/library/publications/2020/ (2010). The impact of board de direction des entreprises policy-brief-the-impact-of-COVID- diversity and gender composition passe par une évolution du 19-on-women-en. pdf. on corporate social responsibility cadre réglementaire. KPMG. 9. Pour un quota de femmes dans and firm reputation. Journal of https ://home.kpmg/fr/fr/home/ les instances de direction des Business Ethics, 97(2), 207-221. media/press-releases/2019/06/ entreprises, rapport Terra Nova, etude-femmes-gouvernance- Viviane de Beaufort et Martin Richer, feminisation-entreprises-evolution- 8 mars 2021 reglementation.html

KNOWLEDGE/6 1 WHAT WOMEN WANT (FROM THEIR OFFICE SPACE)

he world is beginning to cautiously men and women responded differently, emerge from the COVID-19 finding that men generally had a more T crisis, with vaccines increasingly positive experience. available and stay-at-home orders slowly lifting. Millions of people around In the third and latest iteration of “Le the world began to work from home due bureau post-confinement” (the office to the COVID-19 crisis, and now some of after the lockdown), over 1800 people them might be looking at going back to participated in the survey between April the office in the not-so-distant future. 21st and April 30th, 2021. Of these, 58% Ingrid Nappi is a professor of real estate How are people reacting to this? What were women, with an average age of 39 economics and real estate management will the office look like after the COVID-19 years old. Respondents were from Paris at ESSEC. She holds the Real Estate and crisis? Professor Ingrid Nappi, chaired (25%), greater Paris (32%) and elsewhere Sustainable Development Chair and professor of the Workplace Management in France (43%). There were more men the Workplace Management Chair. Her Chair, has studied the future of in managerial or director positions than research focuses on real estate markets offices and what the post-COVID-19 women, with women more often in team and the management of corporate office could look like. In her latest member roles. real estate and workspaces. She has research, she studied how employee published in several journals including preferences differ by gender and by age. Before the first confinement in March Real Estate Economics, Urban Studies 2020, most participants worked in and Journal of Corporate Real Estate a space with an assigned workplace Research. Her latest works include Who participated? (90%), with a smaller number in a L'immobilier d'entreprise, analyse flex office (6%) and 4% in another économique des marchés et Révolutions The Workplace Management Chair arrangement (coworking, remote de bureaux. has conducted three studies to date work). More women had previously focusing on the future of the office after been in the habit of remote work (54% Written with Julia Smith, the confinement, as the lockdowns of women vs. 45% of men). With the Editor-in-Chief of ESSEC Knowledge. and closures are referred to in France. forced pivot to remote work in March In these, Ingrid Nappi surveys French 2020, 55% of men in an employee office workers on what their workspaces position reported a positive experience, looked like before and during the compared to 44% of women in similar lockdown, and what their expectations roles. Notably, men had a more positive are for the present and future. In the third experience - perhaps linked to the version, she delved into the data to see if increased mental load women tend to

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experience, with household duties and work to a greater extent than men, while than those in teamwork roles. Women in childcare. more men noted their preference for leadership roles also felt like they were flex office. Additionally, women wish to more effective during the confinement While employers have previously been spend more of their work week working and were better able to organize their wary about productivity in remote work, from home than do men, who reported work, compared to women in non- the results suggest that those fears are a preference at another, non-office managerial roles. While there was no without basis: 44 % of the respondents location (such as coworking spaces). real difference concerning their desire to felt like they were more productive head back to the office, female leaders working from home. Did this impact how men and women reported a preference for individual see their office space? Yes: more men offices or flex offices, while female tended to see the office’s main function employees reported a preference for Is the future of as a space for creativity, whereas closed, shared offices and remote work. the office gendered? women tended to see the office as a Female managers were also more likely spot to facilitate social interaction and to prefer continuing to work remotely. This period of forced remote work has participation in organizational life. And This may be due to the fact that those caused many people and employers what about going back to the office? in more senior positions may have work to reflect on the future of offices and There were significant differences here tasks that are better suited to remote workspaces. Some have sounded the too: men were more likely to report that work, and also that they may have death knell for office spaces, while they wanted to go back to their prior the means to afford more space and a others are keen to get back to it. Dr. office spaces. dedicated workspace compared to more Nappi examined people’s expectations junior employees. of the office in the present time and for the future as well. She found that Does your professional the COVID-19 crisis has indeed shaped status matter? Generation office people’s expectations, with particular emphasis on being able to safely distance Dr. Nappi and her research team went The findings also varied by age group. from colleagues and the adaptation of even further and explored if a women’s The older generations (Gen X and the collective spaces to respect hygiene and hierarchical position influenced her baby boomers) reported the most safety regulations. responses, comparing women in positive experience working remotely leadership roles (34%) to those in during the lockdown, while millennials Dr. Nappi also identified gender team member roles (65%). Before the (Gen Y) and Gen Z had a more difficult differences in what people are looking lockdown, women in leadership roles time. The youngest generation, Gen Z, for from the office. Women prefer remote worked remotely to a greater extent also reported having the hardest time

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organizing their work during the crisis, seem perfectly suited for remote work: What does this mean for with 32% reporting having had trouble, but participants reported wanting to the future of the office? compared to only 8% of baby boomers. build their professional network and develop their skills, which is challenging Not so fast to those who are saying What’s more, the Gen Z employees noted at a distance. Additionally, younger that COVID-19 has heralded the end of more of a preference for returning to the workers may be working in smaller the office - but nor is everyone keen to office in person and spending more of spaces or in family homes without a get back. Male and female employees their work time at the office compared dedicated workspace, another barrier reported different preferences for to their older counterparts. This may to productivity. their work space after the crisis, with be surprising considering we view Gen women preferring to continue remote Z as digital natives who, at first glance, work and seeing offices as a space for

64/KNOWLEDGE fostering social connections, whereas agrees on the office’s social benefits: the different office space options, and men see it as a creativity source. There conviviality and shared experiences that flexible work hours. The office isn’t dead- are also differences between different we find there. but it does need to be reinvented. generations and even professional categories, with younger workers and This suggests that employers should To learn more about this study and those in non-managerial roles more keen take into account the differing needs others conducted by the Workplace to resume in-person work and do more and varying demographics of their Management Chair, check out their work in person. These varying needs and employees when planning next steps of website. professional goals tell us that there is no the return to the office. Employers could one ideal office and no one-size-fits-all consider offering different options for option. On the other hand, everyone employees, such as a hybrid model,

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