Companies can continue to thrive with different business models

Arnaud NAUDAN [TBS Education 2006]

CEO of BDO France

Arnaud is currently Chairman of the Management Board of BDO France, the world's 5th largest audit and consulting network. He presides over the French entity, which today represents 1,800 employees and sales of 200 million euros. He graduated from TBS Education in 2006 and spent his entire career in auditing firms, starting in Luxembourg, before moving to PwC in New York and joining BDO in 2012. Little by little, he worked his way up through the company's ranks until he was appointed head of the Paris site in 2019. During the Covid crisis, he was keen to help BDO clarify its positioning, to have a clear strategy and a real positive impact in society, and so worked to be elected Chairman of the Executive Board, since January 1, 2021.

Hello Arnaud, first of all, thank you for agreeing to answer this interview and for taking the time to share with us your vision of this highly topical subject, 'Sobriety and business'. In recent months, the word 'sobriety' has come to the fore as a result of global environmental and economic factors: the CoviD pandemic, massive awareness of environmental challenges, the energy crisis... As an individual first of all, Arnaud, what does this evoke in you?

Personally, I wasn't at all aware of these issues before Covid. I had a real and profound awakening during the confinement period in 2020. I had a very bad experience of confinement, I do a lot of outdoor sports and mountaineering, and it helped me to take a step back. When you spend time in the mountains, they are a strong marker of global warming. That's when my ecological awareness really kicked in, and I started making decisions to limit my own impact, like adapting my diary to avoid travel. I travel a lot less than I used to.

In my professional capacity, this is also when I asked myself what BDO was for. How can we ensure that this company makes a positive contribution? How can we continue to deliver profitability for our shareholders, but also share value better, and contribute in a general way to awareness and the associated efforts?

One of the aims of being a company with a mission is to make a company's CSR ambitions central, rather than confining them to a department on the periphery of its strategy.

What did this mean for BDO?

This is where the idea of adopting the quality of a company with a mission was born. This is the most ambitious way of aligning performance, common good and positive impact.

One of the aims of being a company with a mission is to make a company's CSR ambitions central, rather than confining them to a department on the periphery of its strategy. This ambition to reduce negative externalities is at the heart of the strategy.

For every strategic decision, we now look to see if it's in line with the mission we've set ourselves. This is the main change, the very revolution in governance. We talked a lot about it internally at the beginning, and when asked 'What is this?

In theory, if we do the job right, it should change everything.

In our four main professions - auditor, chartered accountant, lawyer and consultant - the common thread is that we have the ear of management. They trust us, and I'm convinced that it's through companies that things can change. Public authorities can introduce regulations, individuals can take steps to reduce their impact, but the main link in social cohesion is the company. So it's essential that companies, via their managers, commit to the transition. Our ambition is to capitalize on this relationship we have with companies to raise their awareness and encourage them to adopt more responsible, more ethical and more sustainable models.

How is it that this new status and sharp shift towards a new strategy has been received and embraced, at all levels of the BDO organization?

When we voted to adopt the "société à mission" status, the vote was 96%. There was very strong support for this project in the governance. It was a collaborative project with all stakeholders to design this raison d'être. As a result, it was well received and welcomed by our employees. I feel that we have met an expectation. It's not just a fad, it's a real expectation, particularly for young graduates, that the company should have a mission.

How do you manage the risk of some people seeing this as nothing more than an opportunistic decision, a strategy to get noticed?

The approach was sincere, so I absolutely didn't want us to be accused of 'mission washing', to hear that it was just a PR stunt.

It's a restrictive system that requires investment: we've recruited people to measure our impact, and we've structured our governance with a mission committee made up of a mix of external personalities and employees with real power, with the role of challenging us in our decisions. I often use the expression 'stakeholder capitalism', which replaces 'shareholder capitalism', enabling companies to open up and integrate their stakeholders into their strategic decisions.

What stands out for companies, and what has really come to the fore since the scorching summer we've had, is that this issue is now inevitable: either the manager is convinced and the company will change the way it operates to limit its impact, or the manager is not convinced but will become aware that this is becoming a business issue. Large groups in particular, but many other companies, are defining a trajectory to reduce their impact on biodiversity, carbon, etc., and this will have a knock-on effect on all companies.

I often use the expression 'stakeholder capitalism', which replaces 'shareholder capitalism'.

How can we reconcile our modern society's legitimate desire for growth, shareholder remuneration and innovation with the goal of sobriety?

That's the complexity. Of course, with BDO I have major growth targets, and I've sometimes wondered whether I'm being inconsistent in advocating a responsible model while at the same time wanting to achieve sustained growth.

The question of degrowth, which until a few years ago was seen as an unrealistic vision in the corporate world, is now beginning to be raised on the boards of very large groups. Personalities such as Jean-Marc Jancovici argue that degrowth is programmed, due to the limits of our resources.

I believe that companies can continue to prosper while having models that are different. Numerous studies show that many companies that have adopted responsible practices are performing better today, recruiting better via a stronger employer brand, etc. In my opinion, this is not irreconcilable. In my opinion, these are not irreconcilable. I think we can grow and find new markets as long as, with every decision, we ask ourselves whether we are consistent with the objectives we have set ourselves.

What advice do you have for business leaders who are convinced of the need to change their business model, but want to avoid the notorious 'mission washing'?

The first thing is that it has to come from the manager. He or she must be convinced, support the project and embody it.

Secondly, consistency. In every strategic decision, we must always ask ourselves whether the direction we are taking is consistent with our mission and values. This is what makes the status of mission-driven company so effective.

From a corporate point of view, a service company like BDO can ask itself how it can consume more soberly. How do we get this message across internally? How can we create an effective corporate culture in terms of sobriety?

Everyone is concerned, but we're in a service industry that doesn't consume a particular resource as some industries or agriculture do.

Most of our environmental impact comes from travel. In our carbon footprint, 80% of our carbon emissions are linked to business travel. For me personally, I've gone from traveling three days a week a few years ago, to just one trip by plane to San Francisco in 2022. That's the rule for associates: we only go if it's a very important business issue. The associates travel a lot less, and we realize that we're still doing business and achieving our objectives. This proves that it was irresponsible to fly to Zurich or London for a meeting. We do the meetings by video, everyone is less tired, and we can devote ourselves to other, more virtuous things. I also forbid flying when there's a train solution.

A final word on the theme of sobriety?

The important thing is to understand the subject. The first step is to measure its impact: both positive, such as its economic and social contribution, and negative, via a product analysis for example. How is my product made, how is it transported, how can I implement measures throughout my value chain to limit its impact?

Interview by Grégoire ANTOINE TBS Education 2005