The theme of sustainability crosses the business world and is accelerating. It invites companies to ask themselves about their raison d'être or their mission, combining profitability and sustainability. A French solution, the mission-based company.

The mission-driven company, a business model committed to the common good

The terms sustainability, sustainable development or sustainable value creation are increasingly used by the business world in the context of corporate social responsibility (CSR). A company is considered sustainable when it subscribes to the principles of economic efficiency, social equity and environmental responsibility, without compromising the ability of future generations.

To implement this vision, they innovate and bring new solutions concerning climate change, but also the preservation of biodiversity or social cohesion. In this spirit, French companies have the opportunity to express their commitment to this sustainable vision, by committing to a "raison d'être" or "mission" framework set up by the Pact law via mission-based companies.

The "raison d'être" and the "mission", the components of the mission-based company

The "raison d'être" defined by the Pact law is a dynamic of thought without real constraint for which the company formulates its commitment to sustainability, by activating the means to materialize the said commitment that it intends to affect in the realization of its activity. This declared will, without going so far as to include it in the company's statutes, is a structuring axis for the company. It is a way to open a space of dialogue with the shareholders on the evolution of the company towards sustainability (article 1835 of the Civil Code).

As for the "mission" enshrined in the Pact law, the company is self-binding in its unequivocal positioning via explicit and irreversible commitments. These commitments on the "raison d'être" are written into the company's articles of association. They are measured and monitored. Thus, the "mission" becomes a constraint that the company gives to itself. Moreover, it is transmitted over time, regardless of the changes in management or shareholders (article 1835 of the Civil Code).

The company with a mission, a thoughtful commitment that highlights the challenges of innovation and sustainability

The evolution towards this new business model requires companies to question their usefulness in the years to come and to make a long-term projection of their destiny. It requires in a strategic formulation, a re-interrogation of their purpose in order to elaborate a new backbone around which it wishes to pivot for :

Participate in the sustainable economy necessary for the planet,
Improve its operational and financial performance.

Led by the executive, this maturation process, which is paced by iterations of reflection, is carried out in a spirit of transparency around a renewed shareholder dialogue, reinforced by the collective, which emphasizes the challenges of innovation and sustainability. Thus, the company of tomorrow is no longer reduced to sharing profits in the common interest of shareholders. It also becomes a contributor to the common good.

How to become a mission company?

In France, by the 2019 Pact law, the mission company is a "quality" of company. It does not need to change its legal form to become one. However, it must:

Change its status to include the company's raison d'être integrating the social and environmental objectives it sets for itself in its activity.
Create a mission committee in charge of monitoring and challenging the achievement of the announced objectives while feeding the strategic thinking and following up in an annual report.
Declare its status as a company with a mission to the clerk of the commercial court. This registration is visible in its K-bis and the Sirene directory of Insee. It allows to make this quality opposable to third parties such as customers, partners or public authorities.
To be audited every two years by an independent third party organization (ITO) accredited by the French Accreditation Committee (COFRAC). This body will give an opinion as to whether or not the company is meeting the objectives it has set itself. The opinion of the organization must also be published on the company's website and remain accessible for at least 5 years. If the objectives are not met, a procedure for the withdrawal of the quality of mission company can be carried out with the president of the competent commercial court by the stakeholders.
Self-commit to delivering a high level of transparency to its stakeholders.

Abroad, this business model also exists. These are the "Benefit corporation" in the USA or the "Société benefit" in Italy. ‍ In France, in the first quarter of 2021, there were 154 mission companies compared to 124 at the end of 2020. They are distributed for 79% in service activities, 11% in trade and 10% in industry.

Of the 18 companies in finance, 10 are in the investment sector. Source: Observatoire des Sociétés à Mission barometer. In France, the API Sirene will include the new "mission-driven company" variable in its fields at the end of 2021.

The objectives of mission-based companies: economic performance and contribution to the common good

For investors and financial analysts, these new forms of enterprise are often highlighted by their business model held together by the principles of economic performance and contribution to the common good.

Thus, these new business models are respectful of the environment, of populations and of the planet, by fighting against climate change and for decent work. Moreover, they take into account the legitimate interests of stakeholders on a permanent basis and aim to meet environmental, social and scientific challenges through the company. They also share the conviction that modern business is not just about sharing profits in the common interest of shareholders, but that it also contributes to the common good.

The information used in the evaluation of the sustainability of a company

To assess and measure the sustainability and performance of a sustainable company, the analysts' technique consists in identifying and selecting a certain number of indicators based on three dimensions: economic, environmental and social. In this assessment, they are interested in the company's strategy, its CSR policy and its ability to develop its offer, actively contributing to the common good of the planet.

Some of the information most commonly used in this assessment includes:

The Extra-Financial Performance Declaration. Mandatory for listed or unlisted entities with net sales or balance sheet total exceeding 100 million euros and employing more than 500 people,
The EPI-II environmental performance index aims to compare the environmental performance of countries,
Valuations of non-financial companies,
The questionnaires sent out,
...

Evolution of accounting combining financial, human and natural capital

In accounting, in order to evaluate the sustainable and financial assets of companies, new models are being developed around the IDEA method (Indicators of Sustainability of Agricultural Holdings) or the CARE model (Accounting Adapted Renewal Environment)

In its design, the CARE :

Takes the principles of traditional accounting focused on financial capital and extends them to natural and human capital with quantitative data. The guiding principle of valuation is that when a company degrades capital, it bears the responsibility to repair it.
Considers the environment as a liability, a loan to be repaid or a capital to be maintained under all circumstances. The cost corresponding to the degradation of the capital is recorded in a line "natural depreciation" or "social depreciation".
Promotes the "Triple Depreciation Line" (TLA) according to the 3 P's method - People (human), Planet (natural), Profits (financial) as a capital preservation tool. These lines directly affect the company's income statement.

This accounting method developed on a valuation based on the cost of maintaining and renewing environmental and social capital, encourages economic actors to :

Re-examine their business models,
Define their social and environmental impacts,
Identify action levers for a more sustainable development.

What conclusion?

The theme of sustainability crosses the business world and is accelerating. The notion of sustainable value creation, in order to attract talents, consumers and investors, implies for the company to emphasize its responsible behavior in taking into account the common good of the planet in a long-term vision.

Moreover, it forces companies, without being in contradiction with their pursuit of profit, to change the way they consider products, services, technologies, processes and business models in order to give back to the planet more than they consume.