A New French Paradox?
French large caps outrank competitors in corporate citizenship
by Nicholas Dungan and Aurore Pasquet
Leading French companies are embracing a more complete vision of corporate citizenship than many of their Anglo-American counterparts, yet this remains underappreciated outside France.
The CEOs of some of France’s most prominent global firms are championing a form of corporate citizenship that encompasses, but surpasses, ESG, CSR, and even purpose. This represents a singular departure from the prevailing Anglo-American fixation of relying on investor indicators like ESG as a panacea for the ills of traditional shareholder capitalism.
At the French equivalent of Davos, the Rencontres économiques d’Aix-en-Provence in July, one French CEO after another made clear that they are motivated by a sense of broad-based corporate citizenship.
French multinationals have adopted a Gallic inclusiveness
Why have French companies not achieved more widespread recognition of their position at the forefront of corporate citizenship?
First, French CEOs seem to have rejected atomistic metrics and devised their own purposeful business strategies, the societal impact of which defies easy measurement. This is perhaps French business leaders’ expression of a form of l’exception française.
Beyond that, in French society, serving the general interest is viewed as a leader’s duty but also as a point of honour. Private-sector companies included. Not the same elsewhere.
In addition, in France, and especially in Paris, leaders from politics, business, finance, academia and civil society frequently share the same educational backgrounds and frequently meet: their values are not unaligned.
Lastly, in the country of Cogito ergo sum, it’s just possible that French corporate leaders may have out-thought the competition.
It’s the large caps that stand out
On paper, the overall ESG performance of French corporates might not appear exceptional. places them slightly ahead of American counterparts and on par with British and German peers.
But on closer examination, France is unique: many of its largest companies – Hermès, Kering, L’Oréal, Air Liquide, and Schneider Electric – are also its most vocal and forward-looking with respect to sustainability and inclusiveness
Only one of the United States’ ten largest companies by market capitalisation – Visa – can be considered a leader by the same criteria.
Indeed, no other country can claim a similar level of corporate citizenship leadership.
Legrand, whose 2022-2024 far exceeds industry standards and incorporates UN Sustainable Development Goals and circular economy principles, is a further example. Another is Veolia, which has implemented initiatives spanning eighteen progress indicators that demand accountability to all the company’s stakeholders and which measures success based on financial and non-financial criteria in what the company terms la performance plurielle.
The ideas behind France’s leadership in corporate citizenship don’t entirely derive from Franco-centric experience. The French CEO Hubert Joly succeeded in turning around the troubled US electronics retailer Best Buy, as he describes in his captivating book, . Joly recounts an almost Damascene conversion from the hard-core shareholder capitalism he automatically espoused as a McKinsey partner to the stakeholder principles he discovered through actual practice in leading a business.
ESG is incomplete
The French approach also suggests the ways in which ESG fails to measure non-financial performance to its broadest extent. These French companies’ more inclusive standards of corporate citizenship reveal ESG as a less than fully developed, shareholder-oriented, box-ticking exercise. ESG covers what a company has done, not really where it is going. ESG therefore reflects little in the way of strategic foresight or thought leadership. By rewarding conformity to pre-set criteria, ESG can encourage greenwashing and hinder authentic, lasting transformation.
Far more than ESG on its own, the French firms’ all-embracing components of corporate citizenship enshrine the primary determinants of corporations’ long-term outcomes.
What can be learned from French companies’ determination to play a positive role within society and apparent refusal to rely on ESG as the sole measure of their non-financial achievements?
First, performance and purpose are not only compatible but also complementary, at least so long as they are anchored in a single strategy. Second, companies will be rewarded for their corporate citizenship, both by the market but also by other stakeholders – employees, customers, suppliers, the public, the business media – so long as that corporate citizenship is authentic and not contrived. Last but not least, genuine corporate citizenship — companies acting for all of society — requires continuous improvement. CEOs cannot assume that their firms’ corporate citizenship will ever be achieved, or finished, or over — no more than any ordinary citizen could do.Vive la différence!