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The Omnibus Package and the CSRD and CS3D directives : what you should know and do

Maria Del Peso — Mon, 24 Nov 2025 11:37:00 +0000

A pivotal date for ESG regulation
November 13, 2025, will be remembered as a pivotal date for European companies and ESG regulation. On that day, the European Parliament voted to simplify the CSRD and CS3D directives, with 382 in favour and 249 against. This decision significantly alters companies’ social and environmental transparency obligations, narrowing their scope to the largest organisations and removing the requirement for a transition plan aligned with the Paris Agreement. To fully understand these changes, it is useful to revisit the history of these two directives.

The Origins: NFRD and the path to CS3D
The story begins in 2014 with the Non-Financial Reporting Directive (NFRD), the first European legislation aimed at enhancing corporate ESG transparency. It required large companies to disclose information on their environmental, social, and governance impacts. In April 2020, European Commissioner Didier Reynders introduced a legislative proposal to expand corporate responsibility for human rights and the environment across Europe, laying the groundwork for what would become the CS3D.

CS3D and CSRD: strengthening corporate responsibility
The CS3D, or Corporate Sustainability Due Diligence Directive, was adopted on April 24, 2024. It required companies with more than 1,000 employees and a turnover exceeding €450 million to implement vigilance mechanisms to identify and prevent ESG risks throughout their value chain. Simultaneously, the CSRD, or Corporate Sustainability Reporting Directive, adopted under Directive 2022/2464, extended non-financial reporting obligations to all large companies—initially those with over 250 employees and a turnover above €50 million, encompassing roughly 50,000 companies. The objective was clear: to strengthen transparency and accountability of European companies in line with the Green Deal.

The Omnibus package and pushback
In February 2025, the European Commission proposed the Omnibus package to simplify and streamline the CSRD and CS3D directives. This initiative faced criticism from many NGOs and civil society actors, who saw it as favouring industrial lobbies. Some business representatives, such as French Medef, argued that the duty of care was overly ambitious given operational realities. In April 2025, the ‘Stop the Clock’ mechanism postponed the entry into force of the directives, giving companies additional time to prepare. Waves two and three of the CSRD were delayed by two years, and the CS3D transposition by one year.

Scope reduction and new thresholds
On June 23, 2025, the Council of Europe and Member State representatives approved the Omnibus package, significantly reducing the scope of obligations. The CSRD now applies only to companies with more than 1,750 employees and a turnover exceeding €450 million, while the CS3D applies only to companies with over 5,000 employees and a turnover above €1.5 billion. Additionally, the duty of care is limited to direct partners, and transposition into Member State law is scheduled for July 26, 2028.

Final vote and its implications
On November 13, 2025, the European Parliament confirmed these adjustments. The final vote—382 in favour, 249 against—signals the EU’s retreat on certain ESG obligations, viewed by some experts as a win for industrial players while raising concerns about the future of European regulation. The transition plan to the Paris Agreement, initially intended to guide companies toward climate-compatible economic models, was removed, intensifying the debate between competitiveness and social responsibility.

Opportunities amidst change
Despite these setbacks, the phased implementation of the directives until 2028 provides companies with time to adapt and strengthen their ESG strategies. The CSRD and CS3D remain essential tools for promoting transparency and vigilance, representing an opportunity for companies to position themselves as environmentally and socially responsible. The history of these directives highlights both the tension between regulatory ambition and economic reality, and the key role the European Union plays in shaping a sustainable framework for business.

What to do in such context?

Even if your company is not yet directly subject to the CSRD, managing an ESG approach and publishing its results remains essential to:

Access favorable financing
Stand out in the market and respond to tenders from major clients
Meet stakeholder expectations (clients, investors, consumers, insurers, employees)
Strengthen your employer brand

In this context, we recommend:

Build or update your ESG roadmap
Launch or update your ESG reporting
Extract value from the data collected
Engage your teams and stakeholders to enhance your ESG efforts
Turn material risks into strategic decisions and concrete actions to make your activities resilient, innovative, and attractive

➔ Contact us to define your sustainability strategy and/or your non-financial reporting.

Swimming cities: water at the heart of tomorrow’s urban life

Maria Del Peso — Thu, 20 Nov 2025 11:39:29 +0000

In recent weeks, France, like much of Europe, has faced record-breaking heat waves. One thing is clear: water is an essential resource for adapting our cities to new environmental conditions. Whether it’s drinking water, wastewater, groundwater, rivers, or seas, every drop counts in ensuring both the well-being of residents and the resilience of urban areas.

In this context, the reopening of swimming in the Seine in Paris is both a powerful symbol and a concrete example of urban adaptation. Banned since 1923 due to pollution, swimming has been possible again since 5 July 2025, thanks to an ambitious clean-up programme launched ahead of the Olympic Games and supported by the City of Paris. Beyond its symbolic value, this initiative addresses major climatic, social, and urban challenges.

Rethinking public space and social inclusion
Swimming in the Seine perfectly illustrates the ambition to rethink public spaces, restore natural urban ecosystems, and promote social equity. Providing clean, accessible, and refreshing places encourages well-being, social connection, and inclusion. This is especially important for children and families who remain in the city during summer: in the Île-de-France region, one million children do not leave for holidays each year. Opening the Seine to swimmers helps make the city more welcoming and enjoyable for everyone.

Following European examples
France is beginning to catch up with other European countries. In Switzerland, Germany, the Netherlands, Vienna, and Copenhagen, river swimming is already part of daily life. Inspired by Paris, other French cities such as Metz, Lille, and Limoges are also exploring ways to make their waterways accessible for swimming, reflecting a growing desire to reconnect urban populations with rivers.

Balancing leisure and logistic activities
The Seine is not only a recreational space—it is also a major logistics artery. Every year, over 10 million tonnes of goods pass through it. River transport, a low-carbon alternative to road transport, already removes 400,000 lorries from the roads and saves 90,000 tonnes of CO₂ annually. Opening rivers to new uses doesn’t mean pitting leisure against logistics; it means imagining smart, sustainable, and scalable ways for both to coexist. The Seine demonstrates how nature, mobility, and quality of life can flourish together when guided by a long-term urban vision.

Water at the heart of urban life
These initiatives show that cities can be reimagined with water and natural spaces at their core. Climate and social challenges can become opportunities: creating places for relaxation, social interaction, and respite while reducing carbon footprints and enhancing biodiversity.

The question now is what the future holds for our waterways. How can we continue to envision cities where water is no longer just a logistical or environmental concern, but also a source of well-being, inclusion, and social cohesion? By learning from European experiences and continuing efforts to clean and redevelop urban rivers, our cities have the potential to become more sustainable, resilient, and enjoyable places for everyone.

To what extent are your activities dependent on water resources ?
Let’s figure out together how the evolution of water resources can put your business model at risk and/or which opportunities your organisation can grasp in that matter.

➔ Contact us for an ESG risk assessment.

Osmotic energy: a silent revolution driving sustainable growth

Maria Del Peso — Fri, 03 Oct 2025 10:41:30 +0000

What if the future of energy didn’t rely solely on solar, wind or hydrogen, but also on… the meeting of freshwater and seawater? It may sound futuristic, yet osmotic energy—available 24/7, fully renewable, and abundantly present across the planet—is now entering a phase of rapid industrialisation.
As companies search for concrete solutions to meet their climate targets while maintaining economic performance, this often-overlooked energy source could become a major strategic asset. And it is precisely the kind of innovation we analyse every day to support our clients in the sustainable transformation of their business models.

A clean… and nearly infinite energy source
Osmotic energy, sometimes called blue electricity, is generated when freshwater meets saltwater. This natural phenomenon creates a pressure difference that can be harnessed to produce electricity. What scientists understood for decades—but could not exploit—has now become possible thanks to a technological revolution: nanofluidics. As physicist Lydéric Bocquet, CNRS research director and co-founder of the start-up Sweetch Energy, reminds us, recent advances now make it possible to deploy membranes capable of producing energy in a stable, clean and continuous way—with a global potential equivalent to 1,000 to 2,000 nuclear reactors.

Why this innovation matters for companies
In a context where organisations must simultaneously reduce emissions, secure their energy supply and control costs, osmotic energy opens new horizons:

A non-intermittent renewable energy source
Unlike solar or wind power, it operates 24/7.
➔ A major opportunity for activities requiring constant energy.
An energy source with minimal environmental impact
No combustion, no emissions, no visual disturbance, no massive land use.
➔ Ideal for companies pursuing a credible low-carbon strategy.
Strategic value for territories
Coastal and river sites become areas of strong energy potential.
➔ New development opportunities for industrial and logistics players.
A strong contribution to CSR and CSRD objectives
Integrating innovative energy solutions strengthens sustainable transformation… and extra-financial performance.

The right moment to pay attention?
• European, American and Asian laboratories are investing massively.
• Start-ups are beginning to industrialise ready-to-install modules.
• Pilot territories are assessing the first production capacities.

The momentum is building, comparable to solar energy in the 2000s. For companies, now is the key moment to understand, anticipate and identify future business opportunities.

How we support our clients as energy innovations emerge
As a consulting firm specialised in ecological and social transition, our role is to help organisations turn these innovations into operational levers:

➔ Strategic monitoring and energy foresight
Identify the technologies that can create a long-term competitive advantage.

➔ Evaluation of opportunities for your sector
Where could osmotic energy fit into your value chain?

➔ Business model transformation
Shift from a constraint-driven mindset to an opportunity-driven approach.

➔ Support for decarbonisation and sustainable performance
Integrate innovations into a coherent, credible and measurable plan.

A signal that isn’t so weak
Far from being just a scientific concept, osmotic energy is a perfect example of an innovation “ready to accelerate.” It embodies what we deeply believe: the transition is not only an environmental imperative—it is a powerful engine of opportunity for companies. And those who anticipate it today will be the leaders of tomorrow.

Would you like to explore the energy innovations that could transform your business?
We help you turn them into a driver of sustainable performance.

➔ Contact us for a sustainability assessment of your business.

Climate change and natural disasters: the last call for business leaders’ mobilization to help avoid the worst

Maria Del Peso — Tue, 14 Sep 2021 15:45:23 +0000

Deadly floods in Germany and Belgium, gigantic unstoppable fires in Siberia; North America, Greece, Turkey, Algeria, Spain… Extreme climate phenomenons were at their peak on August 2021 when the international scientific community released their updated observations on the state of climate. The latest report from the Intergovernmental Panel on Climate Change (IPCC) strongly echoes with the natural disasters now anchored in our daily life. More precise and reliable, this latest publication also conveys more alarming messages. At the current pace, we won’t be able to reach 2015 Paris Agreement objective to limit by 2100 the rise in global temperature to 1.5°C, compared to pre-industrial levels. Neither below 2°C. In addition, the IPCC experts clearly correlate human action with climatic trends caused by greenhouse gas emissions. It is a red flag. And human responsibility is definitely widely acknowledged.

So, what can decision-makers take away from the IPCC’s work? What is in their hands to help avoid the worst? Without waiting for further reports with official recommendations, we can affirm business leaders still have room for manoeuvre to lead the dramatic changes needed, here and now, to prevent a world in permanent crisis.

The IPCC does not carry out its own research, but gathers studies that enjoy broad consensus among the international scientific community. It aims at forming the basis for scientific undisputable assessments, prior to political choices to be made by governments and private stakeholders. What the IPCC recently published is the first part of its sixth assessment report, Climate Change 2021: The Physical Science Basis.

Written by 234 scientists from 66 countries, the report is based upon over 14,000 studies and focuses on the state and trends of the climate. Reports on the Impacts (on natural and agricultural ecosystems and human societies) and on Risk Mitigation (with suggestions on ways to reduce greenhouse gas emissions) should follow on February and March 2022 respectively, with a final Synthesis for Policymakers in September 2022.

According to the IPCC experts, observed warming is unprecedented in more than 2000 years. It is driven by emissions from human activities, with greenhouse gas warming partly masked by aerosol cooling.

* IPCC AR6 Report

Climate change is already affecting every inhabited region across the globe, with human influence contributing to many observed changes in weather and climate extremes.

The report focuses on 3 possible climate futures. But we should keep in mind they do not have equal probabilities at all:

The 1^st scenario (with warming limited to 1.5°C) would require a drastic reduction in global emissions starting today at a very high rate.
- It has a zero economic, social and political probability

The 2^nd scenario (with warming rising to 2°C) considers very severe policies implemented to restrict the use of fossil fuels for example.
- It has a low probability, but if these policies were to be implemented in the next 10 years at global level, this future should not be ruled out.

A 3^rd scenario (with warming going up to 4°C) corresponds to the historical trajectory of greenhouse gas emissions since 1992. In other words, to achieve it, we just need to keep on doing what we are doing today…

Whatever the emissions scenario considered, global surface temperature will continue to increase until at least the mid-century.

Many changes due to past and future greenhouse gas emissions are irreversible for centuries to millennia, especially changes in the ocean, ice sheets and global sea level.

* IPCC AR6 Report

These are some of the IPCC’s findings that business leaders and decision makers can take away to act, right now. But what can they do to speed up the environmental transition?

In fact, plans for action are identified. Dramatic reduction of C02 emissions requires radical changes in energy consumption habits: ramping up renewables, transitioning to electric vehicles, phasing out coal power, increasing the use of low-carbon fuels or industry electrification are some of the major paths already taken by both the public and the private sectors to make energy transformation happen. But not fast, not widely enough. As reported by Climate Watch platform, we need to speed up to achieve net-zero emissions across all sectors.

Using C02-capture technologies, as well as fostering reforestation, can beneficially contribute to decreasing carbon footprint. But they cannot substitute the severe reduction in fossil fuel usage that is dramatically needed.

Environmental and energy transitions require from companies a clear roadmap involving multiple stakeholders driving their efforts in the same direction, with the same ambition.

For this reason we strongly encourage business leaders to engage their company in a climate strategy in line with the global goal of reaching carbon-neutrality by 2050. The UE, the United-Kingdom, Japan, South Korea, and other 110 countries, are committed to it. All together they represent over 65% of harmful greenhouse gasses and more than 70% of the world economy. Private sector stakeholders need to align, to both contribute to common good and boost their business resilience.

Developing a climate strategy requires:

an ambition in line with the 2050 net-zero goal, within planet boundaries
quantitative, science-based objectives of greenhouse gas (GHG) emissions
for scopes 1, 2 and 3
short and medium-term milestones
measurement of GHG, based on standards internationally recognized
(eg. GHG Protocol, ISO 14604)
detailed action plan and resources (budget, investments) for transitioning

It is the executive committee’s responsibility to both validate, promote and commit to the corporate climate strategy. While targeting carbon neutrality, its climate action should be consistent with the company’s raison d’être and strengthen its business model resilience.

To be relevant and successful, the company will design and implement its climate strategy through a multi-stakeholder approach that involves employees and internal players, suppliers and partners of the whole value chain as well. As the impact on third parties has to be measured, it implies having the environment and civil society represented in this approach too. Developing a climate strategy is a valuable opportunity for a fostered and structured dialogue between a company and all the stakeholders of its ecosystem.

We understand that each company has its own specificities due its sector, culture, vision, etc. But when drafting their climate plan, it is important they refer to international standards to allow relevant benchmarks. Companies should use scientific standards like SBTi to build their quantitative objectives and use international frameworks (eg. TCFD, GRI, SASB, IRC, CDSB standards, etc.) for their impact assessment.

Last but not least, once designed, implemented and assessed, the climate strategy should be made public for the sake of transparency. Its release is not part of the non-financial performance disclosure obligations, at least not yet. But companies should anticipate future legal pressure as civil organizations increasingly advocate “Say on climate” schemes to speed up transformation. Modelled on “Say on pay” regulation, a “Say on climate” stipulation would link Top leadership’s remuneration to the company’s climate strategy. The movement is already underway: following Climate Action 100+ investor-led initiative, volunteer companies recently submitted their climate action roadmap to shareholders’ – consultative – vote at their annual general meetings.

It is not companies’ sole responsibility to tackle global warming. Isolated actions from private stakeholders will not be sufficient to preserve the planet. But companies are instrumental in mobilizing their partners and other private stakeholders in common ambitions, in cooperation with the public sector, civil society and citizens. Business leaders can definitely help avoid the worst, acting here and now.

How multi-stakeholder capitalism is reshaping business governance and CEOs accountability

Maria Del Peso — Tue, 25 May 2021 08:45:42 +0000

There is a paradigm shift in progress these days in corporate governance. It is going mainstream to the extent that major global business and political leaders advocate a change in the existing corporate model. The new paradigm is about moving from shareholder capitalism to stakeholder responsibility, from short-term to long-term thinking. All eyes are put on CEOs to integrate the environment, society and good governance as a measured part of corporate accountability. Which de facto puts CEOs on the tricky situation to engage, not only shareholders, but all the stakeholders of their organizations. This is no more and no less than the efforts to deliver for companies to get their license to operate and secure their future.

The late 20^th century’s celebrated mantra that “the business of business is business” no longer brings money. In the late 1970s, Nobel prize-winning economist Milton Friedman started to popularize the idea that a corporation is only responsible for increasing shareholder value. In his v iew, executives work for the owners (shareholders) and a company’s sole responsibility is to increase its profits. For decades, business schools, consulting and investment firms have been spreading Friedman’s words. This theory is still prevalent today and it would be premature to say that the primacy of shareholders is over. But a growing number of thought leaders is voicing that socially responsible organizations can benefit society and shareholders simultaneously.

The recent natural cataclysms in Australia, Amazonia or Siberia, as well as the current COVID-19 pandemic, may have accelerated the pace of general awareness. But it is more likely the growing pressure on companies from consumers and employees to become proactive common-good enablers that prompted forward-thinking leaders to put both the planet, people and profit at the top of their agendas.

Departing from Friedman’s position, US academics Michael Porter and Mark Kramer argued in 2011 that companies capable of leveraging on corporate social responsibility could make a difference. By addressing societal needs, they create value for their customers, employees, their communities, and ultimately their investors. Shareholder economy, based on and the bottom line and investor financial requirements, is gradually giving way to stakeholder capitalism. In stakeholder capitalism, corporations are oriented towards serving the interests of all their stakeholders.

Joe Biden, in his speech on Economic recovery Plan , 9 July 2020.

The concept is not new, but it has gained momentum as a criticism of neoliberalism negative impacts on natural and social capitals. Its proponents, such as the New-Keynesian economist Joseph Stiglitz, believe that it should replace shareholderism as a principle of corporate governance. The World Economic Forum Davos agenda has been calling for years for more resilient, inclusive and sustainable economies, including through the engagement of all stakeholders. Stakeholder capitalism even recently invited itself to the 2019 Business Roundtable. In the words of its then Chairman Jamie Dimon, who is also chairman and CEO of JPMorgan Chase & Co., “major employers are investing in their workers and communities because they know it is the only way to be successful over the long term”.

Running a company with a multi-stakeholder approach obviously entails more risks to mitigate, more expectations to meet, and more impacts to assess.

Business and reputation risks. Studies show that companies affected by environmental, social, and governance (ESG) controversies underperform. Société Générale precisely found that share value could underperform the broader stock market by an average of 12% over 2 years after “high ESG controversy” events. From bribery and corruption to workplace discrimination and environmental incidents, corporate scandals can have significant financial repercussions ranging from legal penalties to consumer boycotts. In addition, these incidents damage the reputation of both the companies themselves and their shareholders.

More expectations to meet. All stakeholders’ eyes are on CEOs, expecting their companies to contribute to long-term, shared value creation. 76% of respondents to the 2020 Edelman Trust Barometer say that CEOs should initiate change, rather than wait for governments to impose it. Fears about hyper-globalization, automation, artificial intelligence or gig economy are real. Many say they believe the public sector is not doing enough to protect people, their jobs and well-being; they expect business leaders instead to take action.

Not taking into account these new realities exposes the companies and their CEOs to new forms of activism with potentially strategic consequences. At GE’s 2021 general meeting for instance, the CEO’s remuneration was rejected by the majority of shareholders. Similarly, DUPONT chemical company leadership has been asked by a group of shareholders led by As You Sow to measure the group’s plastic pollution to align on competitors practices. Under Share-action activism, Tesco has pledged to increase healthy food proportion in its sales from 2022, to fight obesity.

For decades, the sole financial responsibility of companies has been scrutinized in the light of profitability and shareholder value maximization. But the time has come when public opinion considers that companies are primarily responsible for the impact on their global ecosystems, regardless of when and where they operate, produce, invest and recruit.

In a multi-stakeholder capitalism approach, business leaders are accountable for financial performance as well as for the value they generate or destroy to their customers, employees, suppliers, investors, regulators, the environment, communities, etc. Paying fair wages, ensuring safety in the workplace, providing good customer service, investing in local communities, preventing environmental damage are some examples of commitment to stakeholder capitalism.

Advocacy and demand for stakeholder capitalism is at its peak, pulling companies in a deep transformation journey. But its implementation needs watchfulness from business leaders to drive their organization on the path of long-term value strategies. A key factor of success lies on engaging stakeholders proactively around the company’s mission and strategy and building trust relationships with them.

The first step towards stakeholders engagement is to define who your stakeholders are. There is a widely shared definition of the stakeholder concept in ISO 26000 international standard for corporate social responsibility.

ISO 26000

Following ISO 26000 recommendations, you can identify groups of stakeholders with different needs or interests. According to the potential impact your company’s global activities or specific decisions can produce, you may chose to foster dialogue with some of your stakeholders while further involving others in the design and implementation of your social responsibility programs.

A step-by-step approach to engage your company’ stakeholders can be as follows:

start identifying your stakeholders
map their respective needs and interests and analyse the risks of not meeting such needs
focus on strategic risks to mitigate them (ie, the risks that could have critical consequences on the financial health, strategic path, leadership, short term or long-term viability of your organization)
involve your stakeholders in the design and implementation of your sustainability roadmaps
be transparent towards your stakeholders and report regularly on the impacts on them
commit to correct negative impacts and grasp the opportunity to create positive impact

Ultimately, change your corporate governance guidelines if needed. Not an easy task, but sooner or later it will be seen as the counterpart to the license to operate now and in the future.

Purpose in VUCA times : Reviving Maslow hierarchy of needs to engage employees

Maria Del Peso — Tue, 25 May 2021 08:23:20 +0000

Each individual experiences a crisis differently. Our research on COVID19 impact on the employer-employee relationships highlights it. How then mobilize teams if the ones see a crisis as a major source of risks, whereas the others perceive in it a bunch of opportunities? What does it mean for companies and managers when it comes to engage or re-engage employees? Aligning teams around the organization’s purpose is a powerful answer to these questions. But diving back into Maslow hierarchy of motivations beforehand is key to avoid any strategic unconsistency or reputation damage.

VUCA, first introduced in 1987 by the USA Army War College, referred to a multilateral world turned upside down by the Cold War’s end. Theorized later by management specialists, the concept has been widely developed in all its dimensions: Volatility, Uncertainty, Complexity, Ambiguity. With COVID19, uncertainty prevails in healthcare, economics, society, politics. It settles in our daily reality, while becoming certainty.

In normal times, employees expect their company to make every effort to protect their health and secure their jobs and incomes. This is a company’s legal and moral obligation vis-a-vis its employees. In several national laws such as the French one, employers have a duty of «reinforced» means as regards employees’ safety. (The employer must prove it has implemented the necessary measures to preserve its employees’ health and safety). But a crisis like the COVID19 one has further exacerbated such expectations.

Companies that have put the protection of people at the top of their priorities have developed a valuable capital of trust to re-engage their teams. This is one of the results of the survey we conducted in June 2020 via LinkedIn. It is also developed in a McKinsey study on the impact of COVID19 on the “employee experience”.

Similarly, many companies have stepped up their vigilance on psycho-social risks. Even before the pandemic, there was a growing awareness in business about mental health and stress issues among their employees. Remote work during total lockdown resulted in work overload and/or stress and isolation for many people which adds to underlying fears to lose one’s job because of globalization, automation or digitization. We still ignore the extent of COVID19 damage impact on mental health, but it might be the case for a new public health issue. Making time and space for employees to discuss the influence of new organizations of work on their personal well-being and their families’ one may be the next topic for human resources specialists.

Working patterns will change over time to a hybrid organization that combines on-site activities and remote work. Social distancing rules, health measures, new mobility constraints or opportunities, technological solutions, demand for more flexibility, etc. Remote work has become part of our professional and personal world, with a banalization of remote working tools (eg. video conferencing, collaborative work applications). But to what extent? Between supporters of “100% remote work » and opponents of its generalization, some voices offer intermediate solutions. Many entrepreneurs and employees want to maintain a “face-to-face” activity. In order to keep the cohesion of social ties and a sense of belonging, they report the risk of “anomie”. They have grasped employees’ expectation towards their company to be a framework for social connectivity.

Employees also want to be involved in the organizational changes impacting their daily work. Our research evidences that employees are willing to participate in the corporate decisions affecting their work conditions (spaces, presence, tools, etc.) and the quality of their working life. They are the ones who are most familiar with the business processes and the first ones impacted by the changes.

Meeting employees’ primary needs, safety and belongingness is a must-do in employees’ (re)engagement. Interestingly enhough, everything happens as if the so-called pyramid of Maslow became again the grid of explanation for our behaviors.

Maslow’s theory on human needs has been criticized, mainly from an academic viewpoint. Some experts point out that not all people need to satisfy their primary needs to look for esteem or self-actualization. In that sense, the traditional representation of Maslow’s hierarchy of needs via a pyramid may seem confusing.

More relevant is the dynamic illustration which explicitely conveys the complexity of individuals’ motivations. But it still reaffirms basic needs satisfaction as a prior step before optimum personal development.

The company’s purpose is a perfect lever to satisfy employees’ need for self-actualization, in line with the company strategy. It is a perfect lever for employee engagement. But let’s not forget that employees’ basic needs are to be satisfied as well, if not prior to any declamation on purpose or stakeholders’ value.

Otherwise, the reputation damage and mistrust effect might be a high price to pay. See the examples of companies that have announced redundancy plans in the mid of the pandemic to maintain their profitability, while advocating a ‘raison d’être’ for their organization. The Danone case highlights this discordance. In its 2020 Annual General Meeting, Danone became the first listed company to adopt French legal framework of “entreprise à mission”, aiming at pioneering a business model to progress stakeholder value creation. A few months later, the corporation announced the plan to cut up to 2,000 jobs – 2 % of its workforce – as part of a reorganization. Such dissonance generated confusion on the markets and a credibility loss among its stakeholders about the group’s real commitment to common good.

Involving all stakeholders – including employees – in a reflection on the purpose and the contribution to the common good is a sustainable exit strategy from the crisis. But this reflection must come once employees and teams feel protected and reassured by their company about their daily life and their future.

Prior to driving individuals and teams, make sure employees have enough discussion spaces to express their own experience of the crisis, make every effort to secure their jobs and wellbeing, integrate them into concrete and rapidly visible changes that will positively impact them. Communicate actively on the company’ issues and perspectives during the crisis ; employees can understand some information are confidential, but they are able to listen to bad news and positive developments.

These are key steps in (re)engaging your employees. Then build and share the organization’s purpose with them. Employees’ engagement will be part of the success.

Why make Diversity & Inclusion a business priority?

Maria Del Peso — Tue, 25 May 2021 08:09:25 +0000

Much talk, little action. These words sum up the growing interest in diversity and inclusion in corporate statements, combined with companies’ failure in improving fairness in their governance and structures. As evidenced by statistics, only 15% of companies in Europe treat diversity and inclusion as business and organizational issues. But civil society’s pressing demand towards institutions to better represent it in the decisions that collectively and individually impact citizens, cannot be overlooked. Neither by governments nor by the private sector, which should focus on the proven benefits of diversity and collective intelligence on performance to move forward.

There is a growing interest in the value of Diversity and Inclusion (D&I). Companies are increasingly taking fairness, respect and inclusion into account in their external communications, as well as in their corporate policy (HR, management, purchasing, etc.). The reasons for it are diverse, ranging from regulatory or social pressures, demographic trends and investor demands to purely commercial motivations.

From a historical perspective, the pledge for D&I has been closely linked to pressures from social groups. With protest movements leading to laws and regulations, companies find themselves in a framework of constant adaptation to ensure compliance.
Back to the 1950s in the US: minority groups’ protests against discrimination probably paved the way to the evolution of diversity models within the workplace. The affirmative action original scheme drew strength from the law Civil Rights Act of 1964 that implemented equal opportunity employment objectives. Focus was then made on the idea that any individual academically or physically qualified for a specific job could strive for at obtaining it without being discriminated against based on identity.
As another example, more recently in Europe, several countries have enforced gender quotas in governance bodies, mainly in boards of directors and supervisory boards. (Copé-Zimmerman Law in France, 2010, with a 40% minimum of women or men in the boards of directors of medium or large companies; Golgo-Mosca Law, 2011, in Italy with a 30% minimum of women or men in the board of listed and state-controlled companies.; in Germany, for the 108 biggest listed companies, a 30% minimum of women).

The compliance basis has been a constant driver for corporate policies in the fields of diversity, inclusion and other ethical values. France’s example in gender policy is insightful about this. In the governance bodies submitted to quotas, women now account for 44% of their members, in the top 120 listed companies. At the executive committees of such corporations, where there is no specific diversity obligation yet, women struggle to be a 22%.

Organizations realize that making diversity and fairness a business imperative will help them avoid tarnishing their reputation. Inclusion is seen as a key differentiating factor in retaining and developing talents, or attracting new generations of employees. It is also a mean to grasp changing consumer expectations, as more and more customers expect companies to positively contribute to society. They consequently want companies to take a stand on social, environmental or even political issues.

Echoing the resounding outrage caused by George Floyd’s killing, many companies have taken action in support of #BlackLivesMatter movement.

A list of tech companies joined protesters in voicing their outcry and sympathy. As noted by Built In tech job board:

Some companies went further, donating money to anti-racist groups like Equal Justice Initiative NGO that received $M1 from Grubhub.
Others unveiled initiatives for addressing racism in their products or organizations.
A few shared the racial make-up of their workforce and their recruitment and retention plans dedicated to employees from underrepresented groups.

A note from GrubHub CEO Matt Maloney, in support to #BlackLivesMatter

Consumers have the power to retaliate against companies they judge behaving unfairly or inappropriately. Businesses know about that, specially in B2C markets. Remember in 2017, when 200,000 people quickly deleted their Uber accounts to punish the company for taking advantage of New York taxi drivers’ strike. The drivers were protesting against president Trump’s ban on entry of citizens from a number of Muslim-majority countries. Uber apologized publicly afterwards.

Meanwhile, investors are ones of the stakeholders most aware about the potential impact of a company’s approach towards D&I and its business stability. More and more investors have come to believe that Environmental, Social, and Governance (ESG) criteria have a practical purpose that goes beyond ethical concerns. They look after staying away from companies whose practices constitute a risk factor. See the 2010 Deepwater Horizon oil spill and the 2015 Dieselgate, which both shook the share prices of BP and Volkswagen and resulted for them in billions of dollars in associated losses. As ESG-minded business practices develop, investment firms are increasingly demanding from companies’ social standards related to D&I so that commitments and progress in that field can be measured and benchmarked.

The concept of social justice has evolved over the years. It now recognizes that individuals who do not belong to the dominant group must be given opportunities within the workplace, not only because it is a legal obligation, but also because it is a moral one. But despite deep changes in regulations and mindsets, companies are still perceived as unfair.

The general context of mistrust. The growing concern about increasing income inequality, worsened by the COVID19 crisis, is clearly undermining trust in the institutions, including businesses. In the latest Edelman Trustbarometer , institutions are overwhelmingly seen as unfair: the majority of respondents perceive them as massively serving first the interests of a few, instead of generating value equally and fairly for everyone. In a global, long-lasting context of mistrust, every statistic that highlights gaps in salaries or leadership strengthens concerns about discrimination .

The question is then: how to convince managers that diversity is important? For that to happen, experts argue, the appeal for diversity needs to be consistent with business discourse.

Kevin Sullivan, an exvice-president of Apple Inc.

Throughout their landmark Women Matter and Women in the Workplace reports, McKinsey & Company have been researching gender diversity issues and assessing their economic costs. In particular, the 2017 issue of Women Matter noted that, “women generate 37% of global GDP despite accounting for 50% of the global working-age population”. Furthermore, McKinsey & Company argued, closing the gender gap by 2025 would help add up to $12 trillion to global GDP and 240 million workers to the world’s labour force.

In addition to macroeconomic analysis, proponents of greater diversity also focus on management performance studies. Russell Reynolds Associates have found out that executives of organizations with advanced D&I strategies are about 30% more likely than others to feel very loyal, innovative and willing to perform at a high level.

In a pragmatic need to reflect the diversity of customers – women make up half of humanity – many companies are doing their utmost to recrute more women and appoint them to key positions (sales, top management, etc.) with a view to accessing new markets. A good example of this strategy is provided by the automotive industry.

Women in the automotive industry

Research shows that 62% of new cars in the US are bought by women, who are believed to influence more than 85% of all car purchases . However, women only account for a quarter of the workforce in US car industry .
The automotive sector remains a male-dominated activity, but efforts are being made to recruit more women. In the Renault group, where women represent nearly 25% of its workforce worldwide and over 20% of its executive committee, the car manufacturer is aiming at having 30% women in technical positions and 50% in sales positions in France.

In another study, BCG consulting firm bridges diverse leadership teams with higher innovation revenues.

While emphasizing the macroeconomic, financial and organizational benefits, proponents of inclusion also refer to the untapped potential that can bring a diversity of experiences, perspectives and cognitive skills that act as levers to improve collective intelligence, agility, innovation and resilience in complex environments. Using research conducted by MIT and the Carnegie Mellon University, cognitive psychologist Émile Servan-Schreiber has demonstrated the positive influence of diversity on collective intelligence and group IQ . In order to produce collective intelligence effectively, Servan-Schreiber argues, the diversity of views and mindsets must be arranged in a way that organizational, cultural or individual prejudices really counterbalance each other.

With demographic, technological and societal shifts, D&I have become even more important as they affect an organization both internally and in its relationships with all its stakeholders, customers, markets, supply chain, etc.
In times of social unrest and economic uncertainty, companies should clearly focus on the proven benefits of diversity and collective intelligence on performance to move business forward and create value for all. It takes courage from the senior leadership and bold actions to engage their organizations in a long-lasting, positive transformation.

A quick snapshot on such transformation process covers:

a) Acknowledging the issue and assessing the risks (from compliance, financial, ESG standpoints mainly)

b) Driving change from the top, starting with senior leadership’s example

c) Building inclusive cultures within the organization and in its interactions with all its stakeholders

d) Creating inclusive talent management processes to provide a clear path and mentoring to advancement.

It requires courage and boldness, we said. Investments and targets too, with precise, measurable and time-bound objectives, to make real and sustainable change happen. But it is worth the effort.