Renault's raison d'être: nebulous wording and sincere commitment

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Renault's managers honestly believe that the company, its teams and its past history fit easily into a project which, in accordance with the Pacte law, they call raison d'être and had approved last week by the Board of Directors.  By giving this "raison d'être" a somewhat nebulous formulation, they did not contribute to making this vote play the mobilising role that they hoped it would. Fortunately, the major principles were already being translated into concrete terms and this gives some reasons to take the commitment seriously.

 The Renault press release which reports on what was agreed at last week's General Meeting of Shareholders is surprising. The text begins with the following lines.  

"At its General Meeting held on 23 April, the Group presented its raison d'être to its shareholders. Co-constructed with all employees and in consultation with its stakeholders, and validated by the Board of Directors, it expresses the ambition and meaning of the Group's collective project in France and worldwide:  "We make the heart of innovation beat so that mobility brings us closer to each other."

With this phrase, the corporate body of the Group and its 170,000 employees wanted to highlight the substance of its mission to serve its customers and all its stakeholders. Making the heart of innovation beat, testifies to both the deeply human and generous dimension of Renault, as much as the creativity, inventiveness and technical quality of the Group.

"One could almost smile to read it, so much so that the text oozes CSR self-righteousness and mobilises the consecrated logorrhoea where each term is a reference to concepts which have each been the subject of much discussion.   

The term "raison d'être" itself appeared as an exergue in the Notat-Senard report that preceded the Pacte law in the following quote from H. Ford:  "The company must make a profit, or it will die. But if one tries to make a company operate solely on profit, then it will also die because it will no longer have a reason to exist."

The term was further clarified and referred to its English language equivalent as well as to Jacques Ellul's book of the same name.  "The definition of a 'purpose' is not in itself a new object: it is, for example, an essential element of strategic management in companies. It is considered as the expression of a desirable future for the group, both justifying cooperation and accounting for a challenge of innovation. It is therefore its introduction into the law and into corporate governance that is particularly innovative.  

In fact, the report explicitly proposed - and the proposal was adopted - that: "To entrust boards of directors with the formulation of a raison d'être aimed at clarifying the company's own interest and the consideration of its social and environmental issues". 

In a very Jesuit exercise in intellectual balancing, the authors specified their intentions as follows: 

"As the corporate purpose mentioned in the company's articles of association has become an inventory of potential activities, often much broader than the field of actual activities, the purpose is a search for coherence. It is often formulated to strengthen the commitment of employees by giving meaning to their work. Formulated by the board of directors, the raison d'être can also have a strategic use, by providing a framework for the most important decisions, in order to concretise the company's own interest and social and environmental considerations and thus provide a useful counterweight to the short-term financial criterion. (...) Why should the company only have an 'asset' consisting of its assets and liabilities, why should it not have a 'being'? If it has its own will, rights and obligations, and an interest of its own that is sometimes distinct from that of its partners, why should its decisions be guided by a single 'reason to have' without a 'reason to be'?

 We understand the idea. We understand why, faced with financialisation and the errors of management structured around shareholder value, with 'stock market' redundancies and hostile takeover bids, some, including among the directors of the CAC 40, wanted to light a fire. It is easy to understand that these people were willingly recruited from Danone or Michelin, that the "Christian leaders" of which J.-D. Senard is a member have been very active in these reflections for a long time and, given the circumstances of his appointment as Chairman and then that of the appointment of Luca de Meo as CEO of Renault, it is easy to understand why the Board of Directors is, in April 2021, among the first to have to set in stone the "raison d'être" that the leaders believe they can associate with the group that they federate.
 
J.-D. Senard certainly believes in it as much from a legal point of view as in managerial terms and it seems that he has put a particular ardour into trying to give substance to the rather vague formula 'We make the heart of innovation beat so that mobility brings us closer to each other'.
He thus defended that Renault's raison d'être must be based on its "roots which give it stability, depth, a historical, cultural and geographical context", but must also be its "polar star, this desirable future where all the energies converge, which do not add up but multiply".
 
As N. Bourassi points out in La Tribune Bourassi, it is almost obvious that it is first and foremost a question of giving the course taken over the past year, and particularly since the "Renaulution" was launched, a content other than that which would consist of stopping losing money by making sacrifices.
 
To convince the stakeholders (and the State in particular) and the "constituent" parties* (the employees and their representative trade unions), they must first and foremost break the relocation dynamic that has been going on for many years and seems to want to go down this road.
 
They must also, in order for the engineering teams to mobilise, for Mobilize to have a meaning, for the conversion of Flins not to appear as a cover-up and for electrification not only to be a response to regulatory constraints but also a real commitment compatible with the requirements of sustainable development, place all the efforts requested and all the reorientations taken in a perspective which makes sense.
 
This is what the hollow formula that J.-D. Senard tried to fill in is supposed to do. Fortunately, it was not the only announcement and L. de Meo went beyond the declaration of intent by stating that he will make CSR a chapter of his Renaulution embodied by three pillars: 
i) lowering the carbon footprint, 
ii) safety of customers and employees, 
iii) inclusion and skills transformation. 
 
J.- D. Senard and L. de Meo make Flins a kind of condensed and tested version of this "raison d'être": by showing that the site and its employees are not marginalised by moving from the assembly of new vehicles to the status of the first circular economy centre of the group in Europe, which reduces the carbon footprint of the group's activities and the vehicles that it puts on the road, and by renewing the skills of everyone by structuring a "Re-Know University" responsible for ensuring the retraining of the group's employees through training courses leading to a certificate or diploma.
Obviously, these principles will apply beyond Flins and L. de Meo has announced the implementation of an internal carbon pricing system.
 

It therefore seems that this raison d'être should be taken seriously: since J.D. Senard wanted to give the project real substance by proposing that it be voted on by the boards of directors, it is probably necessary for the trade unions, subcontractors and host territories to take the managers at their word and ask that each decision taken in the future be consistent with this raison d'être and the slightly clearer and more precise definitions that will be given in the future.  

26/04/2021



(*) The literature on CSR introduces this term and the Notat-Senard report uses it to indicate that not all stakeholders are concerned in the same way by the life of companies. Stakeholders "suffer the risk of the company's activity" while the constituent parts "invest in the company and suffer the risk". 
 
 

 

The weekly column by Bernard Jullien is also on www.autoactu.com.

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