The French government controls a great deal in business in terms of both ownership and the wider sense of influence. This can be a help and a hindrance...
The state is big business in France. It employs more than a fifth of the workforce, double the proportion of Germany and considerably more than the 14.4% average in the OECD. It also still owns big chunks of many of the country’s major corporations.
Government influence is especially important in sectors such as defence, energy and transport. The state’s extensive shareholdings include stakes in Air France-KLM, France Télécom, GDF Suez, Renault and defence contractor Thales.
It has a big stake in EADS (the European Aeronautic Defence and Space Company), through a holding company called Sogeade. It is the majority shareholder in Electricité de France (EDF), which, through its ownership of Britain’s EDF Energy, is now the biggest electricity supplier in the UK.
In other sectors, state influence on major corporations is less direct. Banking group BNP Paribas, for example, in which the French state is the largest shareholder, is in turn one of the main investors in AXA, France’s biggest insurance company.
This complicated web of holdings means that the state has a say in how many of France’s top corporations are run, and how they approach corporate responsibility. “In the field of CR the state has a very strong influence,” says Céline Louche, an assistant professor at Vlerick Management School in Belgium.
The top-down approach has led to some pioneering initiatives. After all, the state is not only concerned with profits. In France, the country that in 1789 adopted the Declaration of the Rights of Man, the state is the guardian of citizens’ universal rights.
In 1977 France passed one of the world’s first corporate responsibility laws: a regulation requiring companies above a certain size to produce a social policy balance sheet.
France was also the first country to adopt the 35-hour working week, in 2000, followed in 2001 by a law requiring public companies to include a range of non-financial information in their reports: employee relations, working hours, workplace safety, training, health policy, profit distribution and the amount of outsourcing. A year later, “the law expanded to include environmental information”, Louche adds.
New cooperation
Then, when Nicolas Sarkozy became president in 2007, he directed that work should start on the Grenelle Environment Forum, a round-table process involving French industry, trade unions, professional associations and NGOs. Louche says this was “was something completely new”. It shifted the emphasis away from direct negotiations between the government and trade unions or companies, over issues such as wages and working conditions, to a more considered strategic approach on the broad issues of sustainability and how companies should behave. The Grenelle process continues to lead to new obligations for companies.
But there is another side to state influence over corporate life. Corruption allegations involving companies seem to haunt many of France’s top politicians, including previous presidents Jacques Chirac and François Mitterrand.
Last year, employment minister Eric Woerth left the government after a series of allegations relating to tax-dodging and political donations given by L’Oréal heiress Liliane Bettencourt. At the beginning of 2010, Jean-Louis Gergorin, former vice-president of EADS, was given a 15-month prison sentence for slandering Sarkozy, in a complex case involving a Luxembourg financial services firm called Clearstream, warships, and former prime minister Dominique de Villepin – a Sarkozy rival.
Aiming big
Government guidance on corporate responsibility also tends to be aimed mainly at the big corporations, and can result in approaches that are more designed to comply with the law than to develop original thinking. The top French firms are strong on reporting, but there are questions about how deep the commitment to responsibility goes.
Estelle Mironesco of French corporate responsibility analysts Vigeo says: “Typically, French companies are less good in corporate governance issues such as the transparency of remuneration systems or the independence of board members. Companies in France are also not always as advanced as some of their counterparts in putting in place prevention and control systems for corruption.”
Smaller companies, meanwhile, feel less pressure to practise corporate responsibility. Guillaume de Bodard, president of the sustainable development commission at the General Confederation of Small and Medium-Sized Enterprises, says: “Except for some companies that believe in the development of CR as a tool for growth, the majority of [SME] managers have not taken the plunge of [developing] an approach to CR.”
The performance of the biggest French firms in international rankings is respectable but not remarkable. There are 23 French multinationals in the Dow Jones Europe Sustainability Index, about the same level of representation as Germany. Air France-KLM has been the DJSI leader in its sector for six years. BNP Paribas, Carrefour, Danone, Lafarge, LVMH, Sodexho and Total figure prominently.
In the Global 100 Most Sustainable Corporations in the World, France has five representatives, compared with 11 British companies and six from Switzerland. The highest ranked French company is bank Crédit Agricole, in eighth place. The other ranking French firms are media conglomerate Vivendi, commercial property investors Unibail-Rodamco, L’Oréal
France corporate responsibility factsheet
References: Socio-economic statistics obtained from recent publications from the CIA Factbook and the Human Development Index. Corporate responsibility data obtained from a February 2011 Ethical Corporation survey. The results should be regarded as a basic indication of trends in France and not as scientific research. Guideline and standards statistics obtained during February 2011 from official website of each initiative.