We can't be perfect in using this new language. It's a new economics language. In a way, we are rewriting economics. And it's not going to be done overnight. But some of these conversations are urgent. Climate is urgent. Climate change, the physical risks are now. The transition risks have started already in jurisdictions like Europe, Canada, many others that have decarbonation plans that will be coming as negative and positive incentives of companies. So this is happening. And therefore, we need to learn that language of climate together. Welcome to the special English edition of Degorsa Neustadt, a German podcast series by Zabilla Barg, in which she talks to pioneering leaders who, inspired by the World Economic Forum's Great Reset Initiative, create revolutionary projects that actually do make our world smarter, greener and fairer. I am delighted to welcome Emmanuel Faber, the chair of the International Sustainability Standards Board, ISSB, a pioneering entity shaping the future of sustainable finance and reporting worldwide. He's a prominent figure in the business world, renowned for his visionary leadership and commitment to sustainability. With a distinguished career spanning decades, he has held key executive roles, including CEO, and chairman of Danone, one of the world's leading food and beverage companies. Under his stewardship, the company became a global leader in corporate sustainability, pioneering initiatives to integrate environmental and social responsibility into its core business strategies. His contributions have earned him widespread recognition, including being named one of the world's leading leaders by Fortune magazine. Today, we have the privilege of delving into his insights, exploring his role as chair of the ISSB, a groundbreaking institution committed to developing globally consistent sustainability disclosure standards, with endorsements from the G7, G20, United Nations, Central Bank Governors, World Bank and International Organization of Securities Commissions. The ISSB is at the forefront of standard setting efforts, aiming to enhance transparency, accountability, and trust in financial market. It's spearheading initiatives to revolutionize sustainability reporting, aligning corporate practices with ESG principles to drive long-term value equation. Before we delve into our discussion, Emmanuel Farber has been recently reappointed as ISSB chair for a second term. So congratulations to you. And please tell us more about the ISSB and why is it so significant? Well, Cidella, thank you first of all for having me on your panel. First of all, for having me on your podcast. And thank you for having that podcast. I think it's an important platform. Thank you for all the very nice words. They are obviously not all true that you said about me. But let's say the ISSB, I think, started from the observation over time that accounting counts many things that count, but not everything that counts. And the development over the last 20 years of a flurry of ESG metrics, ratings, colors, gradings, numbers, letters, all over the place to the tune of now probably about 500 of them, is an evidence that companies, investors, other stakeholders were trying to express something about the sustainability aspects of companies or ESG, in other words, of companies, without frankly being successful in that, because if that had been the case, the correlation between the practice of companies and their performance against these ESG indicators and their valuation, the cost of capital, the allocation of capital that they get from investors and from banks would be significantly bigger and more visible than it is today. And so what happened was that the market authorities, multilateral, the financial stability board, the international organization of securities commissions, which is a membership organization with all the SECs of the world, 135 countries, the OECD, the IMF, the World Bank, the UN started to think about how to create that system that would allow to count what counts and is not yet in the accounting. They turned to the IFRS Foundation. The IFRS Foundation was created 25 years ago to establish a global language, common language of accounting standards. The Foundation was pretty successful with now about 144 countries that are using the IFRS accounting standards with an equivalent for the US with the US gap. And so it was seen that probably because of that, the IFRS Foundation would be well placed to play a role in that. And this is what led the trustees of the Foundation to launch a huge public consultation in 2020, asking the question whether some things needed to be done and whether the Foundation was well placed to be part of it. The overwhelming answer was yes. And with that, there was an announcement at COP26 of the creation of a sister board to the International Accounting Standards Board that had been doing accounting for 25 years with the creation of the International Sustainability Standards Board, which I have the pleasure and honor to lead as part of the Foundation with that mission of creating an accounting quasi-accounting language for sustainability that would be cost effective for companies around the world and decision useful because it would be comparable, global, consistent, reliable, assurable. And therefore banks and investors would be able to make decisions about the cost of capital that they want for companies that report on this. And therefore we could count what really counts at the end of the day. And in particular, as you said in your introduction, this can be a very powerful way to ensure that capital markets can do their part. Their full part in allocating according to risks and opportunities on ESG, the capital to the transition to more resilient business models and overall more resilient, inclusive macroeconomics as well. Yeah. You mentioned Glasgow. The IFIS Foundation announced the formation of the International Sustainability Standards Boards in November 2021 at COP26 in Glasgow. So, and it took you only two years to manage to deliver two sustainability disclosure standards. One is ISFRS1 and the other one is S2. The one is about general requirements for disclosure of sustainability-related financial information and S2 is about climate-related disclosures. So you did that, Emmanuel, in a very, very short time. Can you dive into it a bit? Yeah, of course. It's actually less than that in a way and more. Less because the first meeting, because we had to assemble the 14 independent members of the board, which is a full-time board. I'm working full-time as 13 of my co-board members and colleagues, which took several months. We consolidated three existing organizations of standard setting to start reducing the alphabet soup. And we started our first meeting as a board, happened in July 22. We published ISFRS1, which is the general requirement, and ISFRS2, which is the specific climate requirement in June 23. So less than 12 months after. It's more because there had already been a technical readiness working group and a number of people working as soon as the decision in principle was made before it was even announced at Glasgow on what a prototype could be. And we've been building from TCFD and many other platforms, a number of other platforms that already existed. But that's, yeah, indeed, not even a year ago, we issued those two standards. They were then endorsed by the International Organization of Security and Discomissions, IOSCO, in July. The Financial Stability Board viewed our climate standards as the culmination of the Task Force for Climate-Related Financial Disclosure, the TCFD, that the FSB of the G20 had been piloting since 2015, and they retired the framework into our legacy work. Ever since, we have been active in starting the adoption with jurisdictions, with companies, with investors around the world. And also, we are in the process of now developing the next stage of our agenda setting with more themes beyond climate and industry-based standards elevated at their next level. And if I look into S1, this includes actually scanning the whole value chain, right? It's risk, opportunities and impacts. And if we talk in terms of scope 1, 2 and 3, does it include or exclude scope 3? It does include scope 3. And so you're absolutely right on S1, our CIVILA. What we provide is a scanning system for CFOs, for CEOs, for C-suites, for boards. So therefore, not for CFOs, not for chief sustainability officers only, but chief accountants, controllers, the people in charge of strategy, of risk management to provide a tool that scans beyond the remit of the financial statements and that is therefore looking at the entire value chain, the whole space of the entire value chain on one side, and then scanning the horizon of times, short, mid and long-term. We require that the whole value chain and the whole horizons of time are being scanned with our tool. And with that, to report what is material that is in our definition the same as accounting, which is what actually matters for investors' decision. And therefore, having consulted with the market in the draft that we exposed in March 22, we know that investors want to have scope 3 information. Most of the time, scope 3, which is this indirect greenhouse gas emissions in the value chains beyond the scope of the company itself, they represent 70 to 80% of, on average, any company's global emissions. And this is where therefore most of the transition risks that can happen if a given country says, I want to reduce my emissions of 80%, like in Europe, for instance, by 2040. Well, if I'm selling thermal engines for cars in the EU, I won't have a business, or my business will be cut by 80% by 2040. So what do I do with that? How do I address that transition risk by investing differently, preparing my company for new consumer demand, or maybe diversifies the places where I'm going to sell my cars? Maybe I just don't know. But therefore, this is why investors have asked that scope 3 is in there. So we voted, I remember very well, we voted in October 2022 that scope 3 would be confirmed as our requirements when it is material. And as you say that you are kind of laser-like focused on investors, but how is that being welcomed by companies? I think companies realize that some ESG topics are critical for their business. I wouldn't say, oh, but some. I've been a manager for a long time. I've been a CA for twice in my career for a long time. I've been a CEO of a global company, as you just said. I also chaired the Consumer Goods Forum, which is the trade association, the global trade associations for the top 500, not only consumer goods, brands and manufacturers, but also the retail platforms and the banners and the digital platforms. So I know many of them. And I cannot tell you one single CEO that does not agree that sustainability is a strategic matter. They all agree that some sustainability topics for their company are critical. So when you're telling them that you're going to design a tool that will allow them, for instance, on climate, to elaborate a strategy and to explain that strategy in financial terms, sometimes in accounting terms to their investors and to their banks, what they realize is that climate change will change their competitive advantage. I'll just give you an example. So Frankfurt, my home office, is not very far from the Rhine River. In 22 and in 23 summer time, the Rhine River went so low in terms of the water volume in the river because of the heat waves in the mountains and the glacier lack of water supply. That the navigation, the traffic of boats on the Rhine River had to be stopped. And the new smaller, much smaller boats had to be brought all across Europe in order to be able to navigate on a much shallower water level. That has transformed the supply chains, created huge inventory issues in the ports downstream and in the cities and factories upstream. For months, which are still now in the inflation that was felt. Nobody thought that being close to the Rhine River or close to another one could potentially have an impact on my supply chains. Well, now you have evidence that it has. So one factory, maybe in a place where there will not be water anymore in 20 years. If you run a climate scenario, in some scenario, your factory may not have water. Well, the factory of your competitor that does exactly the same product may still have water. So they have a competitive advantage against you. So if you prepare earlier to ensure that you have water access in the future, you have access to traffic, including fluvial river traffic if necessary. You invest in the future. You future proof your business to climate change. And any CFO knows that for that you need money. But if you do this in a smarter way than your competitor and you can show to your investor that your ability to design a resilience system and a resilience system is better than your competitor. You're basically creating a competitive advantage. And this is what our standards are doing, which they are highlighting competitive advantages in the supply chains and the short, mid and long term horizons that then companies can use to discuss with their board and with their investors. And so the overwhelming majority of companies is heavily supporting us. It was interesting that at COP26, as I just said, ICCB's creation was supported by a lot of multilateral organizations and global authorities. At COP28 last year, it was very striking in Dubai that in addition to them, there have been 400 organizations that came in committing to support the establishment of our climate. Baseline of language, including membership organizations of businesses in particular in Europe that represented more than 10,000 companies. So I'll finish because I realize I'm super long, but the reason I think they realize that reporting on three, four, five different set of ESG metrics. Today is not giving them the money or the advantage that they want. And that is spending a lot of energy and cost in various languages that are imperfect because they're not comparable. They are not assurable and therefore they're not reliable and useful for investors to decide. So if they could get rid of that and use one language in all countries because Brazil has decided to use our standards, Canada is launching a consultation on this. Japan has decided on 25, Turkey has decided on 24, Nigeria has decided on 25, etc. They will be able to use our standards wherever they are to collect the data, process them into one language, and then go to the market with a simple, cost-effective language and decision useful. Now, it is an investment, but I have to say one thing is it's not by chance that I was asked, I think, to lead and share the group of my colleagues. The choice was made to have a CEO, a CFO. I've been talking to thousands of investors. I've signed accounts of companies 20 years in a row. And so I know what is possible and what's not, what's difficult and what's not. And not only me, it's totally collective. We've got former investors from GPIF in Japan, the government investment fund of Japan, the longest-term investor in the world probably. Colleagues from KKR, colleagues from former BlackRock and CalTas in California. We've got the former sustainability person from Siemens from Dan Gute in Nigeria, multinational in Africa, from Metro, the retail company in Germany and in Europe. And so it's practitioners that have been working together with academics. You know, also one of the vice chairs is from the IASB. So we have the former vice chair of the accounting board, which is now a vice chair of our board, but also the former treasurer of Wellback, which is also the other vice chair. So we are professionals basically in probably what is a very unique place, the IASB foundation, in terms of experience to set standards. And this super long response is to say, this is why I think we've got so much traction from corporates around the world pushing for the simplification that our standards are going to bring. And yeah, feel absolutely free because I don't think it's a matter of super long. It is important that we all understand that and we have listeners in 90 countries by now, all on a different level, I would say, which brings me to the next question is, if you talk about all those companies already committed in the different jurisdictions, how do you or do you have to adapt to the different jurisdictions? What do they adapt to you? Both, both I think what we have done is that we have provided transition reliefs in the use of our standards to allow companies and regulators some time because we know it takes time. I'll give you one example on scope one, two and three. We gave a one year relief on scope three. So if you're not ready on scope three, you have one year. That one year, I know is useful in 209 in my company, we decided to report on scope three. It took us about a year to put a system together. You need to start by doing the value chain mapping and then install a system to measure with proxies or direct measurement and other ways. It takes time. It's an investment. So we've provided for that, for instance. We also provided for instance that some companies would start and could start the first year with climate only. You just report on climate before reporting on the rest. Because we know climate is probably the most difficult and comprehensive set of reporting. We have created transitional reliefs also for regulators in for instance the timing of issuance within a given year. How many months do you allow for that before the next year because to provide the information because our standards require that. Companies publish them at the same time as their financial statements. We know it may take a bit of time. So we have created pathways that jurisdictions can use in order to start their journey. Some jurisdictions would start with climate first. Some jurisdictions will start by permitting the standards. I was mentioning Brazil. Brazil has said listed companies are permitted to use the standards in 24. Private companies are permitted to use the standards in 25. In 26, it's mandatory for everyone. So these journeys are we're talking to jurisdictions to ensure that they go at the speed which is the right speed for success for them. So that's one thing I think is important in the way we discuss with jurisdictions around the world. And I have to say that we have paid a lot of attention that we have a diverse group of board members in terms of their own backgrounds. We've got people as I just mentioned from Nigeria but also from China, from Japan, from Korea. And many others that are bringing a wealth of different approaches around the table. And we do of course have a number of other consultative groups that give us in slide about what jurisdictions want. And I'll just finish by giving a surprising example, which is the first jurisdiction that one year after the COP26 and even before we finalize our standards in Charnelschek at COP27 announced their decision to be an early adopter was Nigeria. And I was in Nigeria 10 days ago and I can tell you that the conversation that we had really resonated on why it makes sense for countries like Nigeria but South Africa and others that we've been in conversation with to gradually introduce our standards for the benefits of the local economy. Yeah, I remember you being in Nigeria because a colleague of mine, she is Nigerian, she attended one of your meetings and was, as I remember, very taken with the work of the ISSP. But equally important, she was very proud of Nigeria's engagement. However, I wanted to take you back to 2009, you being CEO of Danone and absolutely ahead of your time. Because it was 15 years ago that you said, we do not need any longer achieve sustainability officer. By the way, most companies still don't have one today. You said we don't need one any longer because, and I quote you, sustainability is everybody's responsibility. So you're really a pioneer. Can you just tell us why did you do it 15 years ago? Oh, I think there's a combination. First, Danone was already well advanced in sustainability. Already in 1972, the predecessor of my predecessor as a CEO had said that this company would have what was called a dual economic and social project. So it would be looking really at not only delivering economic value, but also social value. That was many, many, many years ago, like 50 years now. Yeah, so that was there. And so over time, corporate social responsibility became sustainability over probably a span of 20 years. So it's not like sustainability was nationed in the business. It was there. We, we, I think were pioneers already. The decision we made was because I was personally very clear that one of the aspects about carbon emissions is that talking about scope three, most of the companies carbon emissions were from agriculture. 70% at least was in agriculture. And when you have emissions by agriculture, it means the carbon that is in the soil goes into the atmosphere. It's not good for the planet, but it's also very bad for the soil because the carbon is 60% of the organic matter that nourishes the health of the soil. So without carbon, you don't have a soil. You don't. I mean, the soil is just dying. Yeah. So over time, we knew that with intensive agriculture in some areas around the world, overall across the world, about 30% of soils are degraded. And you may not be soon able to farm unless you continue to put more artificial chemical nutrients, but basically on a dead soil and just superpowering the plant with chemical interest, which is a dead end. At the end, it doesn't work. So the idea was, particularly on scope one, two and three, but on others, that we had a business rationale to ensure that for business reasons, we want to reduce the agriculture emissions in our scope one, two and three. And we invested in that. But to do this, indeed, what you need to avoid is that there is an office somewhere that in the organization or in the sixth floor or whatever is in charge of sustainability because that person then is the person to go to. And it becomes the responsibility of no one else. And the radical choice that we made was because we were already well advanced in the culture of the company was mature enough, we decided to cut that. And in exchange for that, we added sustainability in the yearly bonus of all the managers of the company. So in 15,000, 15,000 managers around the world out of 100,000 people around about the company had a third of their bonus, yearly bonus, attached to sustainability. And that's how we really kick off a completely new journey of integrating sustainability as part of the strategy and the business decisions for the company. I find that absolutely fascinating because we are talking about a totally different time because I'm currently in Germany. And the talk about ESGs is not alien, but almost. And having a chief sustainability officer is very rare. We cannot compare the small, medium-sized enterprise here to the Siemens of the world or Merlemer's School or UNI level. So this is, I mean, that are 15 years and the sustainability development goals were 2015. So how come we have this group of companies, which one where you belong to or let's say Merlemer's or UNI level, whatever, they did all that. But not many followed at the time. Why is that? I think it's several aspects, but I would say first and foremost, it's a matter of the culture of the company and the history of the company. You don't have the same culture. I mean, every country, every culture is unique and how the culture is built. Is it a short-term performance culture? Is it a long-term performance? Is it an inclusive or not inclusive? All of that is really a matter of decades sometimes of cultural evolution, I'd say the first point. The second is some companies address sustainability topics sometimes without even knowing there are sustainability topics. When you invest in your upstream supply chain or when you train some downstream intermediate companies in your value chain, well, you do this for business reasons. You want them to sell your product in an efficient, cost-effective manner. You just take for instance health at work. You can think about health at work as a human right, and it is. But you can also think of it as a business performance issue. I know for sure, I know I've been in charge of this in my company for a long time. I know for sure that when there are accidents in a factory line or in a truck somewhere, it's because there is a deficiency in the processes. There is a deficiency in the organization, which is an issue of optimal performance. Accidents are the sign of something bigger. They are a terrible thing from a human standpoint, of course, but they are a business issue. The same applies for drivers on the street. If you have an accident because the truck is not well equipped, the safety instructions have not been met by the driver. The driver is not trained properly. The driver has driven too much in the day, and there is an accident. It's a drama, but it also shows that you have an unsustainable business if everyone is doing that. For companies, I know many of them that are investing in the smaller companies that are part of their ecosystem. No company can succeed alone. Any company is completely linked with its ecosystem to be successful overall. The larger companies invest in the smaller ones in their capacity. This is sustainability, but you may not call it sustainability. I would also say that you don't always need a CSO to actually do sustainability without knowing it is. The last thing I would say is that the longer a company has been there, the more established its market position is. Its brand, its reputation, its size. The more it can think, and it should think actually, about how solid, sustainable long term all of this is. If you are a smaller company, I don't think you should be doing the same. I think the agenda given the size and the level of development of companies cannot be the same on sustainability. We need to look at it in a very pragmatic manner. This is why, for instance, as far as our standards are concerned, we are not saying that very small companies should do them. I think our standards are too complex the way they are to apply to groups of companies that are too small. When you talk to investors and business, what are their main questions and needs? I am looking pretty much for, is upskilling and educating one of it? Yes, absolutely. It is very clear that we cannot just be a standard setter. One of the reasons why we have Jean Donghua, the former treasurer of the World Bank with us, with a specific role as a vice chair on capacity building, is exactly that. We know that we need to look at the ecosystem nature of standard setting. We need to be part of conversations that are broader than just sitting in a room and setting standards. We spend our time to listen, to think, to discuss. We spend our time in engaging. When we consulted, for instance, the draft of IFRS S1 and IFRS S2 for four months in summer 22, we actually engaged with nearly 30,000 people around the world in four months through events, one-to-ones, and many others. So 30,000, we listen, we listen to make sure we've got the feedback that we need and adjust where the needs are, what the possibilities are, etc. And then downstream the standards themselves, we are developing educational materials, e-learnings, knowledge hubs, partnership on capacity building with multilateral development banks, for instance, or with official development assistance money that is used in global South countries. We've just announced, for instance, with the UK FDO, a partnership with PAPA, the Pan-African Federation of Accountants, that has 125,000 accountants across the 54 countries of the African Union, a partnership on capacity building which is funded by the UK FDO. And we provide the material, etc., etc. So we are developing right now finalizing a jurisdictional adoption guide that will help jurisdictions in handling their journey towards using our standards as a regulatory tool. And so, yes, the demand from investors and certainly from companies and regulators is to have those educational programs in order to ensure that we learn this language together. I'd say one thing about this, which is we've been advocating the fact that we can't be perfect in using this new language. It's a new economics language in a way we are rewriting economics. And it's not going to be done overnight. But some of these conversations are urgent. Climate is urgent. Climate change, the physical risks are now. The transition risks have started already in jurisdictions like Europe, Canada, many others that have decarbonation plans that will be coming as negative and positive incentives of companies. So this is happening. And therefore we need to learn that language of climate together. And for the first time, we will not be fluent. So, you know, we will be approximate and we will have the right to say, oh, here I need to reassess what my baseline was. That's different, etc. I can use estimates. We are offering the possibility to use ranges, not just one number, ranges, assumptions, estimates, etc. In order to ensure that we all start learning the language together, but also embarking everyone as soon as practicable. So our encouragement and what we are discussing is don't wait until you're perfect. Start now and we are providing the safety and the transition reliefs and the capacity building that we've been talking about. Yeah, yeah. Emanuel, I would really like to dig a little deeper into the importance of this economic language. And just briefly go on a personal note. I've accomplished last month's, a six months ESG and sustainability designation for board members. And it was a fantastic program done by a Canadian company called competent boards. And they are the leaders in basically board education. And what they do is the beauty lies in it is a truly global program from leaders for leaders. That includes basically the who is who of sustainability, right? So we have the ISSP, the standard setters. We have UN Global Compact. We have business leaders like Paul Porman. We have discussions on capitalism, for example, with Martin Wolf from the Financial Times. We have leaders learning from other leaders. And we could understand and use the sustainability language in practice from geopolitics to ISFR1 and 2. And a couple of questions stuck with me. Number one is, do you really know your business as a leader today on the board, as a CEO? And the other question was, how do I know my board is asking the right questions? How do I know? Yeah. Well, I'll start with an uncomfortable data. Okay. Yeah. PWUC published at the end of 21, a survey that was done after inquiring to more than, I think, 1,000 C-suite executives around the world on a number of topics around sustainability. One important chapter was about the board. And 75, I think 76% of respondents said that their board was very far from being equipped to govern and guide the company in its sustainability journey. I spoke earlier of how I felt that CEOs and C-suits were aware that some sustainability topics were critical for their business. I know that. What they are saying is, my board is not aware. My board doesn't have the competency. 75%. Yeah. We need to look at this clearly. Once we've said that, what we provide with the TCFD framework, which we have embarked in all our standards, starting with the grammar, the alphabet, the syntax that everyone is providing. We provide with TCFD a very broad set of disclosures that include for any particular topic on sustainability the metrics that you want to disclose and your performance against your targets, but also the risk management process of your company about that particular risk, but also the strategy that you design for the long-term management of that risk or that opportunity, including your investments and your strategy and everything that's designed about a strategy. And then the governance. The governance question is, who has approved it? It's a different thing if that's a local person or a functional person somewhere in a local headquarter or a region, or if that is the executive committee, or if that is the CEO, or if that is the strategic committee of the board, or if that is the chair of the board and the board. And if in a given company or in a given industry, nine companies say, my board has approved and is overseeing and has been trained on such and such topics. And one company says, no, my body is not overseeing that's done at the division level, and we don't have training or expertise on climate or standard at the board level. That will make a difference. That will make a difference because investors will say, next slate of directors that you need to hire, you need to make sure that you've got people that can bring some sustainability topics on the table that can propose that there is training done with the board, etc. So it's very clear that boards have a major role to play on sustainability. You know, there is this, I've been a member of a 1400-500 board since 2002, so for more than 20 years, until I left my job at Denon two years ago to take this one. So I know how boards work. And my experience, I remember a board member when I was a young board member who said to the CEO, you know, this board has the power to tell you no, but doesn't have the power to force you on yes. Well, I do believe that on sustainability matters, given the urgency, strategic urgency for some of them in companies that board should be compelled to say yes, to authorize, to push the CEO and the C suite to address sustainability in a strategic manner when it is strategic, of course. So I do believe that boards have a fundamental role in propagating and authorizing companies to invest because that's an investment to invest, hopefully with a return through our language because you can get a cost of capital advantage and you can raise funds at a competitive advantage with our standards, but to invest in the sustainability journey that is badly needed for a number of them. And I think also the changes that happen on the board level, and of course that happened for you much earlier than everybody else, but the move from being a competitive board where the CEO and the C is on, they all are competitive, rather than moving towards a cooperative one is a bigger step than it sounds. What could help it on the way? Yes, so I should have mentioned that my previous discussion about boards was about non executive boards, which in Germany would be the supervisory board as a management board, of course. When you speak about management boards, which I qualified earlier in my conversation as C suite, the executive committee, so the management board, that's where you have the CSO and the CFO and the CMO and etc. Yes. Well, two things here. Sustainability is a recognition of interdependence. I'll take it from a very, very high position here. We, the ISISB has constantly dated a framework which is called integrated reporting framework, which started in South Africa many years ago. And that integrated reporting framework, which is one that I have been using in my company for a long, long time before that, says basically that the value of the company is that it is a very high value. That a company creates for itself or for its stakeholders is inextricably linked to the value that it creates, protects or erodes for others. That the company business model is creating dependencies, relationship, impacts in its business ecosystem, which creates an inextricable ecosystem and interdependencies. I know it can be seen as complex, but that is the very, very basic truth. It is the truth. I depend on, that's what I said earlier. I depend on the success of the trucks that are carrying my product. I depend on the success of the farmers or the miners or whoever they are that are working on the raw materials that I need to be shipped to my place. I depend on the boats that are on the river of Rhine or in the Panama, Detroit to ship my goods. I depend on them. My contracts with them, I depend. It's an interdependence. Once you say that, it means that competition is not so much about going at war against each other. It's who is best at cooperating within its ecosystem. Take this and transfer it immediately to just the leadership team of a company. The same applies. The reality is that the various functions around the CEO depends upon each other. I won't expand on that. It's obvious. Those companies that work in a way where you have silos and decisions are being made in silos, I know they work for a time, but they won't succeed in a very complex world where you need now to have this overall view, this 360 helicopter view that allows you to see beyond what counts in the short term. Not everything is in the quarterly EPS number that you have. Every super important things are in the value chain, as I said, the long-term horizon. It's not one function that can see that. It's a collective. You're absolutely true that you cannot establish a proper sustainability strategy and execution by a company if the management board does not behave in a cooperative, integrative interdependency of functions. There are barriers to that. The silos, I mean the way we've designed organizations, I keep receiving calls because I know quite a few CFOs and I know quite a few CSOs as well. And I've got good friends for many years in both worlds around the planet. And the people I know from the CSO space would be telling me, Emmanuel, what you're suggesting with the standards that the company is going to be using because it's mandatory in the country or because we want to use them, it's going to be me, the CSO, who has been fighting to get money for my investment in supply chain, my investment in decarbonation for years. The CFO has said no to me. No, I don't have the money. No, there is the short-term EPS. We don't have the budget. This Mr. No, I'm supposed to give him my life, my professional life is going to be in his or her hands. And on the other side, I've got the CFO that comes to me and say, Emmanuel, I mean, you've been in this business. You're telling me that me, the CFO, I'm a very serious person. I should be taking these Excel spreadsheets and these papers and qualitative stuff and nothing is robust that is in the sustainability side. And I should build a language with which I'm going to the board and I'm going to the next of the financial statements to put this. I can't do that. I'm a serious person. And the fact is, my friends, unless you work together, it's not going to work. So it's exactly what you say. And this is where I think the CEOs and the boards have an obvious, the non-executive boards have an obvious role in facilitating this cultural change and this reorganization. I will just finish on this part by saying, I think the biggest topic is in the accounting and the finance world, because we have been, sometimes, blinded by the long term practice. As I just said, I signed accounts for years. We know so well. I mean, we have budgets of 25 billion euros on costs and we have a 0.1% margin of room for maneuver in the budget to meet our EPS growth every year. So we are super good at tracking this thing, like mathematical thing with provisions, everything else. The fact is, accounting 80% of accounting is estimate. The entries in a double booking is 80% estimate. Academic reviews are saying that that's a truth. There is never a closing on the 31st of December. Soft closing has started many months ago in the smallest of the areas around the world. But the fact is, you have such a robust process, you end up and you're able to design everything in six weeks so that the 15th of February, your full accounts are published. It's because you have a process, but the nature of accounting is estimate. So the revolution is in accounting. The revolution we're bringing is open the chakras of accountants around the world. Look at what counts and that you do not count and learn again that we need estimates. We need to build processes and the day we have processes as robust on carbon accounting than we have on dollar accounting, we'll be successful. I don't think you have any risk of being wrong, but it's simply that it's this new language that we need to rework together. Yeah, yeah. Emmanuel, I get, I would love, I mean, if you would see me here, you will see probably another 30 pages. Full of questions and another five hours would do. But do you allow me one final question? Because during my research and we talked about it a bit before, I found last night really a breathtaking presentation of yours at Sciences Po, the university in Paris, where and you started straight away with, and I quote you, if you want to have an impact, stay free. I thought it was fantastic. Can you just say a couple of words to it? Yeah, I can try. I think that as you may feel that you have success in your life, you can easily become prisoner of that success. It's comfortable and it creates barriers to your freedom, that may be money, that may be glory, that may be power, whatever that is. All of that are, you know, making you prisoner. And so I think we should, yeah, you cannot exercise a leadership in your own life and your life cannot be impactful if you don't have that leadership. So if you want to have impact, you have to stay free. You have to not stay in the center. You have to go to the fringes, not stay too long at the same place because it becomes too comfortable. You know, go with uncomfortable relationship, put yourself at risk so that you constantly push the boundary. And again, you can act in a manner where you do not become part of a static system that is just self-justifying its own existence. That's the contrary of having impact. So I said to these guys, indeed, if you want to have an impact, the first thing you need to do and maybe the only is to stay free. Yeah, yeah. It was really wonderful. And actually to all the listeners who want to listen to it, you find it on Google. Anyway, so Emmanuel, there was an absolute fantastic and very, very knowledgeable conversation. And I'm really glad that you could spare an hour to talk to us. You made me certainly very happy today and I hope many, many of our listeners. I wish you all the best for the ISSP and your work and the next three or four years up until 27, right? Yes, so far. So thanks a lot. Thank you, Sibila. Thanks for having us and thank you for having that podcast. As I just said, I think it's great that you can inspire leaders around the world. You've been listening to a special English edition of Degorsa Neustadt, a German podcast series by Zabilla Barton, in which she talks to pioneering leaders who are committed to making our world smarter, greener and fairer. For more information, please visit www.zabillabardon.com and the official site of the World Economic Forum. .
