On March 22, The Zicklin Center at The Wharton School had the pleasure of welcoming Mr. Gilbert Ghostine, CEO of Firemnich, the world’s largest privately-owned perfume & taste company. At the core of the discussion was the theme of “Inclusive Capitalism”, creating value for stakeholders and shareholders, relevant more than ever in the context of the COVID-19 pandemic. Moderated by Prof. Djordjija Petkoski, the webinar was attended by University of Pennsylvania students and affiliates, alumni of the World Bank/Wharton jointly supported Ideas For Action global initiative, and practitioners in business, policy, development, and academia in multiple countries.
Inclusive Capitalism: A Historic Value
Opening the lecture was a video of Firmenich’s commitment to its customers, creativity, and communities for more than 125 years, starting from its headquarters in Geneva and expanding around the globe.
Mr. Ghostine defined Inclusive Capitalism, which is at the heart of Firmenich’s business model, encompassing and guiding the wellbeing of the company’s customers, employees, suppliers, communities, shareholders, and of course, the planet. He highlighted that the French word for sustainability, durabilité, was coined over 60 years ago among Firmenich’s shareholders, paving the way for sustainable innovation.
“Our shareholders have always supported the Inclusive Capitalism model, which we see as a positive way for spreading wealth among all our stakeholders”. He added that for a company like Firmenich, taking care of natural resources is of pivotal importance, given its reliance on them.
“You need 3.5 tons of rose petals to make 1 kg of rose essential oil”.
Global Climate Action: A Driving Force
Mr. Ghostine highlighted that participating in the UN Climate Change Conference (COP21) in Paris in 2015 was a fundamental accelerator to climate priorities.
“At Firmenich, we believe that we must enact exponential, not incremental climate actions”.
The company prides itself in being one of the few to be consistently awarded a Triple A rating on water, climate, and forestry, from the CDP – Carbon Disclosure Project. For Firmenich, positive impact encompasses the environment, the economy, and communities – and their innovation is rooted in creating solutions benefiting all three.
“We are reshaping the ‘science of smell’ to benefit society. A notable example is the molecules we have created to neutralize malodors in countries with suboptimal sanitary conditions, such as toilets, in partnership with the Bill and Melinda Gates Foundation”.
Mr. Ghostine drew attention to the role of businesses in society today, taking the World Economic Forum (WEF) as an example.
“Last year at the WEF annual meeting in Davos, 4 of the top 5 risks posed to businesses were climate-related – and these were ranked by the world’s CEOs”. He added that companies are more than ever expected to address social issues as viewed by the public, and there is a sense of even greater responsibility, rightfully so.
“In the annual survey on trust, led by Edelman, this year, businesses are perceived as even more trustworthy by respondents, as compared to governments and even NGOs”.
COVID-19: The New Normal
When COVID-19 emerged, Firmenich, like most global companies, was taken by surprise.
“The most difficult thing about the COVID crisis was that there was no similar ‘playbook’ for how to manage it. It was a day-by-day discovery process, no one was able to provide certain information – not fellow companies, politicians, not even medical experts.”
But the family-owned company found its feet impressively quickly with a strong set of values and a purpose to guide it, combined with a crisis response mechanism. Being considered an “essential” industry, Firmenich manufactures the ingredients in soaps (for washing hands, one of the top pandemic preventative actions), detergents for cleaning surfaces, chemicals for essential hygiene such as toothpaste, and of course, flavors in food and drinks around the world.
“We have 46 manufacturing facilities around the world – and I am proud to say that not even one was closed, not even for one day, throughout the pandemic.”
Alongside maintaining its daily operations, during COVID, Firmenich produced more than 100 tons of hand sanitizer solution and offered it at no cost in countries including India, Switzerland, the U.S., and Malaysia, to support hospitals and similar emergency services. In addition, the company was quick to establish a generous work-from-home arrangement for its corporate employees, who have been successfully working remotely for more than 1 year. In light of the pandemic, Mr. Ghostine additionally implemented strategic changes at the executive level.
“Early in the pandemic, I divided my direct reports into two groups: one that is managing the day-to-day factory operations and ensuring we continue to deliver to our clients smoothly, and the other that is looking to the future – conducting surveys, brainstorming ideas and actions to implement post-COVID. Essentially, we are ‘future-proofing’ our business”.
Reflecting on the silver lining of the past year, Mr. Ghostine was optimistic.
“This past year has given us, as people, 10 times the normal experience to learn about ourselves, develop new skillsets, and develop as leaders both personally and professionally”
He also highlighted the importance of taking care of each other, and particularly around the idea of intrapreneurship, commented that partnerships are the key to solving the world’s most pressing challenges. Under the UN’s Sustainable Development Goals (SDGs), Partnerships are SDG n.17.
“We don’t claim to have the solutions to everything – and that is why Firmenich is extremely open to forming partnerships, with institutions such as Wharton, NGOs, farmer cooperatives, between our scientists and research institutes, like-minded businesses and so forth”.
He added that partnerships are empowering because both stakeholders can uncover solutions that make a difference with an accelerated timeline.
Driving forward Firmenich’s Inclusive Capitalism model, Mr. Ghostine commented on the importance of a sustainable future not just for the company’s stakeholders – but even potential ones, aspiring applicants.
“We recently opened a mid-level position for a sustainability manager, and received an overwhelmingly positive response, with over 600 applications. This affirms the role and interest of sustainability among the public, and we are thrilled”.
Ending on a positive note, the Wharton students asked for Mr. Ghostine’s advice to youth discovering themselves and their own careers.
“My advice is the following: one, get out of your comfort zone. Two, define your purpose. And three, define your own meaning of success”.
In closing the event, Prof. Petkoski stressed the importance of creating opportunities for young people to take a leadership role in addressing the challenges and opportunities of sustainable development. He added that the partnership with Firmenich, within the Ideas For Action Initiative, is a good example of how companies can productively leverage resources for more inclusive and lasting impact.
A Recap by Anja Nikolova