We may be familiar with the three stages of the French “PACTE” law which organise the integration, by civil or commercial societies, of certain dimensions of the general interest. How can we understand this tripartite structure? The question, which is not new, deserves to be asked when Danone adopted the quality of social purpose corporation – hereinbelow société à mission (“mission-lead company”) – on June 26, 2020. We propose an answer that calls on the concept of precommitment.
A three-stage structure
The French law of 22 May 2019 (The Plan d’Action pour la Croissance et la Transformation des Entreprises or “PACTE” – Action Plan for Business Growth and Transformation) “designed a kind of ‘three-stage rocket’” (1). This elaborate structure has been much discussed, notably at the research conference held on 2 May 2019 at France Stratégie (2). Before saying a word about this structure, let us recall the contents of the three stages of the rocket. The first refers to the obligation incumbent on companies to take into consideration the social and environmental stakes of their activity (Article 1833 of the Civil Code). The second gives them the possibility of including a raison d’être (reason for being) in their articles of association (Article 1835 of the Civil Code). The third defines the société à mission, whose articles of association mention a raison d’être and one or more social and environmental objectives that the company in question “sets itself the task of pursuing within the framework of its activity” (Article 210-10 of the Commercial Code).
The mandatory and the voluntary
A initial way of understanding this structure is to distinguish between what is mandatory and what is voluntary. The mandatory is at the first stage, the voluntary is at stages 2 and 3. This distinction was suggested by Pierre Rohfritsch (3). He described the stages of the raison d’être and the société à mission as “voluntary stages, which function in the form of an incentive.” He further specified that the société à mission (stage 3) allows “companies that have adopted a raison d’être to go even further and to adopt social and environmental objectives in their articles of association.” We note that the “voluntary,” inseparable from the idea of incentive, is here conceived as the result of a balance between a deliberate act and the acceptance of a constraint:
“The legislator wanted the société à mission to be the third tier, something that is both flexible in terms of incentive and, at the same time, to have a sufficient level of supervision, so that the incentive exists and can signify a quality that is recognised in the eyes of the public. This balance will be the key to the success of that corporate form.” (4)
The mandatory-voluntary distinction not only provides a literal description of the tripartite structure, it also makes it possible to link a general, rather imprecise obligation (stage 1) with opportunities to choose more binding arrangements (stages 2 and 3). These arrangements create special obligations relating to the realisation of a raison d’être or the accomplishment of a mission, but which are not subject to legal sanctions. In short, the tripartite structure can be understood using the concept of obligation. From an imposed obligation, a company’s consideration of the social and environmental issues related to its activity becomes an agreed obligation, which is divided into two levels of constraint.
The precommitment concept
The double reference to agreement and constraint evokes a concept more appropriate to our case: that of precommitment. It refers to a set of mechanisms consisting, for a person or an organisation, in creating constraints that will limit their possibilities of choice in the future – constraints that they impose on themselves (5). In our case, precommitment means that by choosing to state a purpose in its articles of association or to adopt the status of a mission-driven company, a company chooses to submit itself to binding standards or, more precisely, that it chooses to protect itself against the tendency or temptation to ignore, in the future, the social and environmental issues related to its activity. It should be noted that even stage 1, which is based on an obligation and not on the company’s willingness, can fall under the concept of precommitment. For the obligation of any company to take into consideration the social and environmental issues of its activity can be met through a precommitment. A company can indeed choose to impose constraints on itself to guarantee the future satisfaction of this obligation. The practical importance of these self-imposed constraints can of course be discussed, particularly with respect to stages 2 and 3. For the nature of the external constraints may have an effect on the nature of the self-imposed constraints. Emmanuelle Mazuyer stated in this regard that the strongest constraint, the one corresponding to the third stage, “is the withdrawal of the mention of mission,” and she added that this “sanction is purely a public relations matter” (6). But the constraints that one imposes on oneself in the context of precommitment exert a pressure of their own. In the case at hand, this pressure comes from the signs that a company that has become a société à mission sends out to its environment. These signs have an influence on its image and reputation, suggesting that concern for image and reputation is a primary motivation. However, these signs do not only have a “public relations” function. They also allow the public to assess whether the company is trustworthy. Another reason to doubt the practical importance of precommitment in the case of the three-stage structure concerns the latitude given to a company wishing to be located at stages 2 or 3. It is up to this company, not to a public authority, to choose a raison d’être or to adopt the status of société à mission if it so wishes. Even though it does indeed choose to constrain itself by agreeing to operate in public view and to be subject to controls, the weight of the constraints in question has been questioned. Indeed, the company does not engage its responsibility in the same way as an organisation enjoying public authority or placed under the control of a public authority. Taking Danone as an example, Mazuyer asked this question:
“Who will be able to say whether Danone is fulfilling its mission of food sovereignty at the global level?” (7)
Precommitment and commitment
Let’s return to the question of image. Some companies might consider that the three stages, especially numbers two and three, offer opportunities to improve their image. “Many say that having a mission is a matter of communication and marketing,” Virgile Chassagnon noted, before adding an objection related to the concept of commitment:
“In the event of failure to respect a raison d’être, the reputational risks are major, which is also a condition for its self-execution and which partly contradicts the understandable argument of the Commons or Mission Washing (isn’t communicating with the public already a sign of commitment?).” (8)
The parenthesis is important. It refers to commitment. But commitment is not precommitment. Unlike commitment, precommitment is based on easily identifiable constraints. In the case in point, these constraints consist of formal adherence to the rules defined by the PACTE law (stages 2 and 3). Precommitment also implies the representation, by the companies entering a raison d’être in their articles of association or adopting the status of société à mission, of what not to do. This gives it a negative dimension (it prevents something from happening) and a causal dimension, as it is essentially intended to produce an effect clearly resulting from the precommitment arrangements (9). A commitment, on the other hand, remains open to interpretation and may be subject to change. When Blanche Segrestin asserts that “the model of the ‘mission-based’ enterprise allows […] to restore the possibility of commitment to a creative mission” (10), she distinguishes two concepts: possibility, which can be interpreted as a reference to a precommitment, and commitment as such, which is embodied in the raison d’être and the mission. In our view, the tripartite structure of the PACTE law falls primarily under the first concept. We can legitimately discuss the future reality of the commitments that companies will make at any of the three levels, but without forgetting that the actions they take will also depend on their precommitment.
Article updated on 5 July 2020.
(1) X. Delpech, “Publication du décret d’application de la loi Pacte sur les sociétés à mission,” Dalloz actualité, 7 January 2020. (2) “L’entreprise à mission. Réflexions sur le projet de loi PACTE,” France Stratégie, 2 May 2019. (3) “L’entreprise a mission dans le projet de loi PACTE,” in “L’entreprise à mission,” op. cit. (4) Ibid. (5) See Jon Elster, Imperfect rationality: Ulysses and the Sirens, Cambridge University Press, 1984. (6) “Entreprise à mission : quels droits pour les salariés ?” in “L’entreprise à mission,” op. cit. (7) Danone’s raison d’être is to “bring health through food to as many people as possible.” (8) “La théorie de la firme comme entité fondée sur le pouvoir : quelles missions pour l’entreprise ?” in “L’entreprise à mission,” op. cit. (9) See Jed Rubenfeld, Freedom and time: A theory of constitutional self-government, Yale University Press, 2001. (10) In B. Segrestin, K. Levillain, S. Vernac et A. Hatchuel, La “société à objet social étendu.” Un nouveau statut pour l’entreprise, Paris, Presse des Mines – Transvalor, 2015. […]