The Orpea Double Scandal, Or How To Save One’s Reputation By Sharing One’s Convictions

A company's reputation is a double-edged sword: a good reputation provides an invaluable advantage, but losing it can be catastrophic. Furthermore, the volatility of reputations may be greater than that of the stock market. This thought brought to mind the wise words of my grandmother: “My little Ludo, remember that in love, as in business, a reputation takes longer to build than to destroy.”

To dig deeper, I reached out to Aurore, a friend who thrives on workplace excitement. She confirmed my intuition: “Every company wants its brand to shine. Being competitive is no longer enough, a company must also be attractive.” When a company’s reputation attracts customers, talents, and investment funds, it finds itself in a strong position, and can impose its conditions without negotiation—it’s a take it or leave it. Companies work hard to cultivate their popularity. They spend reckless money to attract attention and talent. The most successful companies can dazzle candidates who dream of associating with them. This was the case with Orpea, which ranked No. 2 in the French market of retirement homes, and 5th out of 113 in the Sustain analytics ESG ranking.

On the other end of the spectrum, some companies can quickly lose their reputation, for one professional misconduct in one of its offices. This is what happened to Arthur Andersen, who went from being a top auditing firm to virtually disappearing from the market within weeks. It was never able to recover.

Orpea was a member of the STOXX 600 Europe, MSCI Small Cap Europe, and CAC Mid 60 indexes. When its immorality was revealed, the company’s stock plummeted.

Aurore had actually considered choosing Orpea for her own mother. “Actually, the most scandalous part is that that they tried to reduce costs and cut suppliers’ margins…

I interrupted. “Really? But we're talking about human beings here!”

“Ludovic, you need to understand that not all companies are sentimental—they exist to make a profit. While it might seem right for them to do good for the people, profit is their sole vocation. No, the real scandal is not their level of venality, but that there was no indicator of it. Even their committed shareholders were deceived.”

Orpea was positively assessed by financial rating agencies (...), rising from 34th to 5th place (out of 113) in Sustainalytics in 2021.” Orpea may have complied with regulations, emulated its suppliers with the support of helpful organizations like Ecovadis, and had a set of values displayed alongside a formalized CSR policy. Was it not the recipient of the 2019 Excellence Trophy from the “Master in Business Law and Ethics” Chair at the University of Cergy-Pontoise? Did it not achieve ISO certification? However, all these accolades come at a cost. I turned again to Aurore.

“Do you think this marks the beginning of a broader reassessment of the reputations of companies with good ESG ratings?”

“Yes, because asset managers of ESG funds are likely to be tired of being, in increasing numbers, targets of such bad jokes. Many try to highlight their CO2 emissions and the percentage of women in their workforce, as proof of their goodness or humanity. But Orpea demonstrates that claiming things don’t make them true. The pursuit of certification, labels, or indicators can overshadow a noble initial intention. Let’s not forget that the raters’ primary focus is profit. Therefore, there is a temptation to use ratings as leverage to sell numerous “improvement” initiatives. This can actually be a significant part of a business model.”

- If ratings aren’t the answer, how can we distinguish genuine companies from the insincere ones?

I believe it’s time for them to be honest and expose their convictions to save their reputation and the livelihoods of their 70,000 employees. Authenticity will speak louder than their ESG rankings.

Inspiring leaders throughout the world have drawn on their authenticity to motivate others. They have shared both their successes and struggles, and some, like Emmanuel Faber, have even opened up about their personal experiences.

I want to know who the people behind the leaders of listed companies are. I am interested in how they embody their pro-ESG commitments in their personal lives. Do the directors of Orpea accommodate their own parents in their facilities? Did their children taste their grandparents' meals? Sure, nobody is perfect. Even though they would be subject to critics for their CO2 emissions, they would at least demonstrate greater bravery by sharing their values.

I would highly recommend that they read Brenne Brown, the five-time NY Times best-selling author. They will learn that there is no shame in vulnerability, and that exposing one’s feelings is not a sign of weakness, but maybe the greatest mark of courage one can demonstrate.

Sentimentalement vôtre

Crédit photo : © Dominiqk Lange - Unsplash