Alexandre Calame Swiss Landscape

The Best Performing Executives: Also a Matter of Social Responsibility, Sustainability and Longevity

Dirk Dobiéy Business, Insights Leave a Comment

“Only one of the 10 best-performing CEOs in the world runs a U.S. company”, the Washington Post headlines last week, while pondering over the results of this years’ Harvard Business Review list of world’s best-performing chief executives that was released earlier that week. Eight of the top ten are CEOs of European companies and editor Jena McGregor notes “it’s the balance of sustainability measures with financial performance that explains why CEOs of U.S.-based companies are less represented at the top.” The reason why Amazon’s Jeff Bezos, who made it to the top previously, now moved down to #87 is because HBR changed the rules of the game. “In the past, our ranking was based exclusively on hard stock market numbers. We looked at total shareholder return, as well as the change in each company’s market capitalization. […] And so this year we’ve tweaked things. We’ve added to the mix a measurement of each company’s environmental, social, and governance (ESG) performance.” Also HBR included this year for the first time CEO’s that began prior to 1995 which added another quarter of new names to the list.

Truly one may wonder why criteria such as social responsibility, sustainability and longevity have not been included in earlier versions of the ranking. Did we really prefer people that only care for the hard numbers and even worse purely on a quarterly basis? Do we desire people that create fake accounts or that fake norms, and once caught with it don’t even realize they are totally out of sync with society? The new version of the HBR ranking of CEOs “is meant to be a measure of enduring success” which is a good thing and certainly a better approach. While the ESG performance is only valued at 20% in contrast to long-term financial results at 80% it is a start for a more balanced approach to business.

Imagine what society would look like if we increased the ESG score to 50% when evaluating the performance of companies and their leaders? Leaders such as Novo Nordisk’s Lars Rebien Sørensen who made it to the top this year, recognizing the companies’ deep engagement with social and environmental issues. For Sørensen who will step down as CEO January next year after 33 years with the company says, quoted by authors of the study, “corporate social responsibility is nothing but maximizing the value of your company over a long period,” and adds “In the long term, social and environmental issues become financial issues.” We may appreciate the brave shift HBR is performing considering North American business traditions but if taking a broader perspective, the move was long overdue.

Picture Source: Alexandre Calame, Swiss Landscape, National Gallery of Art


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