Stakeholder Capitalism

Capitalism at work: Watch Episode 5 of the Stakeholder Capitalism video podcast series

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Stakeholder Capitalism

This article is part of: The Davos Agenda

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  • Stakeholder Capitalism is a series of videos and podcasts that looks at how economies can be transformed to serve people and the planet.
  • In this final episode, we look at how stakeholder capitalism – a model that puts people and planet before company profits – works in real life, in the companies implementing and championing ESG.
  • With insights from Jonas Prising, CEO of Manpower Group, and Geraldine Matchett, CFO and co-CEO of Royal DSM. As well as Emily Bayley, project lead of the ESG initiative at the World Economic Forum.

Capitalism and globalisation made many people rich – some very rich indeed – and brought millions of others out of poverty. But at what cost?

All around us is inequality, environmental collapse, the climate emergency. As the leading ideology became to chase profits at all costs, what got left behind were people, their true well-being, and the planet they depend on.

But what if economies and companies could aim for something more than just short-term profits? What if they looked more deeply at their role in society and served all their stakeholders? This would be what we might call stakeholder capitalism – making a global economy that works for progress, people and planet.

Watch the debate in the video above, or listen to the podcast here:

Champions of stakeholder capitalism: transcript

Natalie Pierce: Hello and welcome to Stakeholder Capitalism, a show by the World Economic Forum exploring how economies can be made to work for progress, people and the planet. I'm Natalie Pierce.

Peter Vanham: And I'm Peter Vanham. If you've been following us along, you know that in each episode we've been looking at the current mode of capitalism in all its angles.

Natalie Pierce: We've been joined by experts around the world who have helped us diagnose the problems and prescribe possible solutions.

Peter Vanham: But now, in our final episode, we'll go beyond analysis and theories, and get into the nitty-gritty. We'll look at how we can implement stakeholder capitalism and what that would look like on the ground in companies.

Natalie Pierce: Let's get started. To kick today's episode off, we are joined first by Emily Bayley. Emily is the project lead of the World Economic Forum's ESG Initiative, and there is no one better to talk to about stakeholder capitalism and how we measure and implement it than Emily. Thanks for being with us today, Emily.

Emily Bayley: Great to be here, Natalie.

Natalie Pierce: Let's start with the basics. What are ESG metrics and why do they matter for stakeholder capitalism?

Emily Bayley: So ESG metrics are environmental, social and governance issues. So things like GHG emissions, pay equality, anti-corruption efforts, it's becoming increasingly important alongside the reporting we do on things like their finances and their financial accounting.

Natalie Pierce: And why do you think now in today's current context, more important now than ever?

Emily Bayley: There is no international standard right now for ESG and non-financial reporting. So this initiative came about because a group of companies said, Can we actually, as a group of companies across different industries, different geographies, different capabilities of ESG reporting, come together, agree on a basic set of ESG metrics and disclosures that we can all start reporting on. This initiative's been going on in the Forum for two years now, working with over 100 companies, over 50 who've already integrated the metrics into the reporting materials.

So what the companies who are joining the Stakeholder Capitalism Metrics initiative are committing to are including the metrics either in their annual report or their sustainability report, and they do this on a voluntary effort. One company may not take on board all the metrics because not all of those metrics are material to their business. Take, for example, a bank. A bank might not need to report on water consumption because water consumption is not material to their business.

The second element is they commit to working with the Forum and the coalition of companies on actually helping to push for this global alignment and global convergence. And then the third element is actually working across their networks of their peers, their competitors, companies in their supply chain to actually encourage them to take this on board and join this effort as well.

Peter Vanham: People also say in management that what gets measured also gets managed. So is, does that play into why companies or managers, CEOs are increasingly acting on this ESG report?

Emily Bayley: Absolutely. So it helps them to also bring their entire organisations on board. It's not just the sustainability team or the finance team that does the reporting. You need your human capital and HR teams on board. You need your operations teams on board. You need every aspect of your business on board.

Peter Vanham: So you see these ESG metrics, let's say, trickle down from the top of a company to, you know, various divisions of the company.

Emily Bayley: Trickle up and trickle down because you also have employees demanding that their companies are taking on board these initiatives. They want to see that a company's ESG-friendly, is ESG-mindful and is actually delivering on what they say they're doing. So it's coming from the bottom and it's also coming from the top.

Natalie Pierce: Which of the indicators are kind of significant KPIs?

Emily Bayley: We did a very open consultation process to actually set on the metrics that we use now with investors, companies, academics, NGOs, data providers, stock exchanges, kind of the whole ecosystem of the producers and users of this information. It coincided with the spread of the COVID-19 across the world.

At the start of the consultation, we felt a strong emphasis on the importance of the climate crisis and the climate emergency. But as we continued on in the process, the importance of the S metrics, so like the pay equality metrics, the workplace health and safety measures, those were becoming increasingly important because everyone wanted to know in the crisis what were companies doing to protect their workforce, what were companies doing to protect their supply chain, what were companies doing to actually make sure that they were, you know, being safe operators and safe citizens in a very complex period? All elements of ESG for us are important and urgent, but the COVID pandemic really highlighted that we need to have better reporting on the S metrics.

Natalie Pierce: Things like inequality, pay equity. These are very telling metrics that could also open a company up to some level of vulnerability when they share these.

Emily Bayley: So this whole effort is voluntary. Other jurisdictions are considering what kind of mandatory reporting requirements they pursue in the near term to increase a company's obligation to report on their ESG performance. So if companies are starting now and doing it on a voluntary basis, you can start to work out the kinks in the system. But in the interim, even right now, companies are finding it helpful because they're being asked by suppliers to be compliant with our compliance process, be part of our supply chain, you have to tell us all of these ESG performance metrics. Their financial institutions are saying, well, we can only give you the funding for this in the capital for this if you do ESG performance across these metrics. They need to have good ESG metrics and information at hand and have the reporting up to a certain level because otherwise, they will not be able to operate in the global ecosystem.

Peter Vanham: Critics of stakeholder capitalism have pointed out to the idea that this is mostly for show, the companies commit to stakeholders for show. It's not for real. To what, to what extent is the initiative that you're leading on Stakeholder Capitalism Metrics a response to those critics?

Emily Bayley: Sure. So we started this initiative two years ago working with the Big Four auditing and accounting firms because we wanted to have the right rigour and technical expertise to actually make sure that the outputs of our initiative were auditable. We actually wanted to leverage what currently exists in the marketplace to demonstrate that the current metrics and disclosures from institutions like GRI, SASB and TCFD really actually can underpin what can move us towards a global solution for ESG and non-financial reporting. So this whole effort is voluntary, but it's really companies saying and looking at our metrics as a toolkit to actually start to demonstrate their commitment to long term value creation, to demonstrate their commitment to stakeholder capitalism.

Natalie Pierce: Thank you, Emily.

Putting the 'S' in ESG ... Jonas Prising, CEO of Manpower Group

Peter Vanham: Our next guest is Jonas Prising. He's the CEO of Manpower Group, one of the largest workforce solutions companies in the world, also a Fortune 500 company. And he's joining us today to talk about why he joined the Stakeholder Capitalism Metrics. Welcome, Jonas.

Jonas Prising: Thank you, Peter. Delighted to be here.

Peter Vanham: Jonas, you are one of the largest workforce solutions companies in the world to get a sense of just how big the company is. Could you tell us how many people you employ every day?

Jonas Prising: We employ more than 500,000 people across our 75 countries where we operate globally, Peter. So we have a very large footprint and lots of people that we employ. During the course of the year, approximately two and a half million people come into contact with us and work with us on various assignments across our various brands.

Peter Vanham: You are one of the companies also that signed up for the Stakeholder Capitalism Metrics of the World Economic Forum. Why was it important for you to do so?

Jonas Prising: As Manpower Group is so actively involved in these labour markets with such big volumes, we can clearly see the effects of the bifurcation of the labour markets, between the haves and the have nots, and those who have skills that can participate and look ahead to a bright future and those that are clearly struggling in unskilled or lower skilled jobs that are changing significantly due to technological evolution, globalisation, changing ways of operating within organisations and also their own preferences. So we think it's very important to help bridge this gap that we see continuing after the pandemic and actually accelerating after the pandemic.

Natalie Pierce: Can you give us some examples of the key stakeholder capitalism metrics that you monitor and measure?

Jonas Prising: So the area where we think we can have a significant impact is helping bridge the gap, essentially bringing talent pools in that are disproportionately underrepresented in the workforce, in our workforce, and making sure that they have the opportunities to participate. So the metrics that we use here at ManpowerGroup are gender representation across the company, but in particular at the leadership levels, and that includes our board of directors. Making sure that we have secondary targets in different countries. So here in the US, for instance, people of colour representation across the company and at leadership levels is very important. So those are some of the metrics that we use as it relates to making sure that we keep track of the targets that we have and how we can make progress under the S of ESG.

Natalie Pierce: What have been the moments of progress where you felt like this is really working? Have you seen improvement in these areas since you've implemented the metrics?

Jonas Prising: When we started our senior leadership, representation for women was 22%. And very quickly we made progress, and last year we met 38% representation at the senior leadership level. And I project will get to our target of 40% in 2022. So now we're resetting our leadership representation target to 50% so that we can continue to make progress. But I have to say setting targets is not enough. When we started our progress around gender representation at leadership levels and how important it was, we clearly had a clear idea that it's the right thing to do. And yet we didn't see much traction on making progress in on this objective. But when we started to tackle this as a business strategy that was being led from the top and started measuring our progress and ensuring that our people were acting in accordance with it, that's when we saw the progress. I really came to the conclusion that it has to do with the sincerity and the commitment of leadership itself and first and foremost, the CEO.

Peter Vanham: Jonas, you know, of course, it also means that if you say the importance of leadership may also mean that it's important to have different skills as a leader of a company or as a management team. What are the new skills that you think need are required by leaders of companies?

Jonas Prising: So the first part, of course, is ensuring that everyone is aligned strategically, that we all know, understand, believe and act and coordinate with our targets and our values. Because the stakeholder view is that we are here not only to run a very successful business, but also to ensure that we contribute to the well-being of the communities in which we operate. I think it's very important to think about this as a business strategy. You have to think about this as a way of enabling and accessing talent that's going to help you become much more diverse in your thinking, which is extremely useful as you're trying to navigate a rapidly changing and disruptive world.

Peter Vanham: Let's zoom out for a second. What is the ultimate goal of these Stakeholder Capitalism Metrics? And what is the kind of world that you are contributing to or that you are hoping to see will emerge from companies adopting them?

Jonas Prising: I think most people, most organisations realise that what we have around climate is not sustainable and that we really need to drive towards a more environmentally sustainable planet. We feel that it is not truly the same situation yet on the S in ESG. So the social aspects are as yet underrepresented, underweighted both from an institutional perspective and from an organisational perspective.

But from what we can see, the gaps in the labour markets are real. We may all have been in the same storm during the pandemic, but we clearly were not in the same boat. So different categories of workers experience the pandemic in very different ways, and frankly, many workers had an extremely tough time and continue to have a difficult time during the post-pandemic or the latter parts of the pandemic. So making them feel that there is a future that they have an ability to participate for the future of themselves, their children and their friends is going to be vital so that we don't create big fissures in the labour markets, which ultimately become big fissures in the country and the societal fabric of each nation.

We think that the defining challenge of our time is to bridge these gaps and to build meaningful and sustainable employment for all. And that is the role that we intend to play and be part of a solution to bridge those gaps, which we think otherwise could become very, very difficult for many people to navigate.

Peter Vanham: Fair enough. Fewer storms and better ships for all is how I would summarise that. Thank you so much, Jonas, for your time with us.

Jonas Prising: Thank you so much, Peter and Natalie.

Putting the 'E' in ESG ... Geraldine Matchett, CFO and the co-CEO of Royal DSM

Peter Vanham: Our next guest is Geraldine Matchett. She is the CFO and the co-CEO of Royal DSM, a Dutch multinational company that is a leader on stakeholder capitalism. It's a company active in many different markets, including health, nutrition and bioscience, and boasts almost $10 billion in global sales. Welcome, Geraldine.

Geraldine Matchett: Hello.

Natalie Pierce: Geraldine. I was hoping we could start our conversation really with the basics. Peter told us a little bit about Royal DSM. What do you do? And particularly what's kind of your scope and scale?

Geraldine Matchett: As Royal DSM, we're the world leaders in what makes food actually nutritious, both for humans and for animals. It's a lot of science in not only the making, but also in understanding how bodies work. We are very much a leader in biosciences. We still have an activity in speciality materials that go into cars and mobile phones. That's only about 15% of DSM today.

Peter Vanham: Geraldine, you know, one of the things that strikes me is that DSM used to be known as the Dutch state mines. A company founded very much in the big era of coal. Today, your company is about something entirely different. Could you tell us a little more about that transition and how you achieved that?

Geraldine Matchett: The company was founded in 1902 and used to stand for Dutch state mines. So we used to run and owned the coal of the country. And then over time, there was a clear view that this was not going to be the future. And we evolved. We evolved much more into chemistry, actually a little bit into petrochemical, refining, and again, with a bit of foresight, really looking, forward-thinking, this is probably not going to be the best place, we transitioned and developed our skillsets in science much more towards the more speciality parts of chemistry. And then very importantly, we pivoted towards life sciences and biotech, which is where we are today.

And the main thing here really is about trying to futureproof one's activities by thinking well ahead of what are the societal trends, what are the environmental constraints and really seeing how is that going to impact your activities? But also, how can you, as a company, have the biggest possible positive impact with the kind of skillsets and capabilities that we have in-house, not only in terms of output but also of positive outcomes for society and that the environment that we live in?

Natalie Pierce: Thanks, Geraldine. We talked previously to Jonas from ManpowerGroup, who's really an expert in the S of ESG. And of course, Royal DSM is really focusing on the E and ESG. Can you tell us a little bit more about that?

Geraldine Matchett: Well, I would say we indeed have started a lot on E. So for instance, we have the kind of innovations that can tackle challenges that maybe others would not think of doing. One of the biggest sources of methane is actually burping cows, which is a bit of an unusual topic. Now it turns out that our science has enabled us to over the last ten years do a lot of research on this, and there is an ingredient that you can add to the feed of cows that can reduce the methane by at least 30%. Now this is something which is becoming extremely topical, and this is just one example of many of our innovations that have both a very logical value proposition and a very strong environmental proposition as well.

But I would like to say that we are also very keen on the S part. We also are very involved in what we would term, you know, the fair transition and livelihoods. So one of our targets is to actually reach 500,000 smallholder farmers with our activities.

Peter Vanham: Geraldine, you're also one of the companies that support the stakeholder capitalism metrics, a way to measure your ESG impact, if you will, in your company. Tell us a little bit more about why this commitment is important to you and also how other companies might learn from your experience in implementing early these metrics into your company management.

Geraldine Matchett: We have a very long tradition now of being very much an ESG anchored company, so it started in about 2002, if I'm not mistaken, we issued our first report. It was actually at the time called the 3P report: People Planet Profit, where we started to anchor the fact that our ambitions go beyond being profitable and financially sound, but also having very much ambitions on planet and people.

Now, fast forward a few years. In 2009, we said, Well, that is good, but you need to anchor it in your governance. To do that, we at the supervisory board created a sustainability committee. Since 2010, so more than 10 years ago, we made sure that our variable remuneration systems, so both short term and long term, are 50:50 financial performance: nonfinancial. And this is important because you need to have as much credibility behind these numbers as you do behind financial numbers. That's why we then also made sure that these numbers are audited by external auditors to the same degree than financials.

Now, why is it important? Well, at the end of the day, remuneration is a big, big signal to your organisation, but also to your stakeholders – including your customers, your suppliers, local authorities, etc. as to what it is that you're striving to develop and improve over time.

Peter Vanham: You've described DSM's journey on ESG as a 20-year journey. Now, of course, many companies are just catching up. What are some of the things that they can do that can rapidly start to show results if they start today?

Geraldine Matchett: I think there's one big advantage if you're starting today, and that is that there are starting to be a little bit more convergence as to what is required. So, for instance, with the help of the World Economic Forum, there has been an attempt to really shorten the list of KPIs that one should be looking at. And so I would urge a company that is starting now to really look at what are these frameworks and how do you really go for something already a little bit better defined? So that is already a big advantage.

The other one is to not hesitate to actually speak up and share openly what is your ambition, even if you're not quite there yet on the measuring. What I have found with other companies and peers is that they sometimes try to be overly sophisticated. Simplifying has a lot of advantages. Even if 80:20 in terms of perfection, it is starting to walk and then it becomes embedded and it creates the right conversations within your organisation and that is what you're really trying to achieve. I think the best advice I could share in terms of embedding is truly making it tangible for the people within your organisation, both visible and tangible what it means to deliver on these, you know, triple-P bottom line ambitions.

Natalie Pierce: I'm wondering, Geraldine – you've shared a few examples with us – but those very specific KPIs are metrics that have been so important to Royal DSM. What have they been?

Geraldine Matchett: The way we look at our ESG journey is in three pieces. So first we look at how do you reduce and that is your footprint. So you need to measure what is your greenhouse gas emissions, what your water usage, et cetera, and you improve your footprint. The second one is what we call enable, which is enabling your customers to actually have a positive impact on the environment or socially, depending on what they're trying to achieve. And that is really embedding ESG in the core of your activities. And the third pillar for us is advocating, is peaking up. Now, the one that has had the most impact for us is actually that middle category of embedding it in our value proposition for our customers. Currently a target of 65% of our sales should be market-leading in terms of either its ecological footprint or its social footprint. Now, when you put this in place, the big advantage is that you're actually embedded in everything that you do, which not only is leading to a good ESG outcome, but is also making you very successful as a company.

Have you read?

Peter Vanham: But of course, there's also a cultural journey isn't there? You have to make the transition with the people that work for DSM themselves. How do you make that cultural shift inside your company, both in terms of skills, in terms of mindset?

Geraldine Matchett: Never underestimate how important it is, what comes from the top in terms of the way that we actually define success. Over the years we went from, we want to do well and we want to do good. Then we evolved to we must actually do both. And now we are, doing good is actually the only way of doing well and thriving.

So from a cultural point of view, if you just come at it completely out of the blue, it can be a challenge. If you build it over time, it's very helpful. Now, embedding it in remuneration is one of the very important things. It creates the conversation at the lower levels in the organisation. What I mean by that is the one closest to the ground and closest to the customers, and not just as a corporate narrative, but as a very embedded conversation. When we're trying to look at capital allocation, when we're looking at future technologies, when we are looking at, for example, the funnel of innovations I mentioned, Bovaer, which is our methane reducing ingredient for cows.

Now when you start discussing with your organisation the kind of innovations that you have in-house and putting as much value on the environmental or social benefit than on the financial business case, then people get extremely passionate. And I have to say that you start feeling the positive, vicious circle out of this because you then start attracting talents which are passionate about this. These talents tend to be extremely good at what they do, and then it gets it becomes a positive, vicious circle of being a place which is very rewarding to work, which is nice. And then that creates the culture.

Natalie Pierce: Geraldine, we've talked in this episode about the importance of convergence around global standards. How important do you think this is?

Geraldine Matchett: We really welcome the ISSB, the International Sustainable Standards Board, being created so that we can move now towards something that you know, has the same comparability as when you use IFRS for financial reporting, this is the standard for non-financial reporting.

Not only is it going to enable much more efficient conversations, it's also, I have to say internally, very time consuming and expensive to try and answer the questions of all of the different frameworks that are out there. We did a count of how many we have to handle. And currently we're kind of hovering around 600 different kinds of frameworks and questionnaires and ways of collecting information, which often is very similar but handled in a slightly different way.

So absolutely essential. And I think we'll create a lot of efficiency across the capital markets, from the corporates to the investors to the institutional to actually civil society, getting much more transparent information and hopefully building trust.

Natalie Pierce: Do you have a call to action for our viewers about how they can follow a similar journey that Royal DSM has to?

Geraldine Matchett: My call to action is try. Even if you're not feeling that you're going to be fully there straight away, it's really good to keep practising and attempting. So, for example, the TCFD disclosures on climate change, you may not have the scenarios yet, but if you're able to already cover some of the governance aspects and start looking at your risk map and then maybe you will get to scenarios. But until you start walking, you're not going to be able to run. So there's a lot of evolution around this. So one is to try.

The other one that we found extremely helpful is to actually be part of networks because you can help each other. So one network, which has helped us a lot, is A4S, Accounting For Sustainability, where, for example, CFOs and companies actually get together and share how is it going, where are the difficulties, how can we leverage each other's expertise. So it's much easier to do it with peers and people around than it is on your own. So team up with others and give it a go.

Peter Vanham: Geraldine, if we want to run, then we have to walk first, if we want to go from a vicious cycle to a virtuous cycle, we have to try. Thank you so much for being with us today.

Natalie Pierce: This brings us to the end of today's episode and the end of this series of Stakeholder Capitalism. Peter, we've spoke to Emily Bayley, an expert at the World Economic Forum, who shared with us what ESG metrics are and why they matter. And we've heard from two case studies: Jonas at ManpowerGroup, Geraldine at Royal DSM. What are your takeaways from today's conversation?

Peter Vanham: Well, I think first of all, as we wrap up this whole series, the big, big big takeaway is that we are seeing this shift, this paradigm shift from shareholder capitalism to stakeholder capitalism. That means that we no longer see the business of business being just business. It's not just only about short-term profits. Today, companies are about more than that. They're about playing a role in society, doing good as well as doing well. I think that's the first big takeaway.

Natalie Pierce: And then from today's episode, it was really about what are the very first steps we can take. And we heard from Jonas and Geraldine that having the right metrics matter.

Peter Vanham: I think that's right, because if you look at companies and their managers, you know, they always say what gets measured gets managed. And of course, these ESG metrics are just about that. They're a way to measure if you're doing more than just making profits.

Natalie Pierce: This may be the end of our series, but this is just the beginning for stakeholder capitalism. If you'd like to weigh in on today's conversation or the series as a whole, please tag and write to us on social media and visit the World Economic Forum's website,, for more. On behalf of Peter and I, we want to thank our audience for joining us. This was stakeholder capitalism.

For the full series, visit the Stakeholder Capitalism homepage.

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