IMD_SustainabilityReport_Digital

IMD Sustainability Report 2020

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Publication highlight How to Reconcile Your Shareholders with Other Stakeholders Paul Strebel, Didier Cossin and Mahwesh Khan MIT Sloan Management Review, Fall 2020, p. 63-69 Are executives supposed to manage the trade-offs between conflicting stakeholder interests? For example, between the interests of shareholders and supporting society to help manage a pandemic? Executives need a practical criterion or clear objective for deciding how to allocate resources across various stakeholders; those who create value for the company must be treated differently from those wanting short-term pay-outs. Equally, stakeholders who benefit from the company’s largesse must be treated differently from those suffering the business model’s undesired side effects. After working with boards of directors and executives on stakeholder issues, Paul Strebel, Didier Cossin, and Mahwesh Khan found that to reconcile shareholders with other stakeholders, executives must identify who will create long- term value – and avoid the value-destroying traps associated with others. They can make stakeholder IMD and the Lundin family – represented by the Adolf H. Lundin Charitable Foundation – announced the appointment of Professor Knut Haanaes to the Lundin Sustainability Chair in 2020. The renewal of the Lundin family’s multi-million CHF endowment marks a shared dedication to sustainability as an integral part of business strategy. First created in 2004, the Chair spearheads research and teaching related to the natural resources sector and investigates how challenges and opportunities in this area impact other industries and society as a whole. New Lundin Sustainability Chair

Professor Knut Haanaes

“I want IMD and our research to be useful to executives and their companies as they seek improvements in sustainability, and to be ready for the step changes coming over the next years. Sustainability is more important than ever before. Today many forces are coming together, including investors and consumers, making sustainability a powerful megatrend.”

capitalism work by deploying these five strategies in varying combinations according to their context:

• Block value destruction (of your company) by predators

• Stop subsidizing free riders (such as zombie executives and divisions) to avoid eroding long-term shareholder value

• Develop compacts with value creators

• Minimize value extraction from victims (or possible victims)

• Enlist intermediaries as promoters

Image: MIT Sloan Management Review, Fall 2020.