OWP liVe Report

62 The days of shareholder value are over. Stakeholder capitalism is dawning H O W T O

PETER BAKKER President & CEO of the World Business Council for Sustainable Development

Amajor reasonwe shouldn’t be lured back to business as usual, he said, is because we need to seize the opportunity to elevate sustainable businesses. “Sustainabilitywill become the crucial driver of the competitiveness of your company,” he stated, intimating that businessesmay evenwant to use that as their carrot to integrate environmental, social and governance (ESG) issues into their businessmodel.“Over recentmonths, during the pandemic, we have done our analysis: companies that are serious about ESGs in their disclosures, riskmanagement and decision-making have outperformed the stockmarket by about 10%.”

management and risk assessment of companies?Howdowe change company decision-making? In addition, questionwhat your company does in terms of disclosures to shareholders and other stakeholders, and as regardsmaking themmandatory. Change the communicationwith capital markets: “It’s often said by some of the leading companies in theworld that [they] could do a lot on sustainability if only the shareholderswere integrated andwould integrate it into their capital allocation models,” saidBakker. Well, these types of excuses are over as attention is nowbeing paid to capital markets by both investors and financiers, in their bid to understand theESG performance of businesses. It is becoming clear that companies that bettermanage their sustainability portfolio are also bettermanaged companies.

COVID-19 has upset the applecart in terms of thewaywe do business; but wemust not seek to return to business as usual, says Peter Bakker. Bakker, formerly CFOandCEOof global transport and logistics firmTNT, said that he is “optimistic about businesses’ ability to adapt to the newreality” but that there is no time towaste. It is an exciting time to be a leader, but the stakes are high. “Capitalismwill nowhave to fundamentally change. The days of shareholder value are over,” he argued. “The dayswherewe only optimize financial capital are behind us. Continue thatmodel […] and youwill notmake the jump to the systemtransformationwe need, which is integrated capitalism.”

Here areBakker's top tips for harnessing stakeholder capitalism.

Ask a plethora of questions, along the lines of: Howdowe integrate financial capital, natural capital and social capital into our decisionmaking?Howdowe truly integrate environmental or social risks into the risk

“We need to seize the opportunity to elevate sustainable businesses."