 Good morning, good afternoon and good evening. It's a pleasure to have you all here with us today and welcome to reorienting boards for the long term I'm Adam Robbins and I had future investing initiatives here at the forum today We'll go on two journeys. We'll go on an intellectual journey with our speakers towards understanding stakeholder capitalism But first I want to teach you all on an imaginary journey out of your homes and out of your offices and to Davos We're going to Davos, not just for the spirit of the conversation But because it's here in 1973 where the forum's stakeholder capitalism vision started 48 years on that vision is still going strong, but on the implementation side. We've fallen short as a society So we're here to address that that short come as a panel today We're here to look at the role of corporate boards in particular and how they can align financial incentives Governance practices and long-term value creation Towards business models that support more stakeholder oriented outcomes We'll be in the hands of Sarah Williamson CEO of focusing capital on the long term will lead us through our discussion today with an esteemed panel We'll start with a 30 minute public panel followed by a 30 minute Sounds like we lost Adam halfway through there. So I'll finish what he was going to say. This is Sarah Williamson Thank you so much for joining us and thank you Adam And thank you for the world economic forum for putting this virtual Davos on So the format is we're gonna have a 30 minute session with our panelists And then for those of you who are on the top link dial in we'll ask you to just sit tight for a minute And then we'll transition the technology. So let me start by Welcoming our panel members to this discussion of reorienting boards for the long term So we've got four members who are going to share some insights with us today Kurt Borkland is the co-managing partner of premier advisors a global private equity firm based in London Mark Machin is the president and CEO of CPP investments Alan Jope is the president and chief executive officer of Unilever and Amy Weaver is the president and chief legal officer of Salesforce And with congratulations will be the CFO starting on February 1st So welcome all of you. Thank you for joining us today So at FCLT, we are very interested in the drivers of long-term value creation for all stakeholders And we've identified these key drivers and it won't surprise you that the first one on the list is governance It is essentially impossible to have a long-term Organization with the short-term board that just doesn't work So today, we're really good to talk about the role of boards in creating long-term value Through this lens of stakeholder capitalism. So Mark, let me start with you I hear different definitions of stakeholder capitalism around the world How do you define stakeholder capitalism and why is it such an important issue for boards in addition to business leaders and the business community at large? Well, thank you, Sarah. I think one thing to recognize as I think Adam was saying before he was disconnected is that this debate has been going on for a very long time. It's been going on since Davos first started it The web first started at 1973. It's been going on for many decades before that, which is what is the Purpose of a company and how should it balance? I think it ultimately comes down to balance How should it balance the needs of its stakeholders because I think most people would not Disagree that the purpose of a company is to provide a service to satisfy customers to provide solutions And one of the outputs of that is profit for shareholders But it's not the only thing that companies do so companies have multiple different stakeholders They have customers incredibly importantly customers or consumers They have they have communities they operate in environments they operate in they obviously have employees They have suppliers and and they have creditors in some cases and shareholders in in almost all cases. So that's what Needs to be considered and obviously in the short term You might get away as a company with gouging your customers. You might get away with, you know, screwing your suppliers You might get away with Destroying the communities and the environment you work in in the short term in the long term that's quite hard to do and actually as Sorry, you've indicated and one of the reasons we founded focusing capital on the long term Yeah, one of the founding members was that We think in the long term these things are very very aligned And that in the long term if you do take care of your customers if you do take care of the communities and the environment you're operating in If you do take care of your employees, then then it is much more aligned with long term value creation But I think the the issue is balance because if you have one thing you're trying to aim for then You know, it's probably a lot. It's very simple for executives to drive towards that if you're balancing Multiple things if you're balancing the interest of employees versus the interest of communities versus the interest of your shareholders That's where a board Board's role is incredibly important to make sure that you have that balance right that you have that orientation right And so that that's that's ultimately I think why the role of the board is so important in this debate Right. Thank you. And amy, let me turn to you So you're a leader of a business that has been purpose oriented I think from its start it's well known to uh sales force to be a very purpose oriented company But can you talk about some of the insights that sales force has can offer about how it's bored in particular In addition to the management functions to engage with the with the relevant stakeholders and how does a board drive this mindset Great. Well, thank you, sarah You know as you mentioned a stakeholder Capitalism and having purpose driven company has really been part of our business nearly since our inception over 20 years ago When sales force was created at mark benioff our ceo and our founder Together with his co-founders also launched what we call the 111 model And they committed that one percent of their equity one percent of employee time and one percent of the product Would be dedicated to our communities Now in absolute terms when they started out These were small or frankly non-existent commitments But today having this very intentional model and leading with our values Has led to over 400 million dollars in grants including donations this past year of PPE to support our frontline workers Five million hours of employee time and having more than 50,000 nonprofits using our technology for free Or at a discount And as sarah said to eloquent eloquently you can't have a long-term focus with a short-term board focus And that's where our board has come in and played such a critical role You know first it starts with just having a bounty of diverse backgrounds and experiences on our board And I think that's critical in really helping us see Kind of you know potential blind spots in how our actions might impact the world around us And this variety also helps provide oversight to ensure that our commitment is really to all of our stakeholders You know, of course our shareholders that our employees our customers our partners our community Even the planet as a stakeholder And it brings experience governance To ensure that our values are creating values for our shareholders as well You know, I want to be clear and mark just said this but you know I believe our boards focus on stakeholder capitalism And esg has been a positive force in our long-term success financially And in the overall strength of the company Now in terms of tactical things that we've done recently to kind of enhance board oversight in this area There's a few things Our nominating and governance committee traditionally in the u.s That's a committee that is used to identify new board members and to oversight if some compliance matters That group now also oversees our environmental programs and receives regular updates on employee diversity Our audit committee now has oversight of esg disclosures that now show up in our public financial filings And about two years ago, we established a new committee and it governs privacy rights and the ethical use of technology And it's to make sure that these really critical issues are receiving ample visibility at the board level I think all of these things have been really essential to enabling our board to exercise this oversight That several of these last tactics are also really good for steps If you are start just getting started and trying to figure out how to orient your board to have more of an esg focus That's really helpful. And as a nonprofit who uses your software for free. Well, I'll thank you for that as well I'm glad to hear that sarah. That's true But I think those are very practical tips. That's very helpful So, um, Alan, maybe we can go to you next and and ask you a little bit that we hear sometimes that The challenges to this idea of stakeholder capitalism or the pressures to be short term instead of long term Often come from the investment community from from your shareholders So what are you hearing from the investors that is different? Is that changing or what makes you think that that? mindset around stakeholder capitalism is evolving Thanks, sarah. I mean, I should at this point distinguish that the buy and sell side discussions that we have are different and I'll focus my comments on the buy side the asset managers Basically what they want to talk about is what's your strategy? What's your thinking on the portfolio? What's your thinking new and capital allocation? so if a long term view And esg metrics are in your strategy at the board of Determined that then it enters into the discussion with shareholders And I can tell you the nature of the investor meetings. I've seen a big change over the last two years The esg used to be a five-minute tap and a mention with a junior team member at the end of the meeting And now it is part of the core discussion More and more investors I've never once been challenged on a multiple stakeholder model that somehow it comes at the expense of shareholders Um We firmly believe that if we prioritize looking after our people our customers our business partners the planet and society Then shareholders will be very well rewarded much as mark was saying Uh, and interestingly, I've literally never once had an investor and I think I had over 100 investors meeting last year Challenge that that logic Now, um, we did a lot of work in 2020 on climate and nature We've had an incredibly positive response so far To our commitment to put our climate transition plan took to a shareholder vote at our agm in a few months time I hope that positive response turns into positive votes and the board have driven us that way We went out with some social commitments Just last week actually But the proof is not what we hear the proof is what investors do And we hope that investors will use their hard influence of voting rights Voting for companies that have made net zero commitments Voting for companies that are making commitments to pay net pay Living wages as a minimum And I think you know better than most of us Sarah that we are starting to see capital flows and returns favoring ESG choices So the short answer is the board determines the strategy and the strategy determines What you discuss with investors final point A quarter of my pay is linked to ESG and long term metrics And that is something the board will take a view on very shortly Great. Thank you. That's really helpful So one of the important issues that we've seen in the public markets is this correlation between diverse boards And greater long term value creation. There's obviously been a lot of discussion there But as we turn Kurt to you to the private side, how do you think about diversity in Your boards obviously as a private equity firm you have portfolio companies where you tend to control those boards How are you translating that idea about thinking long term and thinking about diversity in particular Both to the portfolio companies and to your organization itself So first of all After 11 months of working from home. This is the first day when my broadband Capitulates, so I'm sorry about the half good framing on my iPad for for the session But the private equity governance model Should have a significant advantage over the public Governance model in the sense that we have a very aligned Um circle between the shareholding the shareholding control the board and the management team and therefore We should be able to take both effective and long term decisions that are in the best interest of not only the financial investors in the company But also the stakeholders around it And and this time perspective that we have of five to ten years of ownership Instead of any obligation to report whether that's a planning horizon or not, but report quarterly or even annually to To the public markets again as an asset class and then as an ownership model should give us A good ability to drive significant stakeholder capitalism Outcomes if I look at the two highest priorities for me In the current environment, they would be one Inequality and what is happening in the world where we have In a town like london we have 21 percent of people work in the hospitality and the restaurant sector um a lot of Businesses will have been permanently impaired or disappear as a consequence of what's happening with covet Um, and then of course we've seen massive emergencies Emergence of income in inequalities around the world And the second is of course climate change, which was very much a focal point in the late 90s And as we came into the early 2000s Al Gore drove awareness And then the financial crisis came and that dropped down on the agendas of the boards and And governments and I think the same what I fear is that the same thing happened with covet where A year ago as we came out of Davos, it was high up on everyone's agenda and covet then Set all the compasses spinning and the priorities have shifted in the short term We need to get back to solving the long-term issues Now how we deal with that? When it comes to inequality, I don't think that the answer there is stifling entrepreneurship or supporting industries which long-term structurally are stale I think the answer is to ensure that everyone in our ecosystem be it employees suppliers and other stakeholders have Have a sustainable business model with economics that even through this period of time Can and are sustainable and governments of course need to focus on ensuring that education healthcare Provides equal opportunity for everyone And as private equity owners, we need to take a long-term perspective where we don't focus on the short-term negotiations with labor But instead accept that minimum Wages in different geographies are going up and should go up to provide that and when it comes to climate What drives me mad is when I see companies Acting against climate progressive climate policies We know that climate will not change unless The externalities of the damages the damage that companies do to the environment get internalized through taxation And regulation and consumer action and companies should endorse that Now to get specifically to your question the way we get there is to ensure that on the board We measure those outcomes and that there are individuals tasked aware of An experience with dealing with those two issues What I see quite a lot is the sort of ESG checklist Version of greenwashing, which I don't think is healthy because it's not focused enough. It's not pragmatic enough And it's not long-term enough Just one more follow-up question for you on that Kurt. I think Amy gave some very practical tips about Putting certain things on certain committees to make sure that they were covered as you think about the way That portfolio company boards in particular operate How do you think about getting these kinds of issues of diversity or climate or the supply chain and so on on that board agenda? Because they do operate quite differently than public company boards Can you give us some insight in how you actually get that topic into the board room and get the right people and the right Topic into the board room to have that discussion I think one advantage that we have in a private equity environment is that is that we avoid quite a lot of the noise involved with being a public company, right? So if the agenda for a public company board and I've been on a couple of those is 15 topics we have maybe four or five So it's much easier for private equity on board to lift for example supply chain sustainability and climate change Into that top five list of topics to focus on and devote very significant time to that with accountability to drive real change I think public company boards Often have a number of fiduciary duties and processes that they need to serve Which eat up in my experience up to half could be more of that time So to me Again, it's about having a very short prioritized and clear agenda with people on that board that have the diversity of thought the experience to to act and drive them forward It's not more complicated than that Okay Mark, I'll ask you one more question and then I'll watch it by time We'll go to the the this lightning round But as you think of you're in that you're an investor in people like Aby and Alan's companies you're an investor in private equity and public equity, you know as a big investor What would you like those boards to be talking about? in that room that You know, maybe maybe is is there isn't on the agenda today Yeah, we're also invested in Kurt's fund and we're investors in big companies alongside Kurt in the private markets as well as in Two public companies as well. I mean, I think You know listening to these types of sessions listening to the one today Yeah, we I think we all buy into this and we we all get that the In the long term all of these things can be balanced and are aligned I do I do think it's worth reminding Our services to what why this is a debate right now I mean, what why where did we where did we get to what happened to this started? And I think you know, it's often quoted that Milton Friedman had a lot, you know a lot to A lot to do with the SPAC in you know, 1970 or so in pushing for the primacy of shareholders And and that's the reason why is I understand that these things was was so out of work at that point where companies had you know huge amount of self-interest the executives in companies a huge amount of self-interest and just basically paying themselves and also You're just looking after sort of union rights and employees in the u.s And so employees and the executives of companies were doing really well But everybody else was a stakeholder was not doing well including customers and people quite the auto Auto industries in the u.s auto industry And you know, I'm British originally and I think of the 1970s As where you know, almost everything was getting nationalized and owned by the government because of a lot of different failures including the auto industry in the UK again Was was owned owned by the government and customers were really lost on the list of people to be considered So I think clearly that was really out of balance But we've come so far in the other direction. So shareholders the only thing that has mattered Um, which has made companies competitive to create a lot of value for ass owners like my like Ourselves and therefore it has resulted in increased savings for people who have savings or have pension pension funds um, but you know clearly The the sense is it's gone too far And then you're back into how far do you put it back into balance? How much more do you lean into uh, the board paying attention to sustainability and all these esg All these esg matrix including there's an enormous amount of pressure to Rightfully being put in place to do that And I say in the long term generally it leads to better long-term shareholder value But but it is complicated and you have to spend a lot of time as boards trying to balance Some of those things for most companies That's great. Well as a um a long time student of economics If you go back and actually read the Milton Friedman work One of the interesting things is he actually talks about company towns and how Important it is for companies to look after their company towns And so Alan, I don't know what you think of as Unilever's company town now. It's probably about 180 countries or something Um, but but there is even even there some recognition of this So part of this is it's just been taken too far as you've said Well, let's let's let me ask you one quick Sort of lightning round question then So we're we're going to be making lists of important things we can carry out of this So what could I ask each of you in five words or less? What's one thing that boards should focus on to to strengthen stakeholder capitalism as we look forward in this year of 2021 Amy, maybe can I start with you one thing boards should really focus on to strengthen stakeholder capitalism this year It's sure one thing that we really haven't talked about is the incredible impact a negative impact of the pandemic on women So if I were going to have one wish for boards to be focusing on I would say get women back to work Great. All right, Alan I'm sorry, Alan. You're muted forwards equality and climate change All right, quality and climate change those are good ones. Uh, Kurt Board should set long-term accountable measurable objectives around inequality and climate change And mark I think everybody's taken the ones I have before so let me add metrics. I think not numbers real numbers matter numbers are more important than adjectives More more numbers or the numbers and adjectives. Okay. That's a that's a good one. I'm going to remember Okay, well, I'm watching our clock and I'm I'm told we're coming to the end here So I thank you so much all of you for your insights, you know, there's there's an old saying that The job of boards is Oversight insight and foresight and I think that what we've heard a lot about today is that emphasis on foresight looking forward trying to figure out What's coming next and it's obviously critically important that boards take that long view as their organizations Go through the ups and downs of these markets. And so I'm I've taken notes here about Getting women back to work equality and climate change Objectives metrics and maybe all of those those of us who do serve on boards can think about how we take these Topics and make sure that they're on our board agendas As we deal with the near-term issues, of course and the company issues that we're all facing What we'll put these on on the agenda as well So thank you to everybody who has been joining us on from around the world on this stream