 Good morning, good afternoon and welcome to reorienting boards for the long term. I'm Adam Robbins. I'm head of Future Investing Initiatives here at the Forum and in this capacity I lead much of the forum's work on governance and investment sector. Our work is inspired by Professor Schwab's 1973 Davos Manifesto, which states, the purpose of professional management is to serve clients, shareholders, workers, employees, as well as societies and to harmonize the different interests of stakeholders. 48 years later, in the midst of climate, health and economic crises, this vision is more appealing than ever. But yet, as a society, we have not yet achieved it. So now we need to ask how and we need to ask what is the role of corporate boards in particular that can help us get there and help us put in place the right governance and financial incentives to achieve that vision. We'll be with our esteemed panelists and moderator, Jean Roby of Nattice's Investment Management, to help us get there today. We'll start the session with 30 minutes of public panel, followed by an interactive discussion of among registered topic users. Jean, we're in your hands for the next hour. Thank you, Adam. And good afternoon. Good morning, everyone. It's my pleasure to introduce our esteemed panelists. Claudia Azeddo, who is Chief Executive Officer tonight. Paul Volcais, who's Chairman of the Board of Nestle. Good morning. André Offmann, who's Chairman of Maselaz and Vice-Chair of Offmann La Roche. And Masayuki Yoda, who's Director, President and Chief Executive Officer of Sunitomo Corporation. So as you can see, a broad spectrum of activities and sectors and roles. Indeed, this panel is about how can board play a role in promoting long-term value creation through the eyes and the prism of stakeholder capitalism. As Adam referred to, this is part of the initial Davos Manifesto. And mostly as yesterday, Professor Schwab was in a panel on stakeholder capitalism and gave his own definition, which from his perspective is about how corporations relate to and develop natural capital, natural capital in the sense of people, environment. And of course, it draws into question how this is measured. And this is going to be the topic of our session today, the role of boards in promoting stakeholder capitalism and the role of boards in being holding the corporations we need to account in that respect. So to start our panel, what I'll do is I'll go through a few questions around this theme and asking each of our panelists to make some introductory remarks. And then we'll go into perhaps more of an exchange of views through some rapid-fire questions before leading to the second part of the session. So perhaps my first question would be to André Offmann, building on just what I just said. How do you define stakeholder capitalism? And what is your sense of the role of boards and business leaders in promoting stakeholder capitalism in the context of long-term value creation for all stakeholders? Well, good morning, everybody. It's a great honor to be able to participate in this session, which I think touches to the core of what the World Economic Forum has been trying to do for many years, indeed, for more than five decades. This notion of stakeholder stakeholder capitalism is something that really needs a close attention. And I would like to try to define by perhaps taking a step back. I went to school after 1968, and capitalism in those days had a very bad reputation. And that reputation of capitalism has stayed with us for quite a long time. Why do those capitalism not really tick a lot of the boxes of people like us? Because it's primarily concentrating on the use of financial capital in order to develop an economy. Now, many years later, we have reached a conclusion that capitalism is the best solution to propose a development path for humanity. The creativity and its incredibly ingenuity at making the most out of resources has been demonstrated many times, but we have to be able to start to measure the real impact we are having. Stakeholder capitalism is an attempt at trying to redefine capitalism, and it's an attempt at trying to make into, to put into emphasis the fact that we do not just need financial capital, which I would call the constructed capital, but that we also need to take into account natural social and human capitals. Natural capital obviously is the planet that is all around us. We are not going to be able to survive much longer in the dysfunctional nature. In fact, David Datum, in last years, that was defined as the life system support on Earth, and I couldn't agree more. I mean, I don't see humanities, homo sapiens surviving long if all other species disappear. I mean, just as an anecdote and to quote a number, the WWF report published three months ago talked about 57% of vertebrates species having disappeared in the last 40 years. I mean, more than half of vertebrates species known have been destroyed by our economic activity, and I think it's very important to keep that in mind. I mean, we need to go further. We also need to take account the social capitals. I mean, social systems are not functioning as well as they could. We're having disproportionate growth of certain assets and a non-inclusive development of the planet. And then we also need to look, of course, at the human capital, at people, us, homo sapiens, how can we work together, where is the talent, where, how can we develop it, and how can we make sure that we create a growth pattern? This leads me to give a new definition of, say, called the capitalism, and why is it important to businesses? My main professional activity is vice chair of the board of Hoffman-La Roche, Roche Groups. We are a family company. I'm the fourth generation. I do hope that the children of my children will be able in the future to have the same sort of influence of the company that I have. And that is only going to be possible if the company still exists. So we need to think of a sustainability criteria, sustainability philosophy. And to this belongs this notion of being able to grow in a way which satisfies their stakeholders all around us. Now, just my last point, and it's a point that's not going to make me very popular among my fellow shareholders, but I think that the owners of cooperation and like Roche, which employ 100,000 people moving from the same pharmaceutical and health across the planet, the ownership of this company is not those shareholders. The owners are the stakeholders, the people who benefit from the action of Roche, the people who, in our case, the patient. So if we want to drive a sustainable economy, if we want to move forward in a sustainable manner at business level, we need to get out of this notion of just working for shareholders, maximizing the short-term benefit for shareholders. We need to think long-term for society on a broader base and satisfying the stakeholders. I would leave it at that, if that's all right, Charles. Yes, of course. Thank you, André. Speaking, building on what you just said, perhaps I'll turn it over to Claudia Zévedo, as the single largest employer in Portugal. Of course, you are very focused on bringing your employees into that transformation journey. 2020 was a particular year for everyone. I can you share some comments and insights on that, again, from the angle of what we just talked about, stakeholder capitalism, human capital, and societal issues. Sure. Thank you very much, and good morning, everybody. I hope everybody is well and safe, and thank you for inviting me to speak on a subject that I'm passionate about. And putting this in the framework of boards and stakeholder capitalism, we are a diversified group, as you said. And so I would say it's a mixture of a purpose, a culture, and a governance. And starting off with the governance, we give autonomy to the businesses to create the conditions to make it possible and to be valued that the frontline workers and every worker is part of the transformation, leads the transformation. We have so many different businesses. I think that's the only form we can do it, because each business has its challenges. In terms of a purpose, it's very important. We are a 60-year-old company that's always had the same mission, which is to create economic and social value. And I took over a CEO two years ago, and people would say with cloud, it's impossible. You can't have market returns and social value. And I think that nobody would say that this year. So that the progress that has been done has been amazing, I think in the business community, in the world. Everybody thinks now it's obvious that you should have a mission that is to create economic and social value. And the culture, a culture of trust, of transparency, where everybody can feel that they have a voice. In terms of board of a diversified company, we also have, as we call it, a little bit as a joke, the Sonnei glue. So we have a series of forums, committees, sustainability committee, human resources committee, talent. And these, for example, our talent committee is 30 years old. It's not a new thing. We have some new forums, and we have the traditional forums like risk forum, etc. But that bind us together. We have also what we call in our strategy, annual strategy process, we have what we call the yearly guidelines. So in terms of the us at the holding level, we tell each business two or three very simple things that we would like them to address in that year's strategy progress, for example, digital, employee satisfaction, so to make sure that also the businesses, and really, they don't need to, but just to make sure that they know what will be valued at corporate level. Also, we have forums where all CEOs sit and we try and discuss. We have businesses that have been very touched by the pandemic, and businesses that have done well because they're in the sectors and we try and get the best out of everybody. Lastly, I would say communication has been key, very a lot. Communication in terms of us communicating with the different businesses, and in that sense, I think COVID has helped us with all the tools, digital tools, and I was telling the panel before we joined that we had, for example, in our retail business, we had a meeting every single year, very important meeting where there's a thousand people present, and this year, of course, we couldn't do it. So we did a virtual meeting with 9,000 people, and when we look to the future, we say we'll probably keep both because they play very different roles, and the importance of communication has been amazing. We gave everybody at our food retailing, for example, a smart phone, and we use that also for surveys to see how people are doing, to get information. I think information is key in this transformation. Claudia, I'd like to come back to you in a few minutes, because you said a lot of progress has been made, and for me the question is whether or not 2020 is conjunctural or structural in that progress. But first, perhaps go through all of our panelists. Now it's time for Yudhisam to share with us some of his thoughts as Sumitomo Corporation has been a long-term believer in these issues, and now what is your perspective on the progress that needs still to be made to address these economic, social, and environmental issues in terms of stakeholder within the prism, again, of stakeholderism and the role of boards? Thank you very much, Jen. It's a great honor to participate in this forum, and let me touch up on one basic principle left by our Mr. Sumitomo 450 years ago, so as to make our company sustainable. I think 450 years history is long enough, I hope. He simply said that the business always have to take a look at the needs of the society, because society keeps on changing, then our business always have to cope with the changing times. As we all know that COVID-19 has changed our business environment very, very dramatically, and we have to adjust ourselves. Our corporate group is facing difficulties, but the most important thing we have to take a look at is what is the needs of the society, what is the social issues we have to tackle on through our businesses. Last year we identified six social issues, among which one of the most important issue is the climate change. We have to tackle on these climate change issues through our businesses, so we have to redesign our business, and we have to change our portfolio so as to cope with these requirements from the society as of today on the global basis. When we think about this COVID issue, our human beings went through the similar crisis 100 years ago when our company, Sumitomo Corporation, was born, then at the time the total population of the people on the globe was only 1.9 billion people. Today we have over 7 billion people. The similar crisis, but the situation we have today is completely different. What we have to do, the size of the macro view we have to keep in our consideration is different completely. Therefore, it is very important for our board to make sure that the group companies over 900 always think about this changing needs of the society so as to redesign themselves so as to make it sustainable. This is what we are doing every day. Thank you very much. Thank you in building on what you just said, Yudesan. Paul, perhaps when you think about transformation, it's about the corporation, but also its partners and suppliers. How do you think about to take it to use the acronym that everybody uses now ESG in terms of reporting and metrics, not only for the corporation itself, but for its suppliers and partners. How do we, how do large corporations, as yours, can lead the momentum into promoting these considerations? Before answering that, Jean, let me go back to first the title of this session, which is re-orienting boards for the long term. Actually, I wonder, is it re-orienting or is it just remembering, refreshing what actually boards should do? It is somewhere forward to basics. I always thought that economic activity should serve society and by serving society, it creates value. That value then reverts back into somewhere shareholder value at the end. We call that initially creating shared value, which is true products, true caring for the communities you work in, true working with suppliers, true treating well your employees, et cetera. You create value on many, many fronts. To do that over time, long-term, you actually also care for next generation, for the planet, et cetera. Long-term view is what boards should have as first priority. It's somewhere the long-term inspiration. Yes, indeed, short-term intensity. In the days of today, there's a lot of that. So, first comment on this. Then you ask how should corporations like Nestle do that with linked with ESG, et cetera? Well, at the end of the day, somewhere, we have narrowed down everything, which was economic activity to financial reporting, which has created this narrow view also in capitalism that Andrea was calling it. Capitalism was basically linked with resources, not money or no. Money was part of it, and it has been, over time, narrowed down because of the prevalence of financial, has narrowed down to only financial. That's why it has a bad name. I don't even think that stakeholder capitalism has a good chance of sympathizing with the world of public because of the word capitalism, but that's another story. Now, ESG. ESG is, hey, we have to connect with the broader world out there. We have been, me as a company, we have been communicating on 40 commitments out ex-financials already for many years in that framing of creating shared value. The problem is you don't connect, actually, because everybody has another measurement, and ESG and this whole also the ESG framework that we are not working in with the web is trying to have a common language on reporting back, communicating, saying what you do, measure, and being taken responsible on what you do, and on all these fronts. Look, at the end of the day, that's the role of the board to maintain that broader framework, the longer term view. Today, companies are drawn into the short term because, hey, we are in a big crisis, but still it's the board's job to maintain things in balance, to assure that short term action is taken, but to maintain the broader perspective of things. So not to park the ESG dimension of a company. Actually, somewhere, and as to finish, a board as always says to somewhere, somebody told, nose in and hands out, and nose at times somewhere to nose in and all the hands on deck, and with different roles, but, and that is, I think, my last phrase to just say, that's the role of a board, to maintain that framework, to maintain that context, to maintain the long term, to be sure that short term is served, and to see that all stakeholders are served too, because they're responsible for risk. The board is responsible for risk today, tomorrow after tomorrow, and ESG is caring, phrasing, embracing the future risk if you don't care for it. So it's a fundamental responsibility of the board to go about that. Thank you. We have about 10 minutes remaining. So before going to the rapid fire questions, I'd like to ask a follow up question to each of our panelists, starting again, now this time by alphabetical order. So Claudia, as I was alluding to in my remarks a few minutes ago, you mentioned lots of progress has been made on some of these issues in 2020, but the context, one has to agree, has been very particular. Do you think this is structural or just conjectural, and not to be ensured that it's structural, perhaps, in a minute or two, if I may ask? Okay, thank you very much. In a minute or two, very tough. I think it's structural. I think it's structural. We were in 2020, we had the, you know, it's like most people, we made things that we thought were impossible, possible, and it would be a shame if we didn't continue on that track. We saw as front line workers, as food retailers, we saw that we had unbeatable dedication of our people, and that's only possible because of our culture and our lived purpose. And as a board, that's one of the most important things to have. And so we can't let this not be structural. We had a real, I think we had a real life test of how important values and purpose and transparency were, and it would be a shame, more than a shame. It would be not being a long living company if we didn't make this structural for a better society. Speaking of structural considerations, Paul, perhaps going back to what you just said, it's about financial. Right now, there's a tendency to focus too much on financial reporting and short-termism. Perhaps one very minor illustration of that, but I'd be curious in your perspective, should quarterly reporting be the measure of communication for your stakeholders? Because that's right now the rhythm in which corporations have adopted over pretty much all regulatory space. So your perspective on that in a minute. Well, we didn't. We are not fully quarterly reporting. So when the quarterly reporting leave that to another discussion per se, I don't think that's actually traumatic. It's agony. But that's another story. Companies cannot be run quarter by quarter. Quarter by quarter, actually, day by day is this short-term intensity that a company should have. That's true. But that should not all be the full panacea. It's like ESG reporting. We're really trying to organize and structure that. It's going to be hard to have a quarterly reporting on ESG anyhow. It is not relevant. So for me, you have to connect with your shareholders. You have to connect with investors. You have to connect on a need-to-have basis. Every year, you make a point to formally fully structured and fully audited and all that on the financials. And ESG should be starting to be somewhere measured there too. It's true. So the quarterly reporting is actually somewhere a symbol of the French world dominating all discussion. Yet at the same time, the French world is changing too. They start to see that the quarterly reporting is only that what it is. But you lose perspective on the broader issues. And if you speak about old stakeholders, well, we've got to be reporting that that's not served. So more and more of the investors do see that. And we live in a society somewhere that short-term and more now because of the crisis, but the short-term is dominating. And again, I mentioned before, it is somewhere to companies and boards to maintain that perspective, the contextual thinking in time to also comment on the short-term results quarterly and to put that always in the perspective of the long-term. If short-term dominates everything, we wouldn't invest in R&D. We wouldn't invest in pipeline. We wouldn't invest in new products because there is risk link to the et cetera. And it is that balance. It's a balance of balance. It's a balance between longer-term, and we call it inspiration, and short-term. It's clear that you don't get to the long-term if you don't survive the short-term. So it's a matter of balance. Where is that balance to be found? It is on the top of company. And if you think about purpose, the what, the how, and the why of companies, the defining of that, what is that? At the end of the day, it's a way of formulating this context to put things in perspective. And that's the fundamental responsibility of a board. It is to make sure that that is in place, that that gyroscope of a company is in place. And to do that, taking care of all stakeholders, thinking about that. And look, somewhere inside that companies that do care about all these multi-stakeholders are more successful. Well, what is the cause and effect thing? Is it more successful? Because they care about ESG? I think companies that are caring for ESG are just better left, better structured, and as such, they're more successful. So ESG is definitely part of a well-structured company. Speaking of that, Andre, do you think we should be more disruptive about board composition when it comes to ESG thinking? More specialist, more environmentalist, people who have perhaps greater experience? Is that something that should be part of the roadmap? Absolutely. I think it's important if you want to have a strong board to have a diversity of opinion. But I would like to react to two things. First of all, I don't think this is a question of somebody is right and somebody is wrong. It's a natural evolution of the way we create values. We cannot create value without ESG. We cannot continue to create value just on focusing on financial inputs only. At the moment, if you run a company, the only thing you look at is the profit line. And if you happen to introduce other elements into your decision criteria, these are things that we do in-house. There is no unified way of reporting on these things. Now, the second point I wanted to make, the initiative that the work is trying to propose at the moment to all our members, and I understand that we've made some success with that, thanks to Paul's efforts and others, since a number of companies are going to report according to these new sets of ESG metrics that the international business council within the web has worked on and has created. But that's about reporting. That's about rebuilding trust with society around us. It's about being transparent about what businesses are doing. Because deep down inside, it's nothing else than an accounting problem. At the moment, we account for financial flows when we should be really accounting for impact. What impact do our businesses have on the natural, on the social, and on the human capital? If we create a system which will be just as accepted as the general accounting principles, we will be able to report on the more transparent ways. And that will reassure all stakeholders that we are actually really trying to do what is best for the community and not just what is best for our shareholders. But I would like to propose that accounting has two levels there. You have the accounting to bring into the public and in turn the analytical accounting, the help to decision. What we urgently need as a society in a broader sense is that we need to understand how businesses take their decisions. And at the moment, if I am building a new factory or if I'm entering into a new partnership, the first thing I look at is, will it be profitable to do so? Now, that's not taking into account the impact that my activities will have on the environmental, the social, and the human capital. And I think it's very important that we agree soon, of course, that will not happen overnight, that we agree soon onto a common way of describing these activities so that we can run all these companies in a proper way. If we account properly for impact, we could reverse this destruction mechanism that has been happening on the planet for the past 250 years of industrial age. We have actively destroyed the planet on the basis of short-term profit maximization. If we can introduce the concept of impact maximization, of benefit for all stakeholders, we have a chance of repairing the damage done. And that, for me, is the most exciting thing I can think of, thinking of your investment activities. If you could invest into something that is positive, if you can invest in something that is not only based on conversion of natural resources into financial benefits, we could actually change the planet. In fact, this is very much linked to technology. We are getting to a point where we can say that investing in ESG-savvy companies, the one that Paul was just referring to, is a possibility of getting huge investment gains going forward. The green economy is a wonderful opportunity, and being able to report for stakeholders will allow us to benefit from that. So forget about technology, don't invest in tech stocks, invest in ESG stocks as from now on. Thank you. And on this note, perhaps we go to just to conclude the panel on a rapid fire question. And I'll start first with Yoda-san, and perhaps if you want to react to some of the comments, make feel free. In one word or in a few words, what is the single most important thing board should focus on in 2021 to promote and lead on stakeholder capitalism? Thank you. We have to engage in the social issues, and we have to set our own goals. And we do planning and act, and we monitor the actual executive level of the works and progress, and we improve it. That's what we have to do. Claudia? Yes, a bit on the same level. I think we have to, as a board, focus on two or three things that are important for us. I mean, because we can go deeper in that, and we have picked two planets and two in people, measure its set ambitious goals, involve everybody, and reward everybody. As boards, I think we can do that. André? Well, I would like to use one keyword, which is interdependence. We are not acting alone. We are acting as part of society. The question we have more diverse board is exactly for that. We want to introduce more different viewpoints in our companies in the way we make decisions. So interdependence and the COVID crisis has demonstrated into which extent this is relevant. Our current system is weak because we only think about now's agenda. We need to broaden our horizon and introduce a bit more complexity into the way we take decisions. And Paul, one last word from you. Two thanks for companies, long-term inspiration, short-term intensity, and for boards from nose and hands towards nose-in and all hands on deck. Thank you for all these comments. Thank you very much to our panelists. We will now move to a second session for top-link participants. Thank you all, to all of you who have joined us from the web forum. And I hope this contributed to your own thoughts and your own efforts in your own organizations to promote stakeholder capitalism. Think about the metrics to measure progress and of course to bring a diverse perspective to these issues which are very complex. Thank you all.