How 36 years ago a coalition of visionary CEOs took the lead in shaping a world approved by the future
By JOOST WOUTERS September 22, 2051
“We are CEOs from 43 companies and 20 economic sectors. With operations in over 150 countries and territories, together we generated over $1.2 trillion in revenue in 2014.
The undersigned, as CEO climate leaders, urge the world’s leaders to reach an ambitious climate deal, aligned with the UN Post-2015 Sustainable Development Goals. We extend an open offer to national governments to meet and co-design tangible actions as well as ambitious, effective targets that are appropriate for their different jurisdictions.”
With these words started an Open Letter that 43 global CEOs wrote in April 2015 as a call for urgency towards the world’s political leaders that would come together for a climate conference in Paris later that year.
We don’t realize it, but we thank the clean air that we breathe today to these courageous men and women, who stepped up and used their leadership position to break through political apathy to inspire the world that another way of using the Earth’ resources was possible.
To reconstruct what happened between 2015 and 2051, I interviewed the CEOs still alive, and made a compilation of their experiences.
How it all started
“It was a close call”, Pierre Nanterme (92, ex-CEO Accenture) recalls. “Look at it from this perspective: the world we lived in and that we’d created so far became more complex by the minute. Local problems had global impact and often seemed too big too deal with. We were facing big crises in the areas of the environment, health, immigration, water shortage and finances. The question rose if our collective behavior would lead to a sustainable situation for our children and the generations to come. And we knew the answer…
At one point we realized that we as CEOs could have a big impact on the future, actually even bigger than the world’s governments. We were operating in over 150 countries and served almost all consumers in one or more industries we were active in. If it wasn’t us who stepped forward, who else?”
Giving the generations to come a voice
“The ‘thing’ that got a voice and a vote in 2015 was The Future”, adds Ignacio Galán with his cracking voice. He’s 101 years, ex-CEO of Iberdrola, and the oldest coalition partner still alive. “We adopted the age-old Japanese concept called True North, which refers to a target that is set for 250 years from now. The well- being of all people, things and animals 250 years from now: that became Iberdrola’s True North.
I remember we facilitated sessions with our people all over the world and asked for input for Iberdrola’s True North. The response was overwhelming. I think the whole Board completely underestimated the readiness for change of our organization at that time. It was almost as if we were the last to understand that a transformation in our way of doing business was needed. And having the ultimate responsibility in our company, realizing this was a humbling experience for me.
The True North sessions were the basis for what Iberdrola is today. In a joint venture with Shell we form the world’s largest clean energy provider. Something that in 2015 nobody could imagine.
New measures for success
Ralph Hamers (85), then CEO of ING Group, recollects the biggest shift for his organization. “What we actually did within ING – and later introduced in all the joining companies – was changing the context of the time frame we operated in. Up till 2015, we were very short-term focused. Not only in banking, but almost all the industries represented in our joint effort were quarterly focused. We were caught in a system dictated by the stock market and the expectations of our shareholders.
Knowing that a short-term focus was contradicting our aim to contribute to a sustainable world, we committed with our group of 43 CEOs to make a radical change. Budgets and plans as of 2015 were presented and assessed on a 10-year time frame. As well we introduced new measures to define success.
Apart from a positive 10YROI (an investment needs to have a ROI of at least zero after 10 years), the 10YE (10 Year Effect) on the Four Critical Pillars – Clean Air, Clean Food, Clean Water and Clean Energy – needs to be zero or less.
To give you an example, when a brand manager wants to propose a new product, she needs to calculate all the positive and negative effects on air, water, food and energy for the whole product chain: the sourcing of the materials, the production process, the distribution to the end consumers, and the waste management. As a result much fewer products and line extensions were introduced, which was a relief for the overloaded distribution channels in those days.
To manage the financial markets that drove the stressful short-term focused system we were in, we also committed to aim for 80% investments by Sophisticated Investors. Institutions and individuals that shared our long-term vision, and didn’t require unrealistic quarterly performance. Given the weight that our companies together represented in the indices, we created quite some breathing air in the overheated financial industry.”
Dealing with competition
“Some interesting dynamics took place in the market over the last 30 years, and I have to admit that initially I’d completely underestimated our consumers”. I’m invited by Paul Polman (95), and enjoy a cold ice tea with this former Chief Executive Officer of Unilever. “We were in fierce competition with FMCG companies such as Procter & Gamble and Reckitt Benckiser. Basically we were all doing the same: fighting for the same consumer, in the same categories, with the same products. Every month we were either celebrating a slight market share gain, or generating long PowerPoint presentations to explain a share loss. While our competitors most probably did the opposite.
When we voluntarily took drastic measures, such as sourcing 100% self-generated clean energy for our production processes and our offices, it affected our cost price. Not everyone in our organization believed we did the right thing, especially not when competition took a lot of market share in our core product categories. I heard that at their head quarters some people were chuckling about our moves everytime the new Nielsen data came in.
But then something magical happened. As if orchestrated, almost overnight consumers became to realize that we were serious in our commitment. And that in the higher price they paid for our products we had included an option for the future of their children’s children. And that made our products a bargain!” Paul laughs loudly when he recollects this memory.
“All our competitors were forced to quickly adapt the same principles, because consumers were merciless in their choices. And the truth is that some of them didn’t make it. They refused to change and had to close down their business.”
The positive effect on others
“Interestingly you could notice this same dynamic in other industries as well. Back then when cars still drove on fossil fuel, Shell was the biggest oil company. They almost toppled in 2015 when they refused to see that exploring the Arctic for oil was one bridge too far. Their stubbornness ignited the first Global Consumer Ban, and over 1 billion people voted with their action against Shell by avoiding their fuel stations for a year. I still remember when my good friend and CEO of Shell, Ben van Beurden, invited me for a coffee and asked to explain him the concept of True North.
He got it. And within a couple of years Ben transformed Shell’s complete business model. Ten years later Shell formed a joint venture with Iberdrola – one of my pioneer colleagues – and now they run the world’s largest clean energy operation. Unfortunately Ben passed away two years ago, he could have told you some great stories.
I sure have lived in a defining moment for the history of mankind, and I’m proud of what we’ve achieved together,” Paul concludes our interview.
Creating experimental side businesses
“The problem was, nobody knew what was the right thing to do. So we just experimented.” Ex-Philips CEO Frans van Houten (91) looks as if the years haven’t affected him and his vitality is contagious.
“Since we were convinced it was almost impossible to change our big heavy organization in a different direction, we created Experimental Learning Enterprises, so called ELEs, alongside the existing dividsions. An ELE was a complete self-supporting business cell. We literally put 50 to 150 people together in a separate building, and their goal was to build on the viable elements of a division, whatever it was.
It could be our brands, our products, the consumer needs we were fulfilling, our organization structure, values, or our people. They brought their enterprise back to its ‘why’, its fundamental reason for being. Then they defined ways how to bring that ‘why’ alive and on what products and services they would focus.
What I’ve learned after all these years is that the moment a company is clear about its ‘why’ and lives it through and through, it becomes very easy to identify if a solution, service or product is sustainable. There is no room to maneuver when you have created a kind of intolerance towards behavior that is in conflict with your why.
The ELEs were a huge success as of day one. Not hindered by traditional management paradigms, they formed new organizational structures more similar to planetary systems than the old fashioned hierarchal pyramid. They introduced 100% democratic decision processes, and everybody took ownership in the enterprise.
The energy in those ELEs was incredible, and everything seemed to go so much easier. At one point almost everybody wanted to work in one. That was the moment we decided at Philips to split up our organization in small separate units with a maximum of 150 people that were fully self-supportive. The biggest prove that we did the right thing is that our cumulative performance on 10YROI is above industry standard and our 10YE on the Four Critical Pillars is zero!”
The fun of leading the way
I end my interview series in a restaurant with Mark Bolland (92) and Frank Appel (90). On my question if it was a tough job to be a coalition partner, carrying the responsibility of the world’s future on your shoulders, the two grey-haired former chiefs (Marks & Spencer and Deutsche Post DHL Group) start to laugh.
“We had great fun along the way. In particular I remember our annual Coalition Conferences,” Mark shares. “We adopted a Maori ritual about conflict and dialogue, where different parties lay on the ground; and looking at the same sky and supported by the same earth, they talk.
We did the same. Imagine 43 CEOs laying on the ground – every time we chose a different setting: the Amazon, the Alps, the center of Shanghai – talking about the well-being of all people, things and animals 250 years from now. It was moving, intense, and fun!”
Then Frank perfectly summarizes the conclusion of my interviews. “Look, it was not unwillingness or incapacity of our generation that had brought us into trouble. We just never realized it was this bad. We lived as if there was an unlimited supply of resources and if there were 10 planets to live on. Of course I feel ashamed if I think back about those days, and how far we’ve let it come.
But when my five-year old grandson asked me last month “Opa, what did you do when you knew what would happen with nature?” I felt so proud I could tell him the story of 43 brave CEOs who stood up, joined forces and took a stand. For the generations to come to have air to breathe and a world to live on.”
After the sparkling conversations with all these inspiring men and women, I’m left with a feeling of gratefulness. Thank you for the air that we can breathe today. – JW