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Talking about... why boards must think like activists with Helle Bank Jorgensen

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29 April 2022

Board members must realise the urgent need to innovate and change, or stakeholders and shareholders will change them. Helle Bank Jorgensen is Founder and CEO of Competent Boards. She tells TtU’s Nik Gowing how her new work encourages and achieves behaviour change. The result is enlightened board members who think like activists in order to lead transformation.

Nik Gowing

Welcome to Talking About… Thinking the Unthinkable, our latest leadership conversation and podcast. I’m Nik Gowing, Founder and Director of the Thinking the Unthinkable project.

Where should leadership vision and inspiration come from in these disrupted, unsettling times?

From members of boards, whatever the company or institution, all the evidence is that far too many boards remain stuck in both a narrow straight jacket and a time warp from which they really do need to be inspired to escape at high speed.

So let me introduce from Toronto, in Canada, Helle Bank Jorgensen. She was a consultant then a partner at PWC. But a few years ago, she realised that the gap between need and delivery on boards gripping sustainability was huge. Urgent action, she realised, was needed. So in a borrowed shop front in Davos in January 2019, Helle took the bold step, with a small group of us, to explain the urgent need to create competent boards as stewards of the future. And Stewards of the Future is the title of her recent book.

Three years on, it brings together all the inspiration needed to make boards far more effective and socially responsible. Her enormous single-minded success is confirmed by the 100 plus business executive practitioners on her faculty and the number of executives who attend her courses now.

So Helle, welcome from Toronto. In 20 minutes, I want to hear the impact that this is having, Competent Boards. What is the scale of problem?

Helle Bank Jorgensen

From the three years ago, where you were in that little front shop, as you say, to now, I’m afraid that the scale has actually gone even wider than we talked about three years ago. As you just mentioned, we have so many crises that are popping up that boards of directors today need to not only talk about, but actually act upon. They need to be there for the C suite. But they also need to be there for themselves. Figuring out, how do we react?

We have an invasion in Ukraine. We have a Twitter situation right now. We have an election in France. We have so many different things where you as a board member today need to figure out “how can I, how can this company, stay resilient?”

Nik Gowing

Do they literally not have the skills and the talent?

Helle Bank Jorgensen

Many, many, Nik, do probably not have that. Because think about it, how we have grown up - how we learned. We learned about what happened in the past and not necessarily how do we engage? How do we talk? How do we get all that insight from all of our stakeholders?

So, of course, we have very competent leaders out there, but perhaps not competent when it comes to environment, social governance, and stakeholder relations and stakeholder engagement.

Nik Gowing

Are you literally saying there are many incompetent boards? You can say it because you’re no longer on the inside?

Helle Bank Jorgensen

I don’t know if we can call it incompetent boards because, clearly, you have so many leaders that are leaders and have been going through the ranks. The question is, are they competent when it comes to the future?

And that’s what I’m trying now to. As you said, we started three years ago in Davos. And we’re trying to say, how do we get that insight? How do we share the insight from some of the leaders that perhaps have been a little bit ahead of the curve, and ensure that we almost start what I call exponential empowerment and exponential impact of those leaders?

Because it’s good for all of us, as you say, in terms of being stewards of the future. It’s good for the company. It’s good for the leader. And we’re seeing the proxy season right now. We’re seeing a lot of demands from well, the State Streets, the Blackrocks, and many others, on ensuring that the board of directors have the competencies. And if they don’t, some of them are willing to vote them out.

Nik Gowing

We saw it at ExxonMobil last year in 2021.

Helle Bank Jorgensen

Exactly. And I think you’re going to see more and more. And, of course, at the moment, a lot of things are happening behind the scenes. But you are seeing these demands. That’s more than “oh, if you don’t do this, we will”, but actually taking action. And again, everyone is now holding themselves accountable. Because if they don’t hold themselves accountable, the stakeholders will.

Nik Gowing

How much resistance is there to what you’ve been doing, though? Because what you’re doing is going against the flow. I mentioned that ExxonMobil case last year, where three directors were replaced based on the absolute determination of a small group of asset managers. But ExxonMobil, one of the largest oil companies in the world, was literally caught out. Not realising the level of displeasure that there was. How much is that a public indication of something which has really become a big problem right across many boards?

Helle Bank Jorgensen

The thing, Nik, is everyone’s talking about it. But most are saying, “well, they don’t understand my business, they don’t understand”. I’m saying listen to all of these activist investors or be that activist stakeholders. Listen! It’s advice. I would rather, as a board member, have that discussion internally and be that internal activist. Have that person around the boardroom table that says, “how will others think about us”. Then I would wait to actually get that, some would call, attack. I mean Engine No 1 is is also part of our faculty, right, that that you talked about.

This is not about, “oh, we’re going to attack”. This is about having better businesses for the future. Not only for the company, but also for all of those shareholders, all of those stakeholders.

Nik Gowing

You describe what you call single dimension boards, who are overwhelmed at times by interminable projects. But I mention that because you say they only really focus on compliance, rather than innovation and strategy.

Helle Bank Jorgensen

Yes, and I think Nik again, going back, that’s what we did, right? We looked at it. We asked, “are we in compliance with laws and regulations?” All of those things, of course, we need to do that.

But that’s not going to move this company. We need to look at the innovation. We need to look at what are the transitions to where we want to be. If you only look at compliance today, you’re not going to attract the talent.

We are in a war for talent. You’re not going to have the customers. You can just see what’s happening these days in terms of Twitter and everything else. People are voting with their feet. And they are not stopping and saying, “oh, let me listen”.

So you need, as a company, as a leader, to understand what is it that your key stakeholders want? And what’s the consequences of the decisions that you make? Not only in the short term, but also in the long term?

Nik Gowing

I’m holding up the book because of that phrase at the top, right on the cover: Stewards of the Future. Do you think that current boards in transition, those who are being far braver, really do understand that they are stewards? Not just for the shareholders, but for many stakeholders and communities as well?

Helle Bank Jorgensen

I do. I have all of these fantastic board members and executives and other leaders that are going through our ESG Competent Boards, designation programmes. And what they’re telling me, Nik, is that they now starting to look at things in a much more integrated way.

They’re seeing how all of these different issues, this is not just one issue, this is a lot of different issues, how they fit together. They’re seeing how to make a decision. That is thinking both short term, long term and as, you’re saying, thinking the unthinkable. How do we embed that into it.

Some of them are saying, you know, starting to make a decision based off human values, as well as business values. And that’s where you start to say, “I care. I care about my stakeholders”. And when you care about your stakeholders, there’s a good chance that they will care about you.

Nik Gowing

Boards are actually the most important part of a company. They decide on the chief executive, and so on. They are the most powerful players in the company. But do they really think currently -now obviously, you can’t generalise it very easily - but do you think that there is still a focus on the interests of the shareholders? The Milton Friedman (principle): it’s about the shareholder rather than the stakeholders? Purpose. The future of the community. How the company is serving the much broader community than just those who have invested money in it?

Helle Bank Jorgensen

Yes. I think we are talking about stakeholder capitalism. But there’s still, of course, the shareholder.

The interesting thing here, Nik, is that those two things are getting closer and closer together. Because the shareholders are seeing that in order for them actually to make money, you know, value, not only in the short, but also in the long term, they need all of these other things.

So shareholder and stakeholder capitalism to me is kind of like getting closer and closer together. And in that way, it was a perfect mix. But clearly, if you are a company, that’s not really looking at this and saying “oh, we better do what this person says and what this investors says”, without having the purpose internally, you get the shareholders that you deserve, right? So you need to be able to communicate. You need to be able to have that view on what is the strategy for this company today? What is the transition plan to the future we want? And how do you communicate that to your shareholder base, so you get the shareholders that you want, and the shareholders that you deserve?

Nik Gowing

It’s sounding like we’re talking in a business school at the moment, but what has been fascinating to me, and I’ve taken part in several of your programmes, is actually listening to the human side of it.The human realisation. This is not about PowerPoint, and it’s not about arrows on a wall. This is actually about the people who are coming to your courses realising that they, as a human being, have got to change their attitude. Am I reading that right?

Helle Bank Jorgensen

You are and I think that is the fascinating thing. That mindset. And as you know, you have people from all over the world that are contributing with their views. With their insight, with their experience, and what’s happening right now. So you also get that “how do I react to things that’s happening right now?”

Of course, the connections etc. But that mindset, that human mindset and as you know, I said when the pandemic started, cash is still king, care is queen. I think we are seeing that even more now that we need to care.

And I think that is that human aspect. That if you are going to be a successful leader and successful board member today, you need to have that caring for your stakeholders. You need to have those competences. That’s not only I can read different things, and yes, I’m a business lawyer, I’m an accountant.

So of course, all of those things needs to be the compliance part of it. But there’s so much more that needs to be in place in order to be a leader, a courageous leader today, and we need that.

Nik Gowing

In the last few minutes, what I’d like to do is be as positive as we can be. One of the things that strikes me very strongly - so much is changing on sustainability and ESG at the moment. Are there still boards who really question having ESG, sustainability, as a key element of what that company is about? Because you produce some some data, which is really quite shocking.

Helle Bank Jorgensen

I don’t know if questioning. Where I see it at the moment is that we are actually moving to what I’m a little bit afraid to call skills washing. We talk about green washing. But at the moment…

Nik Gowing

…And green wishing, you talk about. You say that people have got to green walk, as opposed to just wish.

Helle Bank Jorgensen

And in order to do that, we need the education. I believe that the future … to get there, the road needs to be paved by this education, by this training. And what I see at the moment is that we have a lot of leaders who say “oh, I read an article and so now I know about this”, which means that we don’t have the alignment we need around the boardroom table.

I’m also saying we need to discuss round the boardroom table what’s the purpose? What’s the purpose, not only of the company, but what’s the purpose of the board of directors? Where do we as the board want to leave this company when we are no longer there?

Nik Gowing

So what you’re saying is a degree of humility is needed. So what you’re saying is there needs to be some form of humility in the way board members approach. To realise and accept that they probably don’t know anything, that they don’t yet have the right skills necessarily, and they’ve got to develop them. Which is what your your Competent Boards courses are all about.

Helle Bank Jorgensen

Yes, and you need to be able not only to ask the questions. You actually also need to be able to understand the answers you’re getting. So yes, that is what our courses are about. Get the insight, get the foresight so that you can provide the oversight.

Nik Gowing

Are people who come on your courses willing to admit their frailties, their vulnerabilities? Do they feel they’re compromising themselves even by coming and admitting that they’re not up to it and they need to broaden the skills?

Helle Bank Jorgensen

I don’t know if they look at it like that, Nik. I think we have real leaders today who know that they need to be better in the evening than they were in the morning. They know they need to be better the next month, the next year.

I think that the leaders that we as a society, but also shareholders and also all the other stakeholders and employees, want are those leaders that are constantly improving their own insight. Constantly learning new things.

And think about it, you know, those employees that we all want at the moment - the talent - they are nowadays interviewing the company that they might want to work for instead of being interviewed. If you do not have the leaders that understand all of these aspects, I don’t think you’re going to have the ability to attract the talent that the company needs.

Nik Gowing

One of the important areas is community but also respect for nature and respect for what, currently, is not in the accounts, not in the audits. But the way business has essentially been taking nature apart, not giving it a cost and so on. Are you seeing among board members a real change? It’s just a year since the Dasgupta report from Partha Dasgupta, the professor of economics at Cambridge University, which said nature is being abused, but business doesn’t understand how it’s doing that. Have you seen a dramatic change when it comes to sustainability on that?

Helle Bank Jorgensen

We’ve been talking about embedding the externalities. You’re starting to see that you put shadow pricing into it. You had many years ago the late Ray Anderson from Interface saying: “In the future leaders like me will go to jail because we are plundering the earth.” You are starting to see that that is coming into the accounts.

We also have IFRS, International Financial Reporting Standards, that are actually now taking on also having sustainability reporting. So we are really moving, which means that in the very near future you’re going to probably - because you already have the different standards out there for people to comment on - you’re going to see that the numbers need to be audited.

So you are starting to really see that we get that into it. Do we have the full externalities embedded into the prices? No, we do not. But you are starting to see that. And you’re starting again to see not only the different stakeholders, but the shareholders asking for it. You’re seeing ESG link loans. You’re seeing the banks asking about all of this.

So I don’t think there is a road back. It’s only a road forward. And only those that are best prepared, and know the bumps that come in that road, and know how to navigate that, they are going to be those that will be successful and resilient in the future. That goes for companies. It goes for the C suite. And it definitely goes for the board of directors.

Nik Gowing

We’ve got a couple of minutes left only. And you very kindly pay tribute to what we’ve done on Thinking the Unthinkable, or thinking the unpalatable. But one of the things you say in addition to that is that a good board member now has to think like an activist. Think like the kind of person who’s going to be creating difficulties for them. Get into the mind of it. Is that something that can really be done? Can the board mind which has been single dimension and narrowminded really open up? Or is it about creating a new generation?

Helle Bank Jorgensen

I think it’s both. All of those leaders that are going through our programmes, they have that mindset, that opening up. So you’re definitely seeing that. You also need that new perspective. But Nik, we all have talked about the golden rule, right? Do to others what you would expect them to do to you?

I’m actually changing that. I’m saying, start thinking what it is that other person actually would like? So instead of doing to that person what you think that person would, you need to engage. So you know what is actually on that person’s mind. How do you act so that person says “yes, this was how I wanted it”. Not what it is that you think that person should want?

I think that’s actually an interesting perspective that we’re seeing at the moment, where we all say, “oh, how would we react in that situation? Let’s help people”, instead of listening.

So we have two years, right? Let’s use them, let’s listen, let’s get out of the boardroom. Let’s get boots on the ground and really listening. And that comes with what I said again, that thing about caring.

Nik Gowing

We’d love to hear from other people, including maybe people who attend your courses about the kind of transition, the kind of transformation that they’ve gone through and how successful they’ve been. Because that really is an inspiring way of looking at the challenge that you’ve taken on. I have to say, as an outsider here, what you’ve achieved in three years is quite remarkable, given that many have been resistant, and I can feel the change under way.

Helle Bank Jorgensen thank you so much for for joining me from Toronto. Do please join us when we have our next conversation about Thinking the Unthinkable. From me, Nik Gowing, until next time, keep thinking unthinkables. More than ever, it’s both possible and necessary.