KEY INSIGHTS 2021
IMPACT BEFORE
INCOME? FOCUS
YEAR ANNIVERSARY
LEADERS OF TODAY CONNECTING WITH LEADERS OF TOMORROW
WELCOME TO AARHUS SYMPOSIUM FOCUS 2021 WHAT IS AARHUS SYMPOSIUM FOCUS? YOUR CHANCE TO ENGAGE IN A DISCUSSION WITH FOUR COMPETENT SPEAKERS ABOUT THE TRADE-OFFS OF PUTTING IMPACT BEFORE INCOME
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DATE AND TIME MONDAY, NOVEMBER 1, 2021 14:45 - 20:00
LOCATION THE S-BUILDING, FUGLESANGS ALLÉ 4, AARHUS
TICKET BRING THE QR CODE YOU RECEIVED BY EMAIL AS YOUR TICKET
FOCUS 2 AARHUS SYMPOSIUM
YEAR ANNIVERSARY
TABLE OF CONTENTS
04
THE PROGRAMME
05
THIS YEAR’S THEME
06
INFOGRAPHICS
08
PRESENTING THE SPEAKERS
12
QUESTIONS FOR THE SPEAKERS
14
PRESENTING THE MODERATOR
15
JOIN THE DISCUSSION
ACCESS KEY INSIGHTS ONLINE HERE
AARHUS SYMPOSIUM 3
THE PROGRAMME OF AARHUS SYMPOSIUM FOCUS 2021
14:45
ARRIVAL AND CHECK-IN
WELCOME TO AARHUS SYMPOSIUM FOCUS 2021
16:30
A THEORETICAL VIEW
WITH SIMON RICHARD NIELSEN AND PHILIPP SCHRÖDER
BALANCING IMPACT AND INCOME
WITH TORBEN M. ANDERSEN AND RASMUS NØRGAARD
17:30
WITH ALL FOUR SPEAKERS
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17:00
BREAK WITH REFRESHMENTS
IMPACT BEFORE INCOME?
19:00
16:15
A BITE TO EAT AND NETWORKING
18:00
IMPACT BEFORE INCOME? THE THEME OF AARHUS SYMPOSIUM FOCUS 2021 ”There is one and only one social responsibility of businesses – to use its resources and engage in activities designed to increase its profits...” These are the infamous words which Milton Friedman wrote in 1962 when he stressed profit maximisation as the sole purpose of a company. Since then, many companies have broadened the scope of their responsibilities as demand for soft values has grown ever higher. Today, perspectives that lie beyond pure profit maximisation have given rise to new, creative ways of measuring business performance such as carbon footprints and employee attachment. When companies shift their objective from mere profits to a broader goal, they can gain from better reputation, an increase in employee satisfaction, and active engagement with
FOCUS
other stakeholders. Hence, engaging in activities with the ambition to change the world for the better can give rise to an immense value creation besides that of profit. Seeking impact or profit can seem like a trade-off. A traditional conflict emerges between profitand value-based business: the conflict between stakeholders and shareholders. Leaders therefore find themselves in a dilemma where they must choose between impact and income or take a risk combining the two. At Aarhus Symposium Focus 2021, we invite you to join the discussion on impact investment and its difficulties. Should leaders of today seek out impact-driven strategies or maintain a focus upon profit? Is there a way to unite the two, and if so, how?
YEAR ANNIVERSARY
AARHUS SYMPOSIUM 5
INFOGRAPHICS ENVIRONMENT
GOVERNANCE
SOME KEY ISSUES INCLUDE:
CLIMATE CHANGE
SOME KEY ISSUES INCLUDE:
POLLUTION & WASTE
ENVIRONMENT OPPORTUNITIES
BUSINESS ETHICS
SOCIAL
SOME KEY ISSUES INCLUDE:
HUMAN CAPITAL
CORPORATE BEHAVIOR
CORPORATE GOVERNANCE
STAKEHOLDER OPPOSITION
SOCIAL OPPORTUNITIES
ESG RATING
Just 100 companies have been the source of more than 70% of the world’s greenhouse gas emissions since 1988.1
Of the 16 largest companies in the world only three are market leaders in managing the most significant ESG risks and opportunities.2
Riley, T., 2017, Just 100 companies responsible for 71% of global emissions, study says, The Guardian (Online, Accessed October, 2021) Morgan Stanley Capital International, 2021, ESG Ratings Corporate Search Tool, Morgan Stanley Capital International (Online, Accessed October, 2021) 1 2
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SHAREHOLDER MAXIMISER
CORPORATE CONTRIBUTOR Integrating social impact in the strategy across the business, and utilising it to expand on new markets
Maximising short term shareholder value and mitigating risk
SOCIAL IMPACT PRIORITY
SOCIAL IMPACT PRIORITY
STRENGTH Maximises financial returns to shareholders WEAKNESS Risks “blind spots” due to narrow stakeholder considerations
3
2
STRENGTH Enhances brand value with key stakeholders WEAKNESS Impact strategy lacks focus and is reactive to changing external pressures
THE FOUR SOCIAL IMPACT ARCHETYPES3
IMPACT INTEGRATOR
SOCIAL INNOVATOR
Placing impact as the focal point of business strategy and exhibiting social preferences internally
Integrating external impact on key stakeholders in the strategic decision making
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SOCIAL IMPACT PRIORITY
SOCIAL IMPACT PRIORITY
STRENGTH Innovates and disrupts by building new socially conscious markets
STRENGTH Drives new business opportunities by integrating social impact across the corporate ladder
WEAKNESS May be difficult to run efficiently and measure social value creation
WEAKNESS Social impact metrics complicate business success metrics
GREEN LIT
STOCK MARKET INDICES, JANUARY 1, 2020 = 100 300 THE ECONOMIST GREEN INDEX* EQUALLY WEIGHTED
250 200
WEIGHTED BY MARKET CAPITALISATION
150 100 S&P 500
By compiling an index of the 105 most popular companies within clean energy investment funds, The Economist has found that investments in clean energy far outperform the S&P 500 index. However, when correcting for market capitalisation, the gains decrease.4
50 0
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
*Based on the companies that are most widely held by 105 clean energy investment funds. 3 Mennel, J., 2020, Driving corporate growth through social impact, Deloitte (Online, Accessed October, 2021) 4 The Economist, 2021, A green bubble? We dissect the investment boom, The Economist (Online, Accessed October, 2021)
AARHUS SYMPOSIUM 7
PHILIPP SCHRÖDER PROFESSOR OF ECONOMICS, AARHUS UNIVERSITY DIRECTOR, FIND RESEARCH CENTRE
SESSION A THEORETICAL VIEW
1994 - 1997
1997 - 1998
2013 - 2019
2007 - TODAY
2018 - TODAY
2019 - TODAY
PHD IN ECONOMICS, AARHUS UNIVERSITY
CONSULTANT, MCKINSEY & COMPANY
DIRECTOR, THE TUBORG RESEARCH CENTRE FOR GLOBALISATION AND FIRMS
PROFESSOR OF ECONOMICS, AARHUS UNIVERSITY
DIRECTOR, FIND RESEARCH CENTRE
MEMBER OF THE BOARD OF DIRECTORS, DANMARKS NATIONALBANK
PHILIPP SCHRÖDER...
FIND RESEARCH CENTRE...
Is a board member of the Danish Recovery Fund and the Danish Competition and Consumer Authority
Consists of a strong international research team based at Aarhus University
Was a member of the Danish government’s economic COVID-19 expert group and the previous government’s Disruption Council 2017-2019 which advised on how Denmark can profit from technological developments
Is backed by a six-year grant from the Carlsberg Foundation
Is currently a member of the government’s Reform Commission which develops and identifies novel second generation economic reforms
Is a project which aims to examine how robots, disruption, and globalisation affect companies, employees, and society
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SIMON RICHARD NIELSEN EDITOR IN CHIEF, EUROINVESTOR
SESSION A THEORETICAL VIEW
1997 - 2006
2000 - 2009
2009 - 2016
2016 - 2019
2019 - 2020
2020 - TODAY
MSC IN ECONOMICS, UNIVERSITY OF COPENHAGEN
FINANCIAL EDITOR, DAGBLADET BØRSEN
PARTNER, CAPITAL RELATIONS
TV HOST, TV 2 NEWS
INSIGHT EDITOR, FINANSWATCH
EDITOR IN CHIEF, EUROINVESTOR
SIMON RICHARD NIELSEN…
EUROINVESTOR…
Is a commentator on ”Business Class”, a TV magazine on TV 2 News
Is the leading independent financial media for investors in Denmark
Is very passionate about the financial markets and highly active in the public debate on this subject
Publishes the podcasts “Penge er noget, vi taler om”, ”Aktieskolen”, and the flagship “Millionærklubben”
Is known for the quote: “First, man invented financial markets, then came prosperity”
Has been a part of Berlingske Media since 2018 and provides news, commentaries, and analysis about financial markets
AARHUS SYMPOSIUM 9
TORBEN M. ANDERSEN CHAIRMAN OF THE BOARD OF DIRECTORS, ATP PROFESSOR OF ECONOMICS, AARHUS UNIVERSITY
SESSION BALANCING IMPACT AND INCOME
1984 - 1986
1984 - 1985
1985 - 1986
1989 - TODAY
2018 - TODAY
PHD CORE, UNIVERSITÉ CATHOLIQUE, LOUVAIN-LA-NEUVE
ASSISTANT PROFESSOR, DEPARTMENT OF ECONOMICS, AARHUS UNIVERSITY
ASSOCIATE PROFESSOR, DEPARTMENT OF ECONOMICS, AARHUS UNIVERSITY
PROFESSOR, DEPARTMENT OF ECONOMICS, AARHUS UNIVERSITY
CHAIRMAN OF THE BOARD OF DIRECTORS, ATP
TORBEN M. ANDERSEN…
ATP…
Has written numerous scientific in fields such as labour economics, macroeconomics, and globalisation
Invests pension funds for more than five million Danish citizens
Holds editing roles in seven different economics journals
Delivers essential welfare benefits such as holiday pay and rent subsidies
Serves as chairman of the European Economic Advisory Board and is a former chairman of the Danish Economic Council
Manages more than 26 subsidiary firms in private equity and real estate among others
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RASMUS NØRGAARD FOUNDER, HOME.EARTH
SESSION BALANCING IMPACT AND INCOME
1991 - 1997
1996 - 1998
1999 - 2001
2002 - 2005
2005 - TODAY
2021 - TODAY
MSC IN ECONOMICS & FINANCE, UNIVERSITY OF COPENHAGEN
SALES MANAGER, NORDEA MARKETS
CONSULTANT, MCKINSEY & COMPANY
HEAD OF INTERNATIONAL REAL ESTATE, NORDEA REAL ESTATE
CO-FOUNDER & PARTNER, NREP
FOUNDER, HOME.EARTH
RASMUS NØRGAARD...
HOME.EARTH...
Has founded multiple successful real estate platforms with customer centricity and sustainability at their centre
Has a diverse team of experts in various fields from real estate, sustainability, technology, and impact investing
Served as CIO of NREP for more than a decade with responsibility for investment, asset management, and business development
Has a stated goal of doing “Homes that are people and planet positive”
Believes that we need diverse, healthy, and inclusive neighbourhoods for everyone to thrive in the urban landscape
Will construct their first project “Nærheden” in 2022
AARHUS SYMPOSIUM 11
QUESTIONS FOR THE SPEAKERS WHY, IF AT ALL, SHOULD COMPANIES FOCUS UPON IMPACT?
TORBEN M. ANDERSEN For investors with a long time horizon, impact is of great importance to future profits. It is, however, important to remain profitable.
PHILIPP SCHRÖDER The crucial factor to consider is the time horizon of a business. Impact investment and impact based business models involves greater risks and potential delays that are incompatible with traditional, short sighted ownership structure. In contrast, if the company’s ultimate owners have the luxury – and the deep pocket - of a long run approach, the benefits of purpose-driven business can be harvested. The Danish “fondsejet” model is a potential example of the latter.
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SIMON RICHARD NIELSEN Impact and ESG has become an integral part of running any kind of business. Impact has gone from nice to have to need to have. It is expected by customers, clients, politicians, and employees.
RASMUS NØRGAARD Shareholder capitalism has proven that it does not work in terms of enabling an inclusive and sustainable society. Faced with the climate crisis, rising inequality and rapid population growth, we need to implement a responsible and market-based model that incorporates all stakeholder needs. Impact is in my mind an expression of such a model, and only by acting responsibly towards all stakeholders will companies be relevant in the long-term in my opinion.
AGREE
FOCUSING ON IMPACT CONTRIBUTES TO INCREASING PROFITS
10
2
9 8 7
1 4
6
1
2
3
4
5 4 3 2
3
1 DISAGREE
1 DISAGREE
2
3
4
5
6
7
8
9
10
AGREE
THE SOLE PURPOSE OF A COMPANY IS TO INCREASE PROFITS
WHICH POSSIBLE RISKS EXIST WHEN FOCUSING ON IMPACT?
TORBEN M. ANDERSEN Impact-driven strategies cannot guarantee high profits. In the end, it is still necessary to deliver a positive return.
PHILIPP SCHRÖDER Two factors constitute pressing risks for purpose-driven companies. Firstly, companies risk that their strategy does not realise its pay-off while the company is in business. In particular, start-ups have a high exit rate. Secondly, impact-driven strategies have yet to prove that they are capable of making a profit. In essence we risk that companies take on an unnecessary responsibility, that ought to be shouldered by consumers. Impact based earning models need to pass the test of consumer preferences. The market place is heartless judge.
SIMON RICHARD NIELSEN The risk is if you get your impact and ESG targets wrong or miss your targets. Identity politics and woke movement are the new fields of land mines for corporations.
RASMUS NØRGAARD Companies that focus on impact need to have a long-term mindset, operating model, capital structure, as well as a strong set of values. If this is in place, I think a stakeholder focused impact model is rather reducing risks than enhancing risks. Companies that operate with a short-term mindset or where the capital structure is not aligned with the purpose of the companies are likely to fail.
AARHUS SYMPOSIUM 13
PRESENTING THE MODERATOR ULRIK HAAGERUP
CEO & FOUNDER, CONSTRUCTIVE INSTITUTE
“
Attending Aarhus Symposium is an injection of hope in the future. This student-initiated mega event is well thought out, highly energetic, and so planned in every detail that we older people walk away thinking: “They will take over. Thank God!”
1994 - 2002
2002 - 2007
2007 - 2017
2017 - TODAY
EDITOR-IN-CHIEF, JYLLANDS-POSTEN
EDITOR-IN-CHIEF, NORDJYSKE MEDIER
HEAD OF NEWS, DANMARKS RADIO
CEO & FOUNDER, CONSTRUCTIVE INSTITUTE
ULRIK HAAGERUP...
CONSTRUCTIVE INSTITUTE…
Was awarded the finest Danish journalism prize, The Cavling Award, in 1990 along with two colleagues for uncovering a series of overindebtedness cases involving several Danish mortgage institutions
Was founded in 2012 and works in close collaboration with Aarhus University
Is the author of “A Good Idea - Did You Get It?” (2005) and “Constructive News” (2014) Was bestowed the Order of the Dannebrog in 2012 for his extensive work in journalism and media
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Focuses on constructive journalism by emphasising the importance of accurate and balanced reporting in response to increasing sensationalism Helps journalists apply constructive reporting by providing access to a best practices portal, a fellowship programme, training curricula, and initiating academic research
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