The best-performing CEO in the world is someone youâ€™ve probably never heard of.
Geege Schuman stashed this in Leadership
Lars SĂ¸rensen, the CEO of Denmark-based Novo Nordisk, sits atop this year's list of chief executives due to hisÂ company'sÂ high rankingÂ forÂ both its financial metrics andÂ its performance on environmental, social and governance issues.
The magazine, whichÂ writesÂ that theÂ "ranking of CEOs is meant to be a measure of enduring success," notes that SĂ¸rensen leads the pack partly due to hisÂ nearly exclusive focus on diabetes treatment, which has boosted sales and stock returns as demand for insulin products has unfortunately grown. YetÂ in addition,Â "his standing also reflects Novo Nordiskâ€™s deep engagement with social and environmental issues, which now factor in to our calculations," the publication writes.
That's a big change HBR made in its methodology this year. In theÂ past, HBR had only examined financial metrics of the S&P Global 1200 companiesâ€”such asÂ theÂ country-adjusted total shareholder return, industry-adjusted total shareholder return, and the change in market capitalization during the current CEO's tenure.
But this year,Â notingÂ that past rankings "failed to account for the many aspects of leadership that go beyond mere market performance," the publication added a measurement of the company's environmental, social and governance (ESG) performance, which was calculated by the investment research firmÂ Sustainalytics. Each CEO's financial metrics are weighted at 80 percent and ESG ranking isÂ weighted at 20 percent to come up with the final list. The listÂ also now includes CEOs whose tenures started before 1995.
Last year, seven of the top 10â€”and all of the top fiveâ€”led US-based companies. Last year's No. 1, for example, was Amazon CEO Jeff Bezos (who also owns the Washington Post). He fell to No. 87 in this year's ranking due to the company'sÂ relatively lower score on the ESG metrics.
One thing that remainedÂ the same between both years: Just two women made the top 100. They areÂ Debra Cafaro, CEO of real estate investment trustVentas, and Carol Meyrowitz, CEO of discount retailerÂ TJX Companies.
In anÂ interviewÂ with HBR, SĂ¸rensen, who earnsÂ less than many of the CEOs on this year's list and doesn't useÂ private jets ("that wouldÂ send a signal to my subordinates that my time is more valuable than theirs," he said) talked about the company's "triple bottom line" philosophy. The company is part-owned by a Danish foundation, he said, which "obliges us to maximize the value of the company for the long term," adding thatÂ corporate social responsibility also helps save money.
"If we keep polluting, stricter regulations will be imposed, and energy consumption will become more costly," SĂ¸rensen told the publication. "The same thing applies on the social side.Â If we donâ€™t treat employees well, if we donâ€™t behave as good corporate citizens in our local communities, and if we donâ€™t provide inexpensive products for poorer countries, governments will impose regulations on us that will end up being very costly."
I like this Danish CEO. He cares!