Learning from a pioneer with a purpose

18 May 2020

Jeroen Smit, we’ve read your book on Unilever with interest. Looking back, what can we learn from your profile of Paul Polman and his book Het grote gevecht & het eenzame gelijk*? 
‘In the book I’ve tried to reconstruct the years between 2009 and 2019, when Paul Polman was trying to promote the message that multinationals need to be a force for good. The world is still ruled by: if it’s possible, if it’s permitted, then you should do it. Otherwise you’re a poor businessman.’ Smit cites the example of Tim Cook, CEO of Apple, who in an interview with The Guardian said he wanted to pay more tax: ‘We desperately need a fair tax system’. It’s very interesting that, although he genuinely believes this, he can’t really get away with saying so in his role as CEO. In 2009, Paul Polman had the courage to point out the undesirability of this split between personal and professional integrity. Your personal integrity needs to be front and centre of what you do.

Another thing we can learn from Polman is that it’s not easy to be the trailblazer. He thought the world of 2016 would understand that we all ought to work together. A global tax on carbon emissions, a living wage and combating poverty, the Climate Accord etc. Instead, we got Brexit and President Trump. To top it all, Kraft Heinz then made an offer for all Unilever shares. What particularly frustrated Polman at the time was the knowledge that the influential major Dutch pension funds (which usually praise Unilever’s sustainable leadership) were willing to sell their stakes in the Anglo-Dutch multinational if the price was high enough. Many pension fund boards are fearful of anything that is hard to quantify.’

Daniëlle Melis, what is your experience as an independent board member at pension funds? What can we learn from the past?
‘In my view shareholders need to play a major role in improving the world. However, are all shareholders able to take on that role, and indeed, do they want to? The will is ther and many recognise the need to do so. But do all shareholders have the opportunity? This fits in with Polman’s frustration: do you allow yourself to be ruled by quarterly figures and regulators? Or do you opt for long-term engaged shareholdership? It’s not a homogeneous group. 

You have the age-old dual agency problem: shareholders are the principals who vote at shareholder meetings and are in touch with the company’s management. At the same time, they’re the agents of the ultimate beneficiaries of the pension funds, the members. So you have a responsibility towards corporates, but also to the pension scheme members you serve. I see issues arising from this dual role in my position as an independent board member. They are two ecosystems in a single world. We still have a long way to go in this respect.’

Smit is curious to understand what lies behind the slow pace of change.

Daniëlle Melis: ‘Some board members still view socially responsible investment as a trade-off between doing good and performance. They think that sustainability costs money. The context in which you operate also matters. Take the plummeting financial markets. There is pressure on pension funds to safeguard their funding levels and financial returns. I don’t believe the constant search for yield and the threat of having to cut pensions mean you can’t focus on sustainability. Fear and turmoil in the short term certainly don’t help though.’

Lars Dijkstra, as an investor, how do you view our current rollercoaster ride in terms of lessons from Paul Polman’s story?
Dijkstra: ‘The current situation is exceptional and very scary, although economically you can also say: never waste a good crisis. How do major changes occur? It’s the classic S-curve. It often takes about twenty years to traverse the entire curve. First you have the pioneers, then a growing group of like-minded people and separate initiatives that are really the same. You can see this now with the focus on climate, sustainability and the long term. Ultimately they all come together and merge. It wouldn’t surprise me if this crisis acts as a major wake-up call: we can’t go on like this.

Our first truly sustainable portfolio dates from 2002. We know that in practice you can exert great influence on companies, even if you’re not a major player. But you all need to believe in it: the entire value chain of asset owners, asset managers and corporates. It’s about personal integrity, but the incentives at all the parties involved also need to be better aligned. I’m not naïve about this, it could take ten years, but still. It wouldn’t surprise me if we use this crisis
o change such things.’ 

Greater cooperation between asset managers, asset owners and businesses seems to be part of the solution. What adjustments would this require?
Melis: ‘Organisations like Eumedion [representing the interests of institutional investors in areas such as corporate governance and sustainability] have taken up the gauntlet in the Netherlands. This gives you a wider reach. And we’re very good at it in the Netherlands, although we’re too modest about it. The system needs to reinvent itself though. That’s another thing I like about Jeroen’s book, the frustration is almost palpable.’ 

Smit: ‘It’s a classic example. The brave pioneer is by definition somewhat tragic. They are the first to tread where no-one has gone before, and that’s when you encounter obstacles. The next person to come along can reap the rewards. That’s what happened to Polman.’

These are our roaring twenties. We ought to be there in ten years’ time, in 2030. Are you optimistic about that?
Dijkstra: ‘Yes. There are innumerable good initiatives that will converge and accelerate as a result of this crisis (phase three of the S-curve), such as on the integrated reporting of ESG (environmental, social and governance) aspects. One thing we do need is an International Financial Reporting Standard for non-financial factors. And in terms of the climate, carbon pricing needs to happen at least at European level.’

Melis: ‘All the initiatives serve to help us speak the same language. Although I wonder whether a price needs to be attached to it or a way of measuring what we can’t currently quantify. You want to appeal to the personal drive, motivation of people. To their sense of purpose. If you can do that as a company, you can inspire loyalty in people, shareholders and other stakeholders.’

What or who do we need to be successful in future, which is by definition uncertain?
Smit: ‘My real theme is leadership. To me, a true leader is someone who dares to plan for ten years’ time. This is a distinguishing feature of Polman’s leadership, as he drew up a plan for 2020 in 2010. It would certainly be a bold step to make a plan for 2030 now. It’s proof you’re confronting the problems: healthcare, the climate. Very few CEOs dare to do that.’

Melis: ‘That’s interesting. Why do you think leaders aren’t doing that?’

Smit: ‘Because leaders are trained to be not vulnerable. You need to be in control. A long term plan makes them vulnerable. Incidentally, you unleash a great deal of energy if you do dare to make one. Unilever received two million job applications. Amazing! All inspired by Polman’s long-term vision.’

Dijkstra: ‘Our long-term vision is what we call the Real Active. It transcends the debate on active versus passive investment and outperforming benchmarks. We’re shifting from shareholder focus to stakeholder focus. Using concentrated portfolios to create absolute real value for all stakeholders. The Real Active also stands for the link between the real and financial economies. That’s our target for 2030, that’s where we want to be. Of course even some of my colleagues at Kempen are critical of this. We’re a listed company and the desire to be in control is a familiar one here too.’

Smit: ‘What you need then is a CEO who says: in 2030 everything at our bank will be invested in line with the Real Active. It would be great if a bank such as Van Lanschot Kempen were to lead the way; that’s the kind of leadership needed.’

Melis: ‘It is starting to happen though. Exhibiting vulnerability by talking about purpose, attracting talent based on purpose and inspiring loyalty in specific clients for that reason. These are the effects I see as a supervisory board member, including at Kempen. Training courses for executives and supervisory board
members used to make fun of purpose. That’s no longer the case. But it does take courage.’

Do you think the current crisis will yield a better or a fairer system? And are we in time to turn the tide on climate targets?
Melis: ‘It may be the optimist in me, but you’ve always got time. You can start making tomorrow slightly better today. This crisis will hopefully yield the insight that we need to accelerate our actions. If you want to leave behind a better world in ten or fifteen years’ time, you need to act now, involve educational institutions and young people. The second aspect is, again, cooperation. How can you channel all these wonderful initiatives so that the process can speed up and take us in the right direction quicker?’

Dijkstra: ‘If we want to link this discussion to the current crisis, we’ve been concerned about the climate for a long time. Nature is now fighting back in a totally unexpected way. The global impact is many times greater than from natural disasters such as tornados or droughts, in which everyone faces a different local threat. Our children are all at home at the moment, including students. In our house this has already triggered further discussions on capitalism, nature and our climate.’

Smit: ‘We’re fundamentally connected to one another. The pressing need to work together and commit to things is being underlined by this crisis. Let’s hope it acts as a catalyst. Yet if everyone only thinks of themselves, we’ll be further from a solution than ever. There’s no way of knowing, but I’ve always been irrepressibly optimistic.’

*Het grote gevecht & het eenzame gelijk (The great fight & the lonely night) van Paul Polman, published in October 2019 and currently only available in the original Dutch

The real active


Kempen aims to clarify the difference between real active investment and traditional active investment, hence our name for this investment style. Real active investment entails long-term stewardship as well as real economic return. The real active isn’t just about performance in terms of returns; it also makes a positive contribution to sustainability. 

Jeroen Smit is an investigative journalist and the author of several bestsellers, including The perfect prey: The fall of ABN AMRO, or: what went wrong in the banking industry. Since 1990 he has written on leadership in industry. He earned a degree in Business Studies from the University of Groningen and started his career in consultancy. His most recent book is a profile of Unilever CEO Paul Polman, Het grote gevecht & het eenzame gelijk van Paul Polman, currently only available in the original Dutch version.



Daniëlle Melis is an independent board member and supervisory board member in the financial sector and achieved her doctorate focusing on the role of shareholders in corporate governance. As such, she is involved in several initiatives, both in the Netherlands and internationally, on long-term engaged shareholdership. Her current positions include a seat on the Supervisory Board of Kempen Investment Funds.



Lars Dijkstra is Chief Investment Officer at Kempen. Dijkstra is a member of the 300 Club, an international group of CIOs, advises a range of investment committees and joined the board of Eumedion in 2018. He graduated in macroeconomics from the University of Groningen. 

This article has been published in Kempen Insight- May 2020


Kempen Capital Management N.V. (KCM) is licensed as a manager of various UCITS and AIFs and authorised to provide investment services and as such is subject to supervision by the Netherlands Authority for the Financial Markets. This document is for information purposes only and provides insufficient information for an investment decision. This document does not contain investment advice, no investment recommendation, no research, or an invitation to buy or sell any financial instruments, and should not be interpreted as such. The opinions expressed in this document are our opinions and views as of such date only. These may be subject to change at any given time, without prior notice.


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