Boards Under The Magnifying Glass

Boards Under The Magnifying Glass
Directors and supervisory directors are under the magnifying glass of both the media and society. During a breakfast session by Management Scope and Allen & Overy, top female executives exchanged thoughts on how they perceive this and what consequences it has, and subsequently came to four inspiring insights for not putting the brakes on excessively. ‘It cannot be that we all do nothing because we are too afraid.’

On a Thursday morning in January, some 10 experienced executives and supervisory directors sat down for a breakfast session initiated by Management Scope at the Apollo House in Amsterdam, home of law firm Allen & Overy. The top female directors, who will not be named in view of the Chatham House Rule, all know what it means to operate under the magnifying glass. Many have experience with media coverage lacking nuance, shareholder meetings disrupted by activists or legal claims. ‘Directors often need to walk a tightrope,’ said Hilde van der Baan, partner at Allen & Overy and the morning’s moderator. All the more important, she said, to engage in a conversation about how to deal powerfully with the ever-increasing pressure, ‘knowing that you will never make everyone happy and that what may have been good enough yesterday may not be so tomorrow.’

Missing context
The topic was introduced by Annette Mosman, CEO of pension administrator APG, and Marjan Rintel, CEO of KLM. Since her first day at KLM, July 1, 2022, Rintel knew the spotlight would be on her. The capacity problems after corona at KLM itself as well as at Schiphol made the headlines almost daily for a whole summer. The contraction of Schiphol announced by the minister to reduce noise pollution and emissions was also intensively reported on. Rintel: ‘As a result, to an extent people now think that the climate problem will be solved if we stop flying. Do not get me wrong. We embrace the government’s noise goals and feel responsible for our emissions, but we should stop talking about contraction alone as a solution. In my opinion, the goal is noise and emissions reduction. We can achieve that with our plan to fly cleaner, quieter and more economical. That context is often missing from the news coverage.’
Pension administrator APG handles pensions for eight pension funds (including ABP) and also manages those pensions by investing 569 billion euros (by the end of 2023) of Dutch pension money worldwide. ‘This puts us under the magnifying glass of the media and society,’ is the experience of Annette Mosman. ‘We regularly receive questions such as: why are you still investing in China? Or: why were you so slow to get out of fossil fuels? We have a clear sustainability agenda - a good income for now, tomorrow and in future in a livable world - but our primary task is to provide an income for four and a half million Dutch people. That is why we continuously need to trade-off between return and impact. While as an organization we are already very much engaged in doing the right thing, there is always something that can be faulted.’
She anticipates the same will happen with the transition to the new Pension Act. ‘We have been doing pension administration for 100 years, first for ABP, now also for other clients. We are now converting that 100-year-old factory into a very modern one, where we will consider, for each group of participants, what risk they can and want to bear. That is exciting and challenging, but we are already thinking through many scenarios to avoid things going wrong. If things do go wrong, the magnifying glass will be on it.’
The tone was set. A lively exchange of ideas, experiences and perspectives on ‘governance in the spotlight’ followed the introductions, culminating in some inspiring insights.

1.         Keep the discussion open
Due to all the external attention, one of the top directors present noticed, some potential executives and commissioners shy away from the responsibility. ‘They do not feel the need, because there is so little to gain.’ Mosman added, ‘Once the media have you in their sights, the negativism can continue.’ ‘More and more CEOs therefore refuse to talk to the press,’ according to Rintel. Yet they consciously choose a different strategy. ‘I always try to stay in discussion and I talk to everyone: spokespeople, members of parliament, politicians, and therefore also the press. I consciously seek out the media precisely to give our perspective. I want to radiate that we have an open ear for society and believe that we need to become more sustainable more quickly but have our own perspective on what does or does not work.’
Mosman also deliberately does not shy away from the press. ‘I sincerely believe that we are doing the right thing, and I like to explain that over and over again. However, I do constantly think about how what I say can be tweaked or framed. That sometimes makes me somewhat discouraged. Moreover, through my supervisory positions at Ajax and NOC*NSF, I see that what the media write really has a high price for the individual and their personal safety. If there is no news, you make news. If something is minor, you make it major.  There is a large group of people who fall behind in the world today. They are constantly fed with negative publicity about institutions, companies and their CEOs. Media reports are in a way a reflection of the polarization in society. It would be constructive if the media became aware of their responsibility and tried to evade this.’
The conclusion was that even if you do not seek out the media, people will still write about you. So, according to Rintel, it is better to take the stage yourself. Because: ‘How do you get society on board if you do not enter into dialogue? Mind you: I leave nothing to chance and am always prepared down to the last detail.’
Mosman sees communication as a part of her job that she must master just as well as, say, a transformation program. She prepares interviews and public appearances in detail. ‘Who are in attendance? What is my core message? What is important at this stage of legislative and regulatory development? I also always want to present something thought-provoking, so I think about a topic to spark discussion. Moreover, I literally practice my speeches. I listen to my intonation and ask for feedback.’

2.         Dare to take risks
The pressure from legislation and society, and especially the threat of lawsuits, make many directors afraid to commit to ambitious goals. This encourages risk-averse behavior, Hilde van der Baan noticed during her work for Allen & Overy’s Litigation practice group. ‘The inherent will to do the right thing quickly turns into the fear that you might not be able to achieve it. This causes you to focus on potential problems instead of opportunities.’
Still, directors must dare to take risks, the top women present believe. ‘It cannot be that we all do nothing because we are afraid of being accused of greenwashing or not keeping promises,’ according to one of the attendees. ‘Instead, let us aim for the 10 and stand behind it. The more likely we are to really start a movement. And how bad is it if you promise 20 percent CO2 reduction and end up with only 15? Explain why it did not work out and, instead, be proud of what was achieved.’
Rintel listed a number of measures KLM has taken in recent years to reduce emissions, such as economic fueling. ‘This means that we no longer take kerosene on intercontinental flights for the return flight, but buy it at the destination, even though the price is much higher. That costs us 10 million euros extra per year, but we do it anyway because it saves significantly in weight and thus CO2 emissions. I fully understand that the average consumer does not immediately count these and other measures as a contribution to sustainability, but we do it anyway because we find it important. All steps, small and large, contribute to achieving your goal.’

3.         Be proud
Mosman regularly visits one of the APG offices elsewhere in the world, such as New York, Hong Kong, Singapore and Shanghai. ‘The problems in the areas of diversity or sustainability, for example, are bigger there, but are talked about much more factual than in the Netherlands.’ Rintel recognizes the picture. ‘You fly out of the Netherlands and everything is totally different. In Taiwan they lay out the red carpet for me because we are the only European carrier that has had a direct connection to the capital Taipei for 40 years. In Aruba we are appreciated because during the pandemic KLM was their only lifeline for visiting relatives and transporting goods. At the time, we supplied the whole world with no passengers but with seats full of medicine and mouth caps.’
The perception that people abroad view Dutch business so much more positively than in the Netherlands itself is widely recognized. ‘Especially in the field of sustainability, the perception is that we are doing extremely well,’ one of the participants observed. ‘The top of the Dutch business community has simply internalized sustainability and really does understand that this is the only way forward. The problem is to get all of the Netherlands on board with this. The voting results in the last election were the way they were for a reason. It indicates that many people are struggling to keep their heads above water. Not everyone can or wants to pay extra CO2 tax or has more money left over for sustainably produced food.’ Her appeal: ‘Let us express a little more of the pride we feel about the things we are so good at.’

4.         Give confidence
Most women in the room hold one or more supervisory board positions in addition to executive board positions. Hilde van der Baan asked about the role of supervisory boards in difficult times. How can their actions support CEOs in those times? In the experience of one of those present, it is precisely then that it is good to show confidence. ‘If, as a Supervisory Director, you dive in as soon as things go wrong and only then start asking all kinds of questions, you are too late. You put that CEO in that position because you think he or she can do it. It is of no help to falter at that moment. You can evaluate and improve afterwards.’ Rintel believes that Supervisory Directors should in difficult times act primarily as a sounding board. ‘When things get tense, I like to call them to hear what their view of the situation is and what their advice would be.’
‘As an executive, you are in the dossiers every day,’ Mosman noted. ‘If you find yourself in the eye of the storm, you need a Supervisory Director who, with some distance, openly and confidently asks the questions you are not thinking about because you are too immersed in those dossiers.’
In short, Supervisory Directors should exercise calm and wisdom and not join in the panic when the spotlight shines on a company or executive, was the shared conclusion. And it is just as important to support executives when things are going just fine. ‘There is often so much hacking and sawing. It helps then for a Supervisory Director to draw attention to the things that are going well. You cannot often enough give compliments.’

Finally, when it comes to operating under the magnifying glass, the top female directors see another important task for both supervisory boards and executives: they themselves must be intrinsically motivated to make a positive impact - because only then will they succeed in getting the entire organization on board. ‘We can feel that we are under a magnifying glass,’ said one of those present, ‘but that applies just as much to our employees. You do not easily tell people at parties that you work at a bank without immediately explaining that it is a good bank.’
‘We will not succeed with yet another change program,’ Mosman said. ‘Employees need to understand and feel why things have to be different so they can make the right choices in their daily work. That requires a good story.’
Rintel deliberately created an inside-out club at KLM. ‘That helps us to test how the things we write down come across. Because yes: even internally, people need to look differently at our place and responsibility in society. The tone of voice must change from defensive to more openness and transparency but always be based in facts.’

This article was published in Management Scope 03 2024.