'We want to change ingrained patterns'
01-09-2021 | Interviewer: Karen Maas | Author: Cleo Scheerboom | Image: Gregor Servais
Almost 2 years ago, David Knibbe took office as CEO of NN Group. NN Group is parent company of, among others, insurance company Nationale-Nederlanden. David Knibbe, who has worked for the insurer since 2004, sees an important societal role for insurance providers. In his previous position as CEO at the insurance company Nationale-Nederlanden, he never made a secret of his desire to bring the financial and societal results of the insurer closer together. Hence, under his leadership, more attention is paid to societal impact.
These developments are visible throughout the organization and secure a top 20 spot in the most recent Management Scope Corporate Impact Index (MSCII). The index, initiated by Management Scope and Erasmus University Rotterdam, is an overview of the expected societal impact of the hundred largest companies in the Netherlands. A great opportunity for a conversation between David Knibbe and Karen Maas about NN’s sustainability ambitions, a notable climb up in the rankings. Maas is not only compiler of the MSCII, but she is also Scientific Director of the Impact Centre Erasmus of Erasmus University Rotterdam and Professor Accounting & Sustainability at the Open University.
Achieving societal impact is high on the agenda in an increasing number of boardrooms. Why does it come naturally to NN to do business with societal impact?
‘You can expect from market leaders in the insurance industry in the Netherlands to have a societal vision. With 7 million customers in the Netherlands and 18 million customers worldwide, plenty of opportunities will arise to have a positive societal impact. It makes sense to make that societal impact part of the strategy.’
From the annual report I understand that this strategy targets at customer engagement, talented people and contribution to society. How will this take shape?
‘It is sensible for listed companies such as Nationale-Nederlanden to focus primarily on financial pillars. My appointment in 2019 was the perfect time to steer the company in a different direction. In the strategy that we have embedded in 2020, we have set concrete non-financial goals that will be assessed. Non-financial goals are the driving forces behind financial results. When you treat your customers, your employees and the societies in which you operate well, the financial results will follow automatically. We are now in the midst of the transition. I am very excited about that. At the same time, I know that it is non-tested. It is easier said than done.’
How do you look at your own role within this process?
‘Throughout my entire career, I have experienced how gathering the right people around you can have a positive impact on society. Diverse and involved people who are also good at taking care of customers all contribute to this. For me personally, it is a unique opportunity to bring the worlds of financial results and societal impact closer together. From an early age I have been taught that social element. I was born in Tunisia; my parents were active in development aid in Africa and the Middle East. I lived in North Africa as a child.’
Where do you see the opportunities to create prospects for positive societal impact?
‘Various societal themes play a role in the areas in which NN is active. In the Netherlands, a risk transfer takes place from government and employers to individuals and families in the fields of pensions, housing and disability. Consequently, people are worried about their pensions. In addition, many of those who are self-employed wonder whether they are adequately protected against incapacity for work. Young people, in turn, want to know if they can still get a mortgage that is sufficient to participate in the housing market. These are the varied themes in which we can play a positive role.
In the short term, we achieve the greatest societal impact through our investments. By investing the hundreds of billions of euros that we manage in a societal responsible manner, we contribute to a sustainable transition of the economy.’
So, enough opportunities. Where are the challenges?
‘It is complicated to truly embed societal impact into the core of your company. We believe we can improve this by setting concrete non-financial goals. Giving employees the space to do voluntary work is insufficient. The integration of sustainable products in our services will cause greater impact. We have had sustainable investment products for some time that enable customers to build up capital for a good pension in a sustainable way. In the field of mortgages, we have developed Woonnu, which makes it easy for customers to obtain a loan to make their houses more sustainable. We are also heavily involved in the reintegration and prevention of occupational disability in small and medium-sized enterprises. By enhancing our organization services and working together in the chain, we can use data for prevention. This way, everyone wins. The employee is back to work faster, which is convenient for him/her. It is also beneficial for the entrepreneur and it is equally good for us as an insurer, because we have to continue paying less wages. Additionally, it works for the general business climate, because it decreases the chance that an employee will have to rely on social benefits after prolonged absence. We want to expand the number of products with sustainable elements.’
What transitions take place within the organization due to the focus on non-financial goals? Have you parted with activities that cease to correspond to long-term value creation?
‘We are more transparent about the costs and margins of our products. For a long time, a financial product was merely a product similar to any other product. Compare it to a car. When you buy a car, you, being the customer, do not expect information about the costs of the different parts. You are not concerned with what the dealer earns from selling that car. We have adjusted that vision – a financial product has a special position for society. One could assume that since there are enough companies that make substantial margins on their products, then why should we as an insurer not be allowed to do that? Our view on this has changed because the customer expects us to balance margins.’
Such a societal vision allows executives to look at their own organization from a different perspective. Do you ever get surprised?
‘Just this week, when we published the message that NN is making all forms of childcare and parental leave inclusive. In our society we notice an increasing diversity of families. We believe that all children have the right to family bonding, regardless of the family’s composition. People inside and outside the organization responded emotionally and extremely positive to this. Although when I read about the changes, my main thought was: “Hold on, this was not the case already?” Our company too has ingrained patterns we would like to change on closer examination.’
Executives and the supervisory board have an important task in focusing on societal impact. The corporate governance code encourages them to concentrate on the long term. Is this code an extra incentive for NN?
‘Not really. I believe if you need to be stimulated by a code, you have a problem as an organization. The attention for societal impact is intrinsic. It must come from the organization and the people themselves.’
How do you ensure that this focus on long-term value creation is governed by the board?
‘Through a good balance between non-financial and financial interests. This requires a diverse team of executives and supervisors. Diversity in both the management board and the supervisory board automatically guarantees people will not all look at a topic in the same way. In a room full of people, there will always be those who are committed to the societal themes, and someone who points out the interests of the shareholders. We need all voices. As NN, we are focused on our stakeholders. One of the stakeholders is the shareholder. It is our job to keep everyone’s needs in balance.’
NN Group has been working on the new strategy for a year now. What is the biggest challenge you are currently facing?
‘Our societal ambition is very well received by most stakeholders. However, as a listed company you do have something to explain to shareholders. They enjoy the attention for societal impact, but often wonder what they can expect in terms of return and dividend. NN Group had to deal with an activist shareholder of American hedge fund Elliott – Ed. Also, let’s not forget that we are ahead of the curve in Europe when it comes to sustainability. Some of our shareholders come from outside Europe. To them, sustainability is less apparent than it is to us. You have to really explain its importance.’
Do the employees get on board with the changes?
‘Employees get excited when you make a solid proposition that revolves around better service for customers. The fact that there is much attention for societal impact contributes to this. That is a side effect of COVID: We have all seen how vulnerable we are as a species and society.
Moreover, the challenge lies in the question of “how can our employees contribute to the societal impact?” In order to achieve this, we invest considerably in training and we are very clear about our targets.’
Many organizations with ambitions concerning societal impact encounter an organizational structure based on the old way of thinking that gets in the way. What is your experience in this area?
‘I recognize that. In the past, all topics were discussed in the management board. As a board, we make decisions about regulatory and compliance issues, among other things. Soon you end up in a kind of governance mode, in which the urgent perpetually takes precedence over the important. That meeting does not offer enough space to shed light on societal and sustainable themes in a gentle way. Currently, we carry this out in separate meetings, such as our purpose council and strategy & transformation meeting. That works a lot better.’
The most recent Management Scope Corporate Index (MSCII) shows that NN Group performs well on the various pillars of societal impact, as well on its relation with the outside world. Companies can utilize their relationship with the outer world to carry out their vision on societal impact. Does the company provide sufficient information on what they are working on?
‘As a company we participate in various public fora. CEO of Nationale-Nederlanden Tjeerd Bosklopper for example, is chairman of the Dutch Association of Insurers. Our CFO Delfin Rueda is chairman of the international CFO Forum. I, myself, am member of the board and treasurer of the Dutch Employers’ Federation VNO-NCW. One hopes to slightly improve the Netherlands with his expertise. Therefore, I sit at the table to ponder on how to help the Netherlands move forward. Therefore, I sit at the table to ponder on how to help the Netherlands move forward, even if that is not directly in NN’s favor.
Thinking about societal impact is important, but it is also just fun. As an avid football fan, I am member of the board of the Johan Cruyff Foundation. In addition, I am involved with JINC, which among other things provides job application training to children living in socio-economic disadvantaged neighborhoods. Mostly children from Moroccan and Turkish families. Countries I have an affinity with since I have lived there myself. So, we do a great deal of work. However, I notice some hesitation to share much information about that publicly. In this regard we are a Dutch company indeed; I do not think you need to send out a press release for everything.’
And yet, the promotion of societal responsibility is part of a company’s job.
‘I am aware of that too. The Edelman Trust Barometer gauges trust in companies and organizations. Now it also shows that trust in business in the field of ethics worldwide is greater than trust in governments and NGOs. It is increasingly expected from CEOs to speak out on societal issues. I have recently been asked to join the Alliance of CEO Climate Leaders of the World Economic Forum. In this alliance CEOs exchange views on how to achieve the goals of the climate agreement.’
How do you see the future of the company? Are you feeling optimistic?
‘I am definitely feeling optimistic. I am positive we are on the right track and because of that it is great our efforts are receiving external recognition. For instance, for the 4th year in a row we are incorporated in the Dow Jones Sustainability Index. Only 7 other European insurers are included in this Index. The strategy execution is vastly improving. In the phase of the transition we are currently facing, it is important to maintain focus. We need to get everyone on board.
People in our business units initially wondered whether the focus on non-financial goals is permanent, or merely for the stage or the annual report. Today they are feeling enthusiastic and we can see that in the measurements we carry out. One has to build trust. Hence, it is necessary to consistently focus on non-financial goals, even if the financial results are disappointing. When that happens, managing the financial pillars is the last thing you should do. As a member of the board you have to adhere to your strategy targeted at societal impact. Even when things get challenging.
This interview was published in Management Scope 07 2021.
This article was last changed on 01-09-2021
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