Harvard Business Review has released its 2015 List of the Best Performing CEOs in the World based on a new methodology taking into account the social metrics of each company’s environmental, social, and governance (ESG) performance taken from the calculations of the investment research firm Sustainalytics. Under the new metrix, HBR is giving weightage for long-term financial results at 80% and ESG performance at 20%.
Based on this Novo Nordisk CEO Lars Sorensen has been propelled to the top position as World No. 1 in 2015, setting aside usual hopefuls such as Amazon’s Jeff Bezos, who usually leads all other CEOs as it happened last year. But Amazon’s relatively poor ESG score dragged Bezos down to No. 87 this year, while Sorensen finished sixth in overall financial performance.
While Sorensen was rated high in ESG, Sustainalytics defended the high rank saying Novo Nordisk benefits from its decision to offer insulin at a steep discount to consumers in developing countries; its transparent and limited political lobbying practices; and its responsible policy on animal testing, among other things.
Another shake up in HBR ranking of CEOs this year is that it has decided to add CEOs who began prior to 1995. Nearly one-fourth of this year’s top 100 CEOs started the job before 1995, meaning they all are new to the list.
Sorensen, when interviewed by the team of HBR, he said he never believed in CEO rankings. "That’s an American perspective — you lionize individuals. I would say I’m leading a team that is collectively creating one of the world’s best-performing companies. That’s different from being the world’s best-performing CEO—it’s a very big difference, especially in a business in which the timelines are 20 or 25 years. You inherit the situation from your predecessor. You may be the best CEO in the world, but you might inherit a bad business. Or the last guy spent 15 years creating a better business, and when the next guy takes over, he becomes a hero," he said.
Based in Copenhagen, Novo Nordisk was founded in the 1920s to make insulin, then a newly discovered drug. In the years since, demand for diabetes treatments has exploded; today close to 400 million people suffer from the disease.
The company now controls nearly half of the market for insulin products—which are second only to oncology drugs as the fastest-growing category of pharmaceuticals. The firm also has branched into growth hormones, hormone replacement therapies, and drugs to treat hemophilia.
"Without our medication, 24 million people would suffer. There is nothing more motivating for people than to go to work and save people’s lives," says Sorensen on his company’s success.