How do we turn societal pressure into societal alignment? 

Historically companies have focused on business objectives and have kept their hands off political issues. That has changed over the last 15 years. Today society demands greater transparency and authenticity from companies and investors. People want to know where organizations stand, what they are doing, and what they plan to achieve in the future on a broad range of big-picture violations (Basiouny, 2022).

When we look at the future, this pressure is bound to increase further. Many stakeholders will expect organizations to become more vocal on a wide range of complex social and political issues. Most of these issues cause controversy and cannot be viewed in good or bad, black or white. The complexity of these controversial issues asks for an enormous sense of nuance. It is a challenge to know when- and when not to engage, and what is the best strategy to do so.

According to Larry Fink, CEO of BlackRock, stakeholders don’t want to hear companies' opinions on every issue of the day, but companies do need a “consistent voice, a clear purpose and a coherent strategy” in responding to societal pressure  (Murray, 2022). Proactively turning societal pressure into societal alignment thus requires a long-term strategy.

Such a strategy starts with carefully listening to- and understanding what stakeholders are saying. Societal alignment is not only about our pension funds’ participants, it is about understanding the voice of society at large; the voice of activists, experts, and younger generations. We need to reflect on how to incorporate the opinions of citizens into the decisions we make in the boardroom. How do we make sure we take calls for action seriously, without losing sight of our long-term goals?

We also have to ask ourselves critical questions about the ways we manage societal pressure. Who should decide whether to engage in a social/political issue or not? Should the CEO make these decisions or should the board weigh in? And should the public affairs and communications teams play a role?

APG aims to provide a good pension in a sustainable world, and we have been striving to drive positive change through our operations for years (APG, n.d.). Though societal pressure is just one of the many drivers that keep us on our toes in aligning our operations with the way our world is changing, it is one that has become very prominent in recent years.

One of the most prominent examples of societal pressure for our largest client ABP has been the public scrutiny surrounding our engagement strategy on fossil fuels (Lachmeijer, 2021). The benefit of engagement - the fact that we can exert significant influence on fossil fuel companies - does not go well with public opinion, no matter how you spin it (van Alphen, 2022). Communication in response to societal pressure has large reputational implications and must be handled with care. Actions on these sensitive topics - and perhaps more importantly, inaction - can just as quickly lead to reputation damage, as it can lead to reputation gains. We should reflect on how we want to handle these types of high-profile cases in the future. To better understand where the sensitivity around these issues stems from, and more importantly, to think about how we can address it in the right way.

Not engaging in political/social issues no longer seems an option in today’s world. Even though it may sometimes be uncomfortable to engage in controversial issues, it is important to formulate best practices for doing so. As a leading asset manager, we want to take our responsibility to contribute to the sustainability of our planet.  “Being the change we want to see in the world”, in the words of Gandhi, requires not only words and strategies, but concrete action. We are excited to reflect together on which actions should be at the top of our agenda.