The world’s top-performing CEO isn’t a household name. In fact, Lars Rebien Sørensen doesn’t even look like a big-time global executive. We recently traveled to the quiet town of Ridgefield, Connecticut, to meet with the CEO of the Danish pharmaceutical giant Novo Nordisk at his lakefront summer home. He met us in shorts, sandals, and a polo shirt, dressed for a bike ride later that day.
How did this mild-mannered, bespectacled executive land in the #1 spot on our list? It’s partly due to his company’s (darkly) fortuitous decision years ago to focus almost exclusively on diabetes treatment. The runaway global growth of the disease has driven up the company’s sales and stock price.
But his standing also reflects Novo Nordisk’s deep engagement with social and environmental issues, which now factor in to our calculations. “Corporate social responsibility is nothing but maximizing the value of your company over a long period,” says Sørensen, who has been with the company for 33 years. “In the long term, social and environmental issues become financial issues.”
HBR’s ranking of CEOs is meant to be a measure of enduring success. We track and analyze each CEO’s performance starting from day one of his or her tenure. Our goal is to create a list that gets beyond the most recent quarterly or even annual results and truly evaluates long-term performance.
In the past, our ranking was based exclusively on hard stock market numbers. We looked at total shareholder return, as well as the change in each company’s market capitalization.
We liked the fact that the ranking was based solidly on data and not on reputation or anecdote. Yet it also felt incomplete, because it failed to account for the many aspects of leadership that go beyond mere market performance.
And so this year we’ve tweaked things. We’ve added to the mix a measurement of each company’s environmental, social, and governance (ESG) performance. For this we relied on the calculations of the investment research firm Sustainalytics. We now weight long-term financial results at 80% and ESG performance at 20%.