Lars Dijkstra, CIO Kempen Capital Management
If there is any country that can work out ‘how to get from there to here’, it’s the Netherlands
Lars Dijkstra, CIO Kempen Capital Management

INTERVIEW: ‘We’ll soon be known for our Dutch Premium’

Heads of Dutch businesses, asset managers and asset owners discussed long-term value creation at Kempen. Editorial board members and organisers Lars Kurznack and Lars Dijkstra reveal the outcome to Anja Corbijn of

Which questions do you expect from businesses when it comes to long-term value creation?

Kurznack: ‘In my view the question should be: “How do you create a workable, long-term strategy that yields a return in the short term?” How do you deal with the pressure of incentives, bonuses, expectations, all the stuff that is human nature? To create such a strategy you need metrics that demonstrate how it works. And that also means measuring the so-called soft factors and including them in reporting. Something like the Net Promoter Score (which measures customer loyalty) is a good start, but it says nothing about profitability, for example.’

Dijkstra: ‘What we need here, from both sides, is nothing less than a transformation. From the existing paradigm to a new paradigm. In the initial phase you have the pioneers. They seek each other out, and I have the sense that is the stage we are at now. The topic is on the agenda at conferences, at the World Economic Forum, and FCLTGlobal is growing. At some point these individual pockets have to come together. Yet it is a complex matter and apparently difficult to pin down. Put more simply: it requires courage. This applies to businesses, but just as much to our side, the asset management side. The easiest option is to follow the masses and focus on the next three years. Yet if you want to make that shift to a different paradigm, you have to go against the flow.’

Kurznack: ‘The task at hand is to demonstrate that a long-term strategy is the best short-term strategy. As soon as something happens too far into the future – such as sustainability – it’s easier for businesses to put it off. The whole discussion surrounding globalisation and growing inequality also generates friction. You can see that from the trade agreements that are coming out of it, which are disadvantageous for many people. All of this forces us to start thinking differently about how we run companies.

‘Another factor is shareholder activism. This continues to grow and in my opinion the only remedy is a sound long-term strategy. Because if you don’t give investors an idea of the earning capacity and long-term revenue model of a company, they will quit. And then your company will fall prey to activist shareholders who want to see results in the short term.’

This summer, Kempen, KPMG and brought businesses and investors together to talk about long-term value creation. Lars Dijkstra, in February you also attended the FCLTGlobal summit in New York, how does that compare to the discussions in Amsterdam?

‘We’ve done what FCLTGlobal is doing on a global scale in our own microcosm. Yet if there is any country that can work out ‘how to get from there to here’, it’s the Netherlands. Take the Dutch Model: it is entrenched in our laws and legislation that companies need to serve all stakeholders, while this is not the case in other countries. In this respect, Dutch pension funds have a lower turnover in their equity portfolios than their foreign peers, and we are leading the way in sustainability. These three aspects mean that we have a considerable Dutch Premium. And I believe this is far better than being known internationally for the Dutch Discount.’

Is there a sense that wanting to make the world a better place is ‘not done’ in the financial world?

Dijkstra: ‘For me personally this is one of the things that gets me out of bed each morning. The financial crisis shook the system to its core. If you don’t learn from that in your own profession….’

Kurznack: ‘I am convinced that long-term value creation is the correct strategy for businesses. I want to contribute to that by providing businesses with the ways and means to really achieve it. That is what drives me.’

Dijkstra: ‘At the World Economic Forum in Davos, Klaus Schwab said that after ten years of quantitative easing (stabilising the monetary system via intervention from central banks, Ed.) it is now time for qualitative easing. This stands for value creation for all stakeholders, including social objectives and climate targets. It was a call to business, as it can make a difference. And that includes us of course. The onus is often placed on politicians and governments, but in fact it lies with us. Value creation does not mean excluding others. It stands for qualitative improvement of the world as a whole. After all this populism, it’s a welcome sound.’

Lars Kurznack, Senior Manager within the Dutch KPMG Advisory practice
The task at hand is to demonstrate that a long-term strategy is the best short-term strategy
Lars Kurznack, Senior Manager within the Dutch KPMG Advisory practice

Why is it so hard for businesses to find long-term investors?

Dijkstra: ‘There are fewer and fewer long-term investors around the world, when you exclude large passive investors. We hear from companies that they actively need to seek them out. This is also because the distinction between index investors who enter into dialogue more out of obligation and genuinely engaged shareholders is not always clear.’

Kurznack: ‘It’s also unclear exactly who you need to talk to at investors. Asset managers that invest on behalf of major pension funds ought to apply a long-term investment horizon and do so. Yet not all investors in this type of organisation look to the long term.’

Dijkstra: ‘I believe that your average portfolio manager has spent the past ten years viewing things from a shareholder’s perspective, with a three-year horizon if you’re lucky. It starts to get confusing if you first send your sustainability analysts to talk to a company and later the portfolio managers, resulting in no-one understanding your intentions as an investor. As an industry we need to create a better balance.’

Kurznack: ‘Soft factors are becoming decisive to a company’s success. Take the capacity for innovation, human capital, brand, research & development and algorithms. The problem is that this information is not included in reporting, nor is it on the balance sheet. This makes it difficult for investors to identify the soft factors. You need a long-term horizon here, especially if you wish to gain the trust of tomorrow’s stakeholders.’



Comment Sarah Williamson, chair FCLTGlobal:

'There is such a global focus in the Netherlands that Dutch companies make up a relatively small portion of investors’ portfolio holdings and Dutch investors represent an equally small portion of companies’ shareholders. Conversations between Dutch companies and their domestic investors can provide a forum for strategic engagement that will benefit both, as well as all of their global shareholders, over the long term.' is a not-for-profit organisation that works to encourage a longer-term focus in business and investment decision-making. It develops practical tools and approaches to support long-term behaviours across the investment value chain.