Message from the Chairman
The global pandemic sweeping across the world is dominating our lives and impacting our habits. COVID-19 is not as deadly as the Spanish flu, which broke out at the end of the First World War, but it has effectively paralyzed large parts of society. Who could have guessed that the freedom to travel would end so abruptly as large parts of the world were closed down to prevent the advance of the virus; that remote working and digital meetings would dominate many workplaces; that social distancing and quarantine would be introduced and lead to loneliness and suffering, particularly among the elderly; that the health service would have to work close to breaking point to care for COVID patients; and that medical personnel would be forced to prioritize in ways they could never have imagined?
Our highest priority during the pandemic has been the personal safety of our employees. At Nordstjernan, we were early in introducing testing and monitoring, as well as guidelines to prevent the spread of infection, and from the start of the outbreak, we have carefully monitored the effects on our company. I am very proud of the way in which employees and colleagues in our operations in 15 countries have adjusted and adapted to the challenges of the pandemic with a large amount of engagement and care for one another.
We are all faced with difficult moral considerations. The politicians must pay heed to the health and lives of individuals, but also to society at large. Some measures were identified by researchers as critical for the control of the spread of COVID-19 – social distancing, contact tracing, testing and quarantine/isolation – and the efficient implementation of these measures is dependent on effective leadership and a strong public health infrastructure.
Sweden chose its own way to address the pandemic, which will undoubtedly be the subject of debate for a long time to come. It is best not to guess at the conclusions. But one thing is certain. Preparedness for a pandemic was nearly non-existent in February 2020. The demands will likely grow for a review of the Swedish management model, as will the demands that those responsible for decisions are made genuinely accountable. The Swedish management model may be excellent in peacetime and on sunny days, but it has obvious failings when the unexpected happens. The handling of the tsunami, the Estonia disaster and the forest fires in Västmanland in 2014, to name but a few examples, have demonstrated in all clarity that it is not sufficient to know on paper what should be done. It is also important to know what to do and how to act in a crisis.
Industry adapted rapidly to the effects of the pandemic, but there are major variations among geographies and sectors and, despite enormous measures taken by governments and central banks, the economic risks remain considerable. The situation remains uncertain and the virus is far from being tamed. Economic recovery, as well as COVID-19 vaccines, will not be equally distributed throughout the world in the years to come. But there is light at the end of the tunnel. Researchers and pharmaceuticals companies have developed effective vaccines in record time and the public has also become better at living with the virus, with or without the help of government agencies.
However, restrictions and social distancing have provided the scope for reflection and contemplation. During the year, Nordstjernan reviewed its strategy and organization. We asked ourselves the simple but important question: What is the purpose of our business? What is our real ethos? This is a question that has particular relevance in times of crisis. What does the owner prioritize? What am I working for?
Since 1947, Nordstjernan’s largest owners have been two foundations established by Axel and Margaret, my grandparents. The primary objective of the Axel and Margaret Ax:son Johnson Foundation for Public Benefit, which holds 85 percent of the capital and 5 percent of the voting rights in the company, is “to support scientific research”. Since 1999, the foundation has elected to support the liberal arts and social sciences.
The purpose of the other foundation, the Axel and Margaret Ax:son Johnson Foundation, which holds 2 percent of the capital and 95 percent of the voting rights in the company, is to further develop the Group created by Consul General Axel Ax:son Johnson and to support the descendants of Axel and Margaret Ax:son Johnson. The foundations have a perpetual time perspective and the ownership form guarantees continuity and stability for Nordstjernan and its various operations.
The Nordstjernan sphere comprises a kind of microcosm of society. Through the Axel and Margaret Ax:son Johnson Foundation for Public Benefit, which receives dividends from Nordstjernan, most of the surplus value generated by the Nordstjernan companies is distributed for public benefit. Public benefit is not defined as philanthropy – helping someone in dire need or despair – but as support for the sectors that, in the long term, are of decisive importance for ensuring that society continues and flourishes, but do not generate economic value in themselves.
The cultural, civil and moral values that maintain a civilization, in our case Western civilization based on the creativity and development opportunities for the individual, have evolved over the past approximately 500 years; the free search for knowledge in the form of science, the individual’s right to ownership, the freedom to conduct business and trade, freedom of speech, equality before the law and the right to choose our rulers – representative democracy.
The Foundation’s activities are conducted on the basis of a conviction regarding the superior opportunities of an open democratic society to permit free individuals to create stable societies over time. Under the motto “excellence and access”, support is provided for individuals, ideas and projects that are at risk of landing outside contemporary fashion trends, but which could be indispensable for citizens in the long term by protecting traditions and developing society. The Foundation supports the search for new knowledge and disseminates research results through seminars, books and our media channels: Axess Magasin, Axess Television and the international web journal Engelsberg Ideas. The goal is to support an independent, intellectual exchange of opinions in Sweden and internationally, based on individualism and libertarian ideals.
Through good business acumen and active ownership, Nordstjernan creates competitive companies and long-term value growth. Through the Foundation, knowledge development is promoted, largely by cultivating new knowledge and reviving old knowledge, as well as disseminating research results. In this way, Nordstjernan and its majority owners unite the best pf two worlds – a profit-generating part combined with a non-profit part, the public benefit part. And this is how public benefit has been created for five generations.
Threat against democracy and the freedom to trade
We live in an age when not only pandemics are global. Political moods and intellectual fashion trends cross borders and impact the social climate in North America and Europe. It is not rare for these to be driven by sudden twitter storms and by movements on other digital platforms. This form of apparently spontaneous opinion-building is a challenge to democracy as we know it, by which individuals – over a long period – gain the possibility to master the difficult issues of politics, which often involve complicated choices and considerations with far-reaching consequences. Accordingly, a well-functioning democracy requires slowness in its systems so that individual citizens, whose votes are what count in general elections, can make mature and well-considered decisions.
EU membership brought many benefits, with its internal market and the platform that European cooperation creates to enable liberal economies to act in concert on major problems of society in general. But when I read the European Commission’s current proposal, Roadmap on sustainable corporate governance, I spontaneously think of Margaret Thatcher’s words from 1988: “We haven’t worked all these years to free Britain from the paralysis of Socialism only to see it creep in through the back door of central control and bureaucracy from Brussels.”
Because if the Commission’s thoughts were to become reality, it would be justified to speak of a risk for serious damage to the successful, libertarian Western capitalism, which has had the ability to increase entrepreneurship and general prosperity.
Protect the Swedish model and meritocracy
The Swedish corporate governance model, with a high degree of self-regulation and based on the Swedish Companies Act, has created a strong business sector and promotes responsible and long-term enterprise. We must not replace a well-functioning Swedish model with joint EU legislation.
The Commission wants to see legal changes in the regulations for corporate law and corporate governance in the member states relating to Board composition and assignments. As is so often the case when individual owners’ fundamental right of determination over their companies is put into question, it is claimed that the objective is to depart from a short-term financial approach. But if there is damage to ownership rights, the conditions are worsened for responsible long-term ownership through enterprise. And if the company’s right to dividends and buyback is limited, the capital that is currently used for new long-term investments in, for example, innovation and research so that new competitive companies can emerge, will be locked in. Not least, the dividend restrictions will prevent public benefit foundations from realizing their objectives.
The European Commission has long tried to gain control of corporate governance and is influenced by the concept contained in the term identity politics. The starting point is in itself reasonable demands for equal treatment at an individual level. But the European Commission has embraced the idea that individuals must be organized in diverse groups to be able to compensate assumed disadvantaged collectives through quotas and affirmative action. Again, the intentions must be considered good, but if we open the door in this way to division into groups – based on, for example, ethnicity, skin color, religion or sexual orientation – then we are not far from social development that is the direct opposite of the superiority of the free market economy and the open society over the collectivist system, namely trust in the independent and free individual and their inherent ability. The Commission’s demands and solutions will lead to the opposite of a meritocracy and anti-discrimination. This must be fought using the energy of everyone who cares about freedom and prosperity in Sweden and the entire community of EU countries.
Stockholm, April 12, 2021
Viveca Ax:son Johnson
Chairman of the Board