image: Zara
The best-performing chief executive officer in the world as of 2017? According to Harvard Business Review’s annual list, it is Inditex’s Pablo Isla, who has overseen the Spanish retail giant’s portfolio of brands, including Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, and Uterqüe, since he took the CEO spot in 2005. He beats out Amazon’s Jeff Bezos, LVMH’s Bernard Arnault, Nike’s Mark Parker, and hundreds of others for the title.
The publication’s ranking system – which focuses on gains that companies make over the long-term – “relies on objective performance measures over a chief executive’s entire tenure.” As such, HBR’s key financial metrics include: The company’s total shareholder return (adjusted for country and industry performance) and its market capitalization.
In addition to considering financial success, since 2015, HBR’s ranking has included Environmental, social and corporate governance (“ESG”) considerations. ESG, which is a set of standards for a company’s operations that socially conscious investors use to screen investments, criteria tends to include how a company performs as a steward of the natural environment; how it manages relationships with its employees, suppliers, customers and the communities where it operates; and how it approaches leadership, executive pay, audits and internal controls, and shareholder rights.
The ESG scores are derived from the rankings of two separate companies – CSRHub and Sustainalytics – both of which appear to rely extensively on information made publicly available by companies regarding their efforts to address ESG factors; this likely explains why Inditex score so highly in this regard. (For a look at why this can prove problematic and result in skewed information, you can find that here).
With all of this in mind, Inditex’s Pablo Isla comes out on top. According to HBR, Isla has spearheaded the company’s “global expansion during which [it] has opened, on average, one store a day. That growth has increased its market value sevenfold and made it Spain’s most valuable company.”
In addition to financial performance – which if considered by itself would actually put Isla at number 18 on the list and land Jeff Bezos in the number 1 spot – Isla was given in the top spot thanks to “praise” worthy ESG scores for Zara.
Isla’s rankings included: Financial (18), Sustainalytics (76), and CSRHub (142).
* Note: a ranking of 1 in each category is the best and 895 (the total number of CEOs considered) is the worst.
According to HBR’s report, “ESG-rating firms praise Inditex’s transparency in managing, monitoring, and auditing its supply chain. The company encourages consumers to bring worn-out clothing to its stores for recycling (in Spain it runs an at-home-pickup recycling program), and Zara’s Join Life collection is produced using recycled fibers and with careful attention to the consumption of water and other resources.”
Moreover, HBR asserts that “among apparel retailers, Inditex stands out for two things: Its success in helping consumers easily migrate between physical stores and online shopping, and its ‘proximity sourcing’ system, under which more than half of production takes place close to home. This allows it to keep inventories low and jump on trends to get new merchandise into stores quickly.”
As for other fashion, apparel, and/or cosmetic brand CEOs, the ones that rank most preferably following Inditex’s Pablo Isla include …
5. Bernard Arnault, LVMH (parent to Louis Vuitton, Christian Dior, Celine, Givenchy, etc.). His rankings: Financial (9), Sustainalytics (240), and CSRHub (192).
8. Mark Parker, Nike. His rankings: Financial (36), Sustainalytics (272), and CSRHub (237).
23. François-Henri Pinault, Kering (parent to Gucci, YSL, Balenciaga, Alexander McQueen, etc.). His rankings: Financial (112), Sustainalytics (42), and CSRHub (111).
25. Fabrizio Freda, Estée Lauder. His rankings: Financial (76), Sustainalytics (284), and CSRHub (159).
42. Tadashi Yanai, Fast Retailing (parent to Uniqlo). His rankings: Financial (14), Sustainalytics (440), and CSRHub (731).
44. Blake Nordstrom, Nordstrom. His rankings: Financial (82), Sustainalytics (208), and CSRHub (450).
56. Leslie Wexner, L Brands (parent to Victoria’s Secret and Bath & Body Works; formerly parent company to The Limited, Express, Abercrombie, and Lane Bryant). His rankings: Financial (40), Sustainalytics (377), and CSRHub (740).
87. Jean-Paul Agon, L’Oréal. His rankings: Financial (199), Sustainalytics (80), and CSRHub (1).
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