The impact of the COVID pandemic has shone a fresh spotlight on the role of business in society and challenged leaders on how best to focus on the long term and to deliver beyond short term financial results and pressures. As a family-owned, privately held business Mars has always had long-term thinking built into its DNA, but it remains a challenge to fully embed “long-termism” in order to help tackle big challenges like climate change.

We recently sat down with Mars CFO Claus Aagaard to learn more about how Mars is working to achieve this across the business.

As a family-owned company, what would you say are the pressures to deliver short-term results, and how do you push back on that to ensure focus is also on longer-term thinking that benefits more people?

The art of managing this is to acknowledge that while there will always be short-term pressures, we must continuously ask ourselves what the impact of today’s decisions will be on the world tomorrow. At Mars, this is at the core of how we do things. Our financial freedom as a privately-owned, family business allows us to take that longer-term view and think in terms of generations, not quarterly reports. Of course, we must stay disciplined because, whatever your ownership structure, one has to ensure the economic engine is delivering sustainable returns and hence confidence to invest for the longer-term. What private ownership allows us though is more freedom to decide investment pace and margin evolution every quarter or every year.

Some of these long-term issues, like sustainability, we’ve put at the heart of our strategies. That’s because, in order to give them the attention they deserve, they must be prioritized and built into investment plans. The good news is that this is coming to us more naturally now, because the data is clear, as is the reality of the situation we’re in and what needs to be done to fix it. It's also become clear that up-and-coming talent wants to come and join corporations like ours who think of the future, and of course we know that’s what consumers want to see of us too.

What would be an example of a more long-term investment that Mars has made in recent years?

I think a powerful example of this is with palm. In the last year we proudly achieved a deforestation-free palm oil supply chain. We did this by simplifying our supply chain —  taking the number of mills we source from 1,500 to fewer than 100, and we’re on the path to further halve that in 2022. We achieve this by awarding longer-term contracts only to suppliers who can commit to our environmental, social and ethical expectations.

And this is just one example of finding the areas we need to improve in and taking action, not just talking about it. We have also done this with renewable energy, where we’re taking a long-term view. In the last few years, we have been securing 20 - to 25 - year deals on renewables in 11 countries, including in the U.K, U.S. and Australia, and we’re saving money as we do it. That is an approach that delivers positive societal impact and makes financial sense — and it’s all part of achieving net zero in our direct operations by 2040.

These are examples of long-term thinking. We know not everything can be done in a day, but we understand that we must commit our time and resources to these issues now and make sure we do it right.

Over the years, it seems that purpose-led, longer-term thinking has moved further and further up business agendas. Has this been the case for Mars? What does a company need to put in place operationally to make this thinking a reality?

Mars has always been a purpose-led business, and we hold ourselves accountable for delivering across multiple metrics — not just financial performance. We’re fostering a new finance culture that ensures we are living up to our ambition that the world we want tomorrow starts with how we do business today, and this is what we refer to as the Mars Compass. The Compass guides our Board, on behalf of the wider family, and those of us on the Mars Leadership Team to build it into our business strategy. It’s a tool, made up of four “quadrants,” which helps us assess whether we are living up to our purpose and creating mutual benefits for people and the planet.

The first quadrant is financial performance, because we obviously can’t create the world we want tomorrow without having the financial ability to resource it, and the second is quality growth —  focusing our resources on the trends, categories, geographies and channels that are going to help us continue to grow for the years ahead. The next two quadrants aren’t financial. There’s positive societal impact, which is a measure of the positive influence we’re having in the world, and our Sustainability in a Generation Plan is great example of that. And finally, we must be a trusted partner —  the fourth quadrant. Here we measure how our stakeholders see us, a proxy for whether people see us living up to our commitments and their expectations of us as a business.

It goes without saying that purpose without performance isn’t possible, and performance without purpose is meaningless. At Mars, our purpose sets a clear expectation for our leaders, and it’s at the core of how we measure business performance and deliver against the Mars family’s objectives. This is what’s needed to ensure tangible action is delivered, and meaningful changes are made.

Is there a final thought you’d like for us to take away on balancing short- and long-term priorities?

We truly believe that creating a framework that focuses on long-term value beyond just profit is critical. As a CFO, I’m focused on trying to make that happen and implement it throughout the business. It’s why the Mars Compass is so important, because this is the strongest example of how we can both define our financial and non-financial goals, and then hold ourselves accountable for action. It’s a long-term journey, but it's one that we can make meaningful progress on if we put our minds to it. We believe we’re doing that in a very innovative way at Mars, making the necessary choices to deliver change for this and future generations.