Business – more than making money
Feike Sijbesma, RSM alumnus, molecular biologist, and CEO of Royal DSM, is committed to the belief that in a world of great inequalities, hunger, and the ever-growing effects of climate change, business has a serious and necessary responsibility to contribute to improve society as well as return profits. With this vision in mind, he has not only led DSM through an impressive transformation that has made it both a hugely successful business and a champion of sustainability, but has himself stepped up to become a vocal and influential advocate of the “people, planet, profit” philosophy.
Story by Russell Gilbert
DSM is the global leader in its industry in the Dow Jones Sustainability Index. Fortune-magazine gives it the accolade of being one of 50 companies changing the world. DSM, which together with its affiliates has net sales of around €10 billion annually and some 25,000 employees, states proudly that “sustainability is our core value, a key responsibility and increasingly an important business driver” and has committed itself to working towards the United Nations Sustainable Development Goals (SDGs). But it wasn’t always like this. The company, established in 1902, was originally called the De Staatsmijnen (Dutch State Mines). Later it diversified from mining into bulk chemicals and petrochemicals. It was far from being “green” in any sense.
‘Strategy changes over time,’ says Feike Sijbesma (Postkandidaatsopleiding Bedrijfskunde 1987), CEO and chairman of DSM’s managing board since 2007. ‘In taking a longer view, and in terms of being future-proof, we decided to divest all our bulk and petrochemical operations and create a science-based company active in health, nutrition and materials. What we have is a company that on one side is a business addressing sustainability and climate change. On the other side, it addresses malnutrition in the broadest sense of the word.’
‘Civilisation has solutions, money and logistical streams’
Why has DSM so readily taken up the causes of sustainability and climate change during Sijbesma’s ongoing and undoubtedly successful tenure at the helm of DSM? For Sijbesma, who received the RSM Distinguished Alumni Award in 2009, the answer is simple: ‘The world has made great progress over the last 50 to 100 years. Prosperity has increased during that time, but not for all levels of society globally,’ he says. ‘The eight richest people in the world have as much wealth as three and a half billion of the world’s poorest people combined. That’s half of humanity. At the same time, around one billion people go to bed hungry and another billion are undernourished. On top of this, the prosperity of many is in danger because of climate change.’
Sijbesma believes that for a civilisation as rich as ours, issues such as hunger should be unacceptable. ‘We have the solutions. The money is available, products are available, as are the logistical streams, so our civilization needs to bring hunger to an end!’
Progress is being made. Sijbesma points to the Paris Agreement, signed by close to 200 countries in 2015 in an acknowledgement that the threat of climate change is real and must be addressed. ‘With global average temperatures, already close to breaking through the 1.5°C threshold agreed at the Paris summit, we need to act faster and in ways that have a stronger impact. In the south of Bangladesh, tens of millions of people are already affected by climate change and endure significant problems such as floods. In the Horn of Africa, even more people are confronted daily with drought and famine. The bleaching of the Great Barrier Reef – this can’t continue, we need to act. Climate change threatens the lives of millions of people, which will trigger climate-migration and geo-political tension,’ he says.
But who has responsibility for addressing what are effectively global problems? Sijbesma is convinced that collective efforts – multi-stakeholder initiatives – are the only solution. ‘The old model of how to run society, where governments have responsibility for public matters, companies lead the economy, and international institutions co-ordinate on bigger matters, is not applicable any more. Societal responsibilities are now very blurred,’ he says. ‘Many big companies are multinational, giving them a global reach and impact. Having such a great impact on society, companies must show more responsibility. Companies also have the innovative solutions and technological capabilities to help solve society’s big problems. Governments, meanwhile, have the legal power to make regulations and enforce laws relative to these problems, which is how it should be.’
For Sijbesma, this is where the triple bottom-line of “people, planet, profit” becomes the over-arching philosophy. At the same time, Sijbesma believes that corporate social responsibility (CSR), in what he describes as the “classical sense”, is a bit old-fashioned: ‘You don’t have a company on the left and CSR activities and reports on the right. That is outdated. It should be almost illegal for corporates to be involved in activities that are not socially responsible because they are a part of society. It’s not a case of society is over there and we interact with it from over here.
To effectively run a company for people, planet, and profit, Sijbesma says a more relevant form of CSR must be integrated into everything it does. ‘This is how it works at DSM,’ he says. ‘That means we also have an integrated annual report. In addition, it means that the areas in which we want to have an impact on society are not just issues we feel need to be addressed, but are those in which we have real competencies.’
Focus on competencies
In this respect, DSM, as the largest nutritional and food ingredient manufacturer in the world, is perfectly positioned to have a high impact on malnutrition and health concerns. ‘For 10 years, we have collaborated with the UN and the World Food Programme in the drive to make food healthier and more nutritious. We are their largest partner in this. We make food healthier by replacing salt, sugars and fats, and by adding probiotics, vitamins and micronutrients, and omega-3s.’
As one of the larger material science companies in the world, DSM develops water-based resins for use in coatings and paints as alternatives to solvents, which can be dangerous to health and the environment. But it doesn’t end there: ‘We develop materials that can reduce the weight of cars and therefore the use of fuel and associated CO2 emissions,’ he says. ‘We make electronics greener by taking out hazardous chemicals and replacing them with biodegradable materials. We have developed technologies to boost the yield of solar cells, and convert agricultural waste into ethanol and green energy. The circular and bio-based economy, climate change and renewable energy, nutrition and malnutrition are major issues upon which we can have a big impact.’
Sustainable development goals
For DSM, this means the UN Sustainable Development Goals (SDGs) and global trends effectively lead company strategy. The company’s annual report provides an overview of the 17 SDGs and outlines those upon which Sijbesma and his colleagues are committed to having an impact: ‘Five of the goals link automatically to malnutrition, climate change and well-being in society, areas in which we can have a huge impact. There are another 10 goals in which we can have a moderate impact, and a couple where, with our specific competences, we can only have a limited impact.’
The company takes three approaches to its sustainability responsibilities based on reduction, enabling, and advocacy. ‘First,’ says Sijbesma, ‘we have set a trajectory to reduce our own environmental impact. We’ll do this by decreasing our emissions by 45 per cent and stepping up our use of renewable energy to 50 per cent by 2025. Second, we enable our customers in our supply chain to be sustainable through the materials and the nutritional and food ingredients we develop. Third, we feel companies have a duty to raise their voices, make commitments, show their own responsibility, and we must do what we can to encourage and advocate this.’
Walking the talk
And Sijbesma is a man who very much walks the talk: Jim Yong Kim, president of the World Bank, appointed Sijbesma as one of three climate leaders along with Kofi Annan, Nobel Peace Laureate and former secretary-general of the UN, and Christiana Figueres, former executive secretary of the United Nations Framework Convention on Climate Change, who played a key role in the Paris treaty. ‘Our role is to help drive action on climate change through advocacy,’ he says
Sijbesma also leads the World Bank’s Carbon Pricing Leadership Coalition with Ségolène Royal, France’s minister of ecology, sustainable development and energy, who is now being succeeded by Catherine McKenna, Canada’s minister for the environment and climate change. ‘The initiative’s aim is to put a price on CO2 emissions,’ he explains. ‘Why? Because we want to anchor doing well for the climate into our economic system, and this is the best way of doing so.’ He also plays a leading role in the World Economic Forum’s CEO Climate Leaders.
Logical business sense
Taking responsibility does not mean you hurt your company financially, Sijbesma states firmly. ‘On the contrary, it is just logical business sense to invest in the future, to adapt yourself and make your business future-proof. This can be evidenced by the fact that at this moment the DSM share price is close to an all-time high, and that the company is doing financially very well. DSM has created a lot of value over the last decade. Looking internally, we score very highly in employee engagement. Our people find working at DSM to be very motivating. If you approach your responsibilities and do it well, all these aspects influence and strengthen each other positively meaning you can achieve several worthwhile goals at the same time,’ he says.
But what of other CEOs: are they increasingly convinced of their societal responsibilities to the degree that they are committed to doing more than “old-fashioned” CSR? ‘Increasingly I see that CEOs and companies realise they have a broader responsibility than only taking care of shareholders and making money, although that business sense is important,’ Sijbesma responds.
‘I see it as a growing coalition – such as in the Netherlands where companies including Unilever, AkzoNobel, Philips, FrieslandCampina, Air France-KLM, Heineken, Shell and DSM have founded the Dutch Sustainable Growth Coalition. Maybe not everybody sees responsibility in the same way or they are still very much focused on the short term, or only their own prosperity – of themselves as leaders or the prosperity of their company in isolation – but I think it’s changing,’ he says. However, Sijbesma is adamant businesses need to be run in a professional and profitable way: ‘A company is not a charity foundation. The art is to integrate the people, planet, profit approach and not over-focus on only one element. It makes good business sense to take care of the world around you and prepare your company for the future.’
The role of business education
When invited to give speeches at business schools, Sijbesma says that he often starts by asking students to define in one word what it is their chosen subjects are really about. Many, he says, believe the answer is money. ‘I ask them to consider the roots of business. It started with barter and specialisation. One person might have been successful as a hunter, and another better at growing crops. They traded together based on needs, others came along and so business began,’ he says. ‘Money is not the ends, but the means. Originally money was the means for a distribution and specialisation model through which goods were exchanged. As time has gone on we’ve forgotten this. In the last 30 years or so the focus on money and short-term returns has created enormous inequality across the world.’
Business schools clearly have a crucial future role in educating the leaders, managers and entrepreneurs of tomorrow about societal responsibility and global priorities. ‘This is very true,’ says Sijbesma. ‘When students tell me that studying at a business school is all about money, I know we’re not yet there in terms of educating them properly. As I mentioned, money is not the most important topic – although let’s be clear: a company starts with customers, serving needs of markets in a societal context. If you do that well, you will make money. Not the other way around. What they should be learning is how an economic system – the planet’s system – works, how it should work, and how it can be improved so that we can live here well, in prosperity with many – maybe with all – now and in the future. This is what business schools need to teach students.’
Sijbesma says this is where the UN Sustainable Development Goals have a major part to play in connecting people to the people, planet, profit philosophy. ‘Business schools need to step up on this,’ he says, ‘because I believe so much more needs to be done. This is why I applaud RSM on its new mission focus. Looking at how the SDGs as a global strategy can have an impact on RSM – and how RSM can reshape its teaching programmes and research accordingly to become the force for positive change it intends to be – is the correct thing to do. Taking this approach, I believe RSM can distinguish itself from other business schools. And if RSM can build on this and take on its responsibilities as a leading business school then I think we’re definitely on the right track.’