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Novozymes: Using Sustainability as a Competitive Advantage

RP Siegel | Monday November 19th, 2012 | 0 Comments

Novozymes, the Danish biotech company that is sponsoring this series on biofuels, has long been considered a leader in sustainable practices. While the series has explored the future of biofuels in a general sense, once we learned about the company’s deep and innovative commitment to sustainability and how it is incorporated into their R&D, we wanted to share their process with the 3p audience. Novozymes has topped the Dow Jones Sustainability Index  in the biotech sector for 11 years running.

The company was also just recognized as a leader in sustainability by winning KPMG Denmark’s CSR Strategy Prize [note – you may need Google Translate if you don’t speak Danish.] The CSR Strategy Prize is awarded to the company that has successfully aligned its CSR efforts with its business strategy, while managing risks. According to KPMG’s announcement, “Incorporating CSR aspects into a company’s strategy can help to better identify and manage business risks, achieve business objectives more successfully, improve reputation and customer relations, and decrease costs.”

Former President Bill Clinton spoke at the award ceremony.

The individual award for the best sustainability leader was given to Claus Stig Pedersen, the Director of Novozymes Sustainability Development Board.

The Novozymes Sustainability Development Board (SDB) is the vehicle for integrating sustainability into the company’s day-to-day business activities and securing departmental ownership of sustainability in the business strategy. Members include vice presidents from the following departments: Sourcing, R&D, Production, Sales & Marketing, and Finance. SDB members develop Novozymes’ sustainability development strategy, which is integrated with the business strategy and takes stakeholder concerns into consideration. SDB also sets sustainability targets that are approved by executive management and the board of directors.

Claus holds a Ph.D. in Life Cycle Management and a M.Sc in Chemical engineering. He is also a member of Walmart’s Sustainable Value Network, member of Procter & Gamble’s Supplier Sustainability Board and Chairman of the European sustainability organization PREPARE. He is Liaison Delegate to the World Business Council for Sustainable Development and executive committee member of the Danish Business Council for Sustainable Development. You can see him in the video below.

I spoke with Claus by phone this week about Novozymes’ integrated sustainability approach and the role that life cycle assessment (LCA) plays in their overall business strategy.

TriplePundit: Congratulations on your award. That’s quite an honor for both you and the company.

Claus Stig Pedersen: Thank you.

3p: I had heard that Novozymes relies heavily on the use of life cycle analysis in all your projects. Could you talk a little about how you use it and why?

CSP: The basis of all our sustainability work is understanding all the ups and downs from a life cycle perspective. So we do life cycle assessments of all our solutions, from raw materials to production and then when our solutions are applied by our customers, what are the impacts, what are the savings, what are the benefits. We then convert that into a claim that can be used by our customers to help market and sell the products or to communicate with partners or whatever else they need to use this information for. That is something we use quite extensively to understand the value chains we are part of and to translate that understanding into something that can be used in the marketplace.

3p: This certainly gives the long-term and far-ranging impacts of your work, but I’m wondering where does the initiative to do this come from? Is this something that your customers or your suppliers demand or is it more of an internal thing?

CSP: We do it because we would like to know the benefits of our technology. We know that there are a lot of benefits to our technology and the LCA is a way to document that. We can use that documentation to support our customers’ claims. For example, the benefits of all of our solutions from textile manufacturing, to household care, to laundry detergents, we can give that to our customers so they can use it in their marketing and they do that. In the biofuels area, we use the life cycle assessments in our discussions with NGOs and with politicians all around the world about what is good and what is bad in this field and what direction make sense to follow. So we use it for many different purposes.

3p: So this information is really kind of an extension of the products, since this is something they can turn around and use in their marketing, which makes doing business with you more attractive to them, which, in turn, makes doing business with them more attractive to their customers, or at least to those who are concerned about sustainability. How long have you been doing this?

CSP: The first one was done in 2004, and we have been doing them ever since. It gives us a solid knowledge of our technology and the value chains that our technology is part of. There is a requirement by the International Standards Organization (ISO) that any LCA used in marketing must be verified by a third party. All these verification reports are available on our website.

3p: This really seems to make Novozymes somewhat unique in the way that you have incorporated LCA.
CSP: Yes, we are definitely at the cutting edge when it comes to integrating sustainability into our business. We have been doing this for many years and now many of our customers are beginning to embark on that journey and we are happy to help them.

3p: So you are actively mentoring your customers, then, on how to be more sustainable.

CSP: Yes, we have done a number of workshops and seminars with our customers where we combine a mentoring role with an exploration of the sustainability opportunities.

3p:How did this interest in sustainability begin at Novozymes? Was it there since the beginning?

CSP: Yes, it was there from the beginning. The original CEO was keen on running a responsible company because it was the right thing to do. Then, about ten years ago, it became clear that there was interest in this, and that it was something you could build a reputation on. Then, about six or seven years ago, I was invited to join the company because of my background in integrating sustainability in all business functions all the way from R&D, to sourcing, production, sales, marketing and investor relations. I had done that in my previous job and I had done my doctoral thesis on this theme. I was invited to Novozymes to take sustainability from a risk management operation to an active, positive benefit that could help grow and develop the business.

3p: So you’ve been able to transform the question of sustainability from a conversation about risk to one about opportunities.

CSP: Exactly. This has definitely helped open doors for us. For example, I have held advisory board positions for Walmart, advising them on what they can do to optimize their supply chains for sustainability, and of course, share with them the opportunities related to our technology. I sit on an advisory board with Procter and Gamble, who is now our biggest customer. Of course that applies to biofuels as well. One of my guys has a seat on the California Air Resources Board. These kind of interactions give us a lot of insights and open a lot of doors, with NGOs, with authorities and with customers. Having done the LCAs also gives us a lot of weight in the discussions.

3p: So would you say that the LCAs give you the ability to provide facts while other people only have opinions?

CSP: Exactly.

Note: I asked Claus about the use of LCA in their biofuels work and he referred me to Jesper Hedal Kløverpris. Jesper told me that for biofuels they have relied heavily on LCA work that has been published in the U.S., especially the work of Adam Liska at the University of Nebraska.

 

 

[Image credit: sea turtle: Flickr Creative Commons]

RP Siegel, PE, is an inventor, consultant and author. He co-wrote the eco-thriller Vapor Trails, the first in a series covering the human side of various sustainability issues including energy, food, and water in an exciting and entertaining format. Now available on Kindle.

Follow RP Siegel on Twitter.


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