While in Copenhagen last week, I had a chance to talk to Novozymes’ Head of Sustainability, Claus Stig Pedersen about what “sustainability” actually means to the company. It turns out, quite a bit.
Novozymes makes enzymes. By definition, enzymes make reactions more efficient, faster, and they often reduce chemical by-products. As such, Novozymes has a good reason to integrate sustainable principals into its operations. Their strategy and thought processes are valuable for many companies to consider.
Pedersen offered me a chart (which I attempted to recreate above) that outlines the way he sees sustainability being integrated into a company. It’s pretty logical and may feel very familiar. At the most basic level, sustainability is about compliance and avoiding risk. It’s also a PR move – to keep potential critics at bay. As a company begins to understand what sustainability is really all about, financial savings start to become apparent – especially as a result of efficiencies in resource and energy use. At the highest level, sustainability begins creating new business segments, new products, and growth.
But what does it take to get to that highest level and perhaps beyond?The answer is simple on paper - get the company to take sustainability seriously. But, testament to the fact that one way or another, most of the articles on TriplePundit are about this topic, it can be a complicated, lengthy process. In Novozymes’ case, the company developed a series of specific internal motivators and messages that have helped to make sustainability a core reason for the company’s existence.
The company convenes a VP level sustainability board from all major departments which works out various sustainability targets. The targets are broken up into four different levels. First, across the supply chain: Novozymes ensures suppliers meet the company’s standards. The second target addresses the company’s own operations (energy,water, etc). The last two targets get more interesting: The third tackles the environmental footprint of Novozymes’ customers through the use of their products and the fourth looks at a “society level” impact. Goals tied to outcomes that the company may not have direct control over are difficult to achieve which makes the third and fourth targets particularly commendable.
Tying sustainability goals to compensation
One especially interesting piece of Novozymes’ sustainability targets is that they’ve tied a portion of annual employee bonuses to meeting them. Simply put, just like financial targets, if sustainability goals are not met, employees get paid less. This is proportionately severe, so the CEO who might have 70 percent of his income tied to bonuses would take the biggest hit if the company fails to meet a target.
Typical targets might be basic reduction in the company’s CO2 footprint or more outwardly facing targets around reducing the footprint of customers through the use of the company’s products. So far the company seems to be doing well, as their own calculations have show they reduced their customers’ footprints by an astonishing 48 million tons of CO2 last year alone.
Secondly, Novozymes evolved internal messaging that has made sustainable thinking more proactive. Their original, somewhat passive slogan was ”unlocking the magic of nature.” It was changed to a more active phrase – “rethink tomorrow.” This phrase creates a foundation on which an internal story about sustainability can be built. It challenges company stakeholders to to think about enzymes as more than just products but solutions to the world’s biggest problems.
Finally, the company has made “driving the world towards sustainability” a specific mission of the company. The concept has three parts:
- First, to “become a voice on the world stage.” The idea is to advance global understanding of biotechnology in general, and especially as part of sustainability.
- Second, to drive new business from sustainability. Novozymes is well-positioned to not only make existing industrial processes more resource efficient, but also to help develop new processes that could be fundamentally more sustainable.
- Third, to build sustainability capabilities. This includes everything from deepening the company’s internal dialogue about the subject to developing tools and publicly facing best practices to give outside stakeholders a better understanding of the subject.
At the end of the day, Novozymes’ commitment is a pragmatic business decision based around winning new business. Like the chart suggests, sustainability starts out as a matter of compliance and risk avoidance. It can then evolve as a way to grow the existing business and produce cost savings, especially around resource and energy use. Novozymes’ current products offer customers benefits along these all these lines. The ultimate evolution, according to Pedersen, is for sustainability to be seen as a way to create new business. It doesn’t just make detergent more efficient, but can develop entirely new ways of cleaning, fueling or fertilizing that offer ecological benefits beyond mere efficiency.
Ed note: Travel and Accommodations in Copenhagen provided by Novozymes.