Leadership
20 Questions with Claus Stig Pedersen:
Sustainability – and Now SDG – Pioneer

Last month, UN Secretary General Ban Ki-Moon named Claus Stig Pedersen, Head of Corporate Sustainability at Novozymes, one of ten 2016 Local Pioneers of the Sustainable Development Goals (SDGs).

Sustainable Brands CEO KoAnn Skrzyniarz recently caught up with Claus at SB’16 Rio to find out more about the role the SDGs play in his work at Novozymes, his sustainability journey to date, and what he’s learned along the way.

KoAnn: What were the first drivers of your awareness about and ultimately commitment to sustainability?

Claus: When I was young until my [early] 20s, I was not really concerned about it - but when I was midway in my studies as a chemical engineer, I took a sabbatical and I travelled to South East Asia with my surfboard …

KoAnn: What led you to chemicals, or chemistry?

Claus: I was fascinated by biology and biotechnology and I wanted to learn more about how can you connect nature better to what is possible in terms of making lives better, so there was already [an interest] back then … I spent a lot of time in the forest, and using things from the forest, and we sailed all my life as a kid, so outdoors has been very important. I learned about biotechnology very early, so I decided to go into chemical engineering because the closest you could get to biotechnology back then was – you could study biology at the university, and you could study technology at the technical universities, but biotechnology was not really something you could study. So I decided to do engineering and then find out how can you make a difference and not just know about it - I’ve always been very action-oriented. I very quickly lose my patience when it’s theory and talking. So, it’s always very quickly like, ‘What can I use it for?’

So midway in my chemical studies I thought, ‘Ah, is this really going to be the purpose of my life?’ So I took the sabbat and travelled around for six months and saw people suffering, saw the environment being broken down, and got really upset. So sitting there on the beach [in Indonesia], I saw the damage – the oil spills, and the plastic on the beaches - and I got upset. You know, it was green rivers in India - kids were playing. It really – it was painful.

So when I returned, I joined Greenpeace, and I looked for political parties on the extreme left wing to see, was there a lever that could be used to change something? But I didn’t see it. And then I continued my study and I just realized that a solution was probably to be found on the flipside of the problem.

KoAnn: When was that?

I was the junior guy working with these senior guys developing the method. There was a consulting arm of this institute at the university, called the Institute for Product Development (IPU) - they were advising companies to use these LCA methodologies to develop better products. So I was doing LCAs for a number of companies, to help them integrate environment into their product-development processes, and one of my clients was this packaging company, Hartmann Packaging, making packaging from waste paper. I made a number of reports for them, analyzing their different packaging from waste paper, and what was good and what was bad. And then the reports piled up and nothing happened. And then I got upset again [chuckles]; all this beautiful information about the right thing to do - why is it not moving anything?

So I suggested that they should employ me and finance my PhD on integrating sustainability into business decision-making. And to my surprise, they said yes - and I started to do a lot of work in the company, [where] I collected data and information that I used for my PhD. It took me six years to complete my PhD because it was basically weekends and evenings, but every idea I came up with and tested in the company was basically implemented. And it helped take this company from an unknown actor – a packaging manufacturer with a purpose of making good quality egg boxes, basically - to be a star in the sustainability scene and having a purpose of protecting values - protecting mobile phones, eggs, fruit, people and protecting the environment at the same time. So that was really exciting.

KoAnn: What did you learn when you were trying to understand the keys to implementation?

Claus: A key takeaway is that the world is not rational. It’s emotional. Because when I started this PhD work, my belief was that it would be 90 percent doing more LCAs and 10 percent getting people to follow the advice, but it was the other way around. So there was so much work to do in selling the idea, making sure people understand, making sure people see the benefits and ‘okay, so we have to go this way, but what is in it for us? And how should we really do it?’ [Having] facts on the paper is just the beginning.

So, after 10 years I was leading sustainability and quality for the group. The group has expanded - it became an international packaging group, and a leader in sustainability. Because of our sustainability leadership edge we even got a free seat at the World Business Council for Sustainable Development.

KoAnn: It’s interesting that your work [combined] quality and sustainability. I know when I first started getting really serious in this space there were a lot of people kind of acknowledging that there’s a tight connection between quality and sustainability. I don’t see that as much now. Why?

Claus: It depends a lot on the industry. But I used that learning when I started at Novozymes, because to me, again, it was ‘how do you move things? Where is the power to change?’ That’s my focus. And the success of the company is [in] how efficient you run your production. In a packaging company, it made a lot of sense to have sustainability combined with quality and production process optimization, because the annual result to a high degree is defined by the cost efficiency in production. In a company like Novozymes, success is to a much higher degree defined by innovation and how much can we sell – it makes more sense to connect to the sales to the marketing to the business development functions - so the power is in a different place.

KoAnn: Do you have any observations now about the differences in companies that are focused on efficiency versus innovation, as it relates to how relevant sustainability is to them?

Claus: Sustainability is strategic to all companies and something they should all take really seriously. Unfortunately, only a minority has yet realized that. All companies can be categorized according to one or more of the of the following strategic sustainability related drivers: Risks, Costs or Opportunities: There are a lot of companies under increasing risks because they use processes, raw materials or business models being out of sync with world development and needs. For example, the fossil energy sector or industries building on underpaid or under-aged labor in the third world. Companies using excess amounts of energy, water and other scarce resources and/or generate high amounts of waste/pollution are increasingly facing cost pressure because of direct or indirect cost of operations and compliance with regulations. And then there are other companies with tremendous opportunities because they are in a position where they can innovate solutions that the world needs for the future. All three elements can really dictate success or failure for a company. And they should take it seriously. But again, that requires that they see and accept the premise that the world is going down Sustainability Avenue, where the needs of a growing world population will be met through business solutions in sync with the carrying capacity of nature - exactly what the UN Global Goals are intended to drive.

KoAnn: I want to make sure we get on paper the role that you had in bringing LCAs and getting The Sustainability Consortium (TSC) launched. Can we talk a little bit about that?

Claus: Sure. I had approached Walmart when I was in packaging, because we were supplying egg boxes to Walmart. So when [former CEO] Lee Scott declared that Walmart [was] going to be the leader in sustainability, I jumped on a plane to Bentonville. This was in 2005. I started knocking on doors and I had conversations with buyers of packaging but they had no clue what I was talking about. They heard about something [called sustainability] that the “Big Kahuna” was talking about but that’s very far away - so no buy-in at that level. Then in December ’06, I started at Novozymes. And my first day at work, I said to the CEO, ‘We have to inform Walmart about the potential of Novozymes’ technology to optimize supply chains for a giant retailer like them.’ And he said, ‘Well, sounds interesting, but you go try.’ So no belief that this was possible.

KoAnn: OK, big takeaways: Think big and … can’t hurt to ask?

Claus: Yeah, I had learned that starting with the buyers would not lead anywhere - I had to go for the top.

KoAnn: Interesting.

Claus: I happened to have had a lunch with Amory Lovins in Copenhagen only a few months earlier, when I was working in packaging – and I knew that he has been advising top management in Walmart. So I gave him a call and said, ‘I’m now working in another company and they do fantastic things - we have this great technology and Walmart should hear about it, but I don’t know how to get in contact.’ And he said, ‘well that’s easy,’ and he grabbed the phone and called Andy Ruben, who was the VP of Sustainability back then. And then we started having this conversation. But then there was some re-orgs in Walmart, and then I had to re-start the conversations with their new Sustainability Lead, Rand Waddoups.

It took a year; Walmart liked the lifecycle idea, but they were not really sure what to do about it because we were not trying to sell them anything - we were trying to sell a vision, a mission. He finally said, ‘Ok, we’re going to organize an event for our suppliers. And we’re going to call it, ‘How to design your product for the better,’ and you’re going to be the keynote speaker, and then we’ll see what happens.’ That was in 2008. And that was a big event; I was speaking [to] 500 suppliers about LCA as a tool, and how you could use that to optimize and improve your products for the benefit of all – based on my PhD, and my experiences working with this for more than 10 years, I was basically sharing that and trying to make that business-relevant. Many of our customers were in the room. And it went really well. Rand said to his suppliers, ‘Listen, this is the future.’ [Laughing] So, that was quite a tall order.

Immediately after the conference I was invited to serve in some of the product value networks of Walmart. There was a number of buyers, suppliers, and NGOs in these groups. And I was basically given a seat as an NGO, because we were not trying to sell anything to Walmart. I was serving in three value networks, in ‘08 and ‘09, and then in ‘09 we were part of forming TSC, based on all of this thinking. I’ll never claim the fame for the formation of the TSC, but I was part of it, and it was really great to see how the world’s biggest consumer-facing companies joined forces and aligned toward common goals of “making better consumer products.”

KoAnn: Are you still involved with TSC?

Claus: [Novozymes is] a member, and we have been involved in a lot of the working groups, providing a lot of data and information and perspectives. Because what [they’re] driving is so important for the world, and its so important for Novozymes’ business. The more retailers that uptake this, the more business driven down their value chains to the retailers, the more business we have and the more we change the world.

KoAnn: In the 10 years you’ve been at Novozymes, where have you seen the most strategic development both within Novozymes and in the corporate sector?

Claus: Obviously we spend a lot of time integrating sustainability into all corners of the business, trying to find out where can we add value in the buying process, how can we add value to our employees, and all the value chain players and different other players in this ecosystem of stakeholders that define the environment in which we do business. And we learned that there was a growing interest and a growing opportunity to add value of different forms in these different parts of the ecosystem, and that all could be added up to something that is valued by our customers. So I think that learning has been key.

And a special learning, and high value in sustainability, is the ability to open very high-level, very strategic doors around both the customers and policy. When you approach a customer trying to sell them an enzyme or microbe, you get 30 minutes with the buyer, and the discussion is, ‘How can we get a better price?’ If you approach a customer in India, in China – anywhere in the world – and say, ‘The world is changing. We are part of the same business /ecosystem. Should we have a conversation about what we can do together to succeed?’ Then we get a full-day workshop with the C-level. So we’ve shifted the dialogue from buy-sell to strategic conversations about what can we do together for our mutual benefit. And I have used that a lot and I think it has been very inspirational for the fellow leaders in Novozymes to learn that. It was also, of course, a big ‘wow’ experience that we could actually open doors to Walmart upper management and get a position to inspire and influence so many large companies, including many of our customers.

KoAnn: It’s a great example of the power of purpose.

Claus: It is. And also this scare, that ‘Can we do this without upsetting our customers?’ When I got seats with Walmart, I was asked to take a seat with Procter & Gamble on their supplier advisory board, because I could help connect the dots. So I think those are some of the key learnings from these years.

KoAnn: We all know it’s not been an easy road - we were talking the other night about how for some reason you and I have both made decisions in our careers that have inclined us to choose more difficult paths that maybe had a lower return, at least in the short term. What’s been keeping you making those decisions?

Claus: I’ve been thinking about it a lot over the years, and the honest answer is, I don’t know. But it feels right, and maybe that’s the answer - because it’s not the brain; it’s the heart that drives.

KoAnn: I describe it as integrity, in the degree to which it means alignment; like, strength comes from alignment and integrity. Would that be another way to describe your experience? We don’t feel good when we’re not aligned.

Claus: No, because I’ve been tempted by other opportunities many times, but it always made me go back to the same track, to continue this uphill struggle, because it feels right.

KoAnn: Talk a little bit about the UN SDGs - how did you get involved with them, and what are you excited about around them?

Claus: We have been involved with the UN for many years, so when the UN initiated an open working group at the UN Earth Summit in Rio 2012, we saw this as an obligation and an opportunity to share with world leaders what is possible, in terms of technologies and business being part of the solution - and opportunities because we hope that this could be translated into something that could increase the call for our solutions. So it was an obligation and an opportunity to thrive. And we have been engaged by a number of channels in this process, via the UN Global Compact, the WBCSD, and other organizations that have been involved in the process. We’ve also commented on documents and drafts - it’s been a super multi-stakeholder, long-term consensus process.

KoAnn: How are the Goals going to play a role in Novozymes’ strategy going forward?

Claus: We use the SDGs formally as a lens to look into the future; that’s how we describe it. And in practical terms, we have created an assessment and management tool basically connecting the SDGs – the targets that have been set by 193 countries, the problems that have to be solved in the next 15 years – to the technology and business models we have. Using that tool, we can then understand better the innovations in our pipeline that fit best into that picture – so, which solutions can deliver the highest possible positive impacts to those needs? And we will use that information to prioritize our innovation pipeline alongside financial information and strategic inclination.

KoAnn: I love that somebody was talking about this this morning - that you can’t drive change until you start looking at the whole. Tell us about your own personal purpose or aspiration. I love the question, ‘what would you like your kids to say about you when you’re gone?’

Claus: I think maybe I am where I want to be because when my kids describe what their parents do they say, ‘Mommy helps people (my wife works as a psychologist) and Pappy helps make the world a better place.’ And I think it’s cool.

KoAnn: You are newly part of our global Sustainable Brands advisory board, and I’m curious if you have any thoughts yet about how you’d like to influence our members, and what you think we might be able to do together as a community.

Claus: I hope I can contribute to demystify the SDGs and make them more interesting and relevant and operational for the brand community, because I truly believe that brands have a key role to play to make the SDGs a success. And by doing that, I believe that brands will be able to protect their brands, and most importantly be able to use their brand power to make the world a better place, and help the world go in the direction we all want.

KoAnn: If you were going to give advice to a young leader, what would you tell them about how to approach their business life?

Claus: Learning from my own story, I think it’s about following what the heart and the stomach feel, and then the brain will adapt. [Laughs] Because I actually started out the other way around but that made me feel unrest, and now I can see that following the heart and the stomach feel is more satisfying.

KoAnn: Ah, that’s lovely. Have you adopted any practices over the years that has helped you get more attuned to following your heart and your stomach versus your head?

Claus: You want me to talk about meditation? [Laughs] I will not claim that I ever had a deep meditation practice, but I have used meditation since I was 13 years old as a tool to rest my brain and help me see things clearer. I see myself as a “meditation abuser” and i typically use it when I travel - to avoid jet lag, it’s very practical. I use it when I am tired and need to rest my brain. I use it when I’m confused. And I’ve often experienced that I see clearer after 30 minutes on a pillow. I mean, we’re being bombarded by so much information and signals and sometimes it’s overwhelming and confusing, and I think meditation and mindfulness – these techniques help us survive and navigate this environment.