Product, Service & Design Innovation
Pivot, Partner, Proliferate:
How Major Brands Are Driving Lasting, Industry-Wide Change

The “musical chairs of leadership” can be a huge obstacle to embedding sustainability in the private sector. An average CMO remains in position for just 18 months, Thomas Kolster, aka “Mr. Goodvertising,” told SB’16 Copenhagen attendees on Tuesday afternoon. Sustainability teams also face the challenge of translating their work into the language of finance, and cultivating consistent C-suite buy-in. We must work and collaborate more closely together, Kolster reiterated, or we risk limiting the sustainability movement to a pursuit of the few.

Tuesday afternoon’s plenaries provided examples of companies leading the way in overcoming these challenges, along with highly successful cross-industry collaborations in the plastics and textiles industries.

Susanne Stormer, VP of Corporate Sustainability at Novo Nordisk, spoke about how her company has institutionalized sustainability under the leadership of its CEO over the past 16 years.

Novo Nordisk changed its bylaws to explicitly account for long-term, triple-bottom-line planning. Now, with a change in leadership underway, its sustainability objectives are protected.

So, is sustainability planning helping business?

Stormer presented evidence that it was, indeed; as the company invested in sustainability, it grew, too. She couldn’t speak to whether this was correlation or causality, but Novo Nordisk’s sustainability work is also helping it achieve its company mission, which is ultimately to cure diabetes. Having a social mission demands the company balance the profit motive with broader goals. These dual aims need not be mutually exclusive.

In fact, “you can only maximize shareholder value if you consider impacts to [all] stakeholders,” she said. At Novo Nordisk, one pursuit supports the other.

An impressive example of a company implementing this ethic is DONG Energy, which transformed itself from one of the most coal-intensive utilities in Europe to a leading global renewable energy giant. DONG reduced its coal consumption by 74 percent by replacing coal and gas with biomass at a number of its power plants, has constructed huge offshore wind farms in European waters, and today owns as much as one-fourth of the offshore wind capacity in the world.

“It’s much easier to continue what you’ve always done,” said Filip Engel, Head of Group Sustainability. But climate change limits human life, and demands immediate action, he said.

Personally, Engel says he wants to be a force for good. He played a part in the company’s reversal from majority coal to offshore wind: in 2008, the company started switching its portfolio to renewable sources.

“We want sustainable energy to empower people, business and societies to unleash their potential without damaging environment,” he said.

Engel described four levers to change: identifying threats to business (e.g., climate change, political risks, employee retention); shifting resources (e.g., pursuing renewable investment opportunities); setting targets (DONG will reduce CO2 emissions by 60 percent and associated costs 40 percent by 2020); and communicating with C-level leadership.

DONG shifted resources to analyze the wind supply chain (previously only 15 percent of its portfolio) and to train employees in the industry. Today, DONG has accounted for more than half of Denmark’s CO2 reduction over the last decade.

“It hasn’t been easy,” he said. But “purpose pays off.” First, it helps to understand threats, shift resources, and set reasonable targets.

A company with a similarly bold sustainable mission is IKEA, which is building an economic model that is increasingly circular.

Its motto - “A better everyday life for the many people” - motivates its focus on products that are reusable, resellable, and most importantly, low cost.

“Even if we don’t talk sustainability in an environmental sense, it still makes business sense,” said Sustainability Manager Jonas Engberg.

Engberg identified IKEA’s number-one challenge in reaching the many people, “especially those with thin wallets” as resource scarcity and added costs.

If cost falls on customers, we won’t succeed, he said. IKEA wants people to be able to repair, refurbish and resell its stuff. “You could see selling secondhand as a threat, but we don’t. We want to be part of that journey.”

One example is the KARLSTAD sofa, which IKEA projected could recapture 95 percent of its value through an extended life of reselling and refurbishing. IKEA wants that value to be part of its dynamic growth.

The company is also pursuing more traditional environmental sustainability measures, such as moving towards 100 percent FSC-certified or recycled wood by 2020.

Stores in the future will be a destination for repairs, furniture hackathons, and tips to prolong the life of products.

Transition towards circularity is necessary and it is helping IKEA, Engberg said. Many times, the more sustainable choice is not the most expensive choice. Reaching the many people and building a sustainable business “doesn’t mean just consuming less,” he said. “It means consuming in a different way.”

Partnerships are critical to this work, and the last two plenaries focused on two examples.

Tomi Nyman, Head of Business Team and New Ventures at Neste, described his company’s development of plastics from renewable sources, and IKEA’s adoption of the material in its products.

Puneet Trehan, Material Innovation Leader for Polymers at IKEA Sweden, spoke of the value of partnering with Neste, which develops its renewable plastics with focus on total transparency in the value chain.

When you come together and build a value chain, you can integrate sustainability if you have the expertise to support your goals, he said. Three things are essential: First, do you really believe in it? Second, do you have leadership? Third, are you truly ready for a journey together

Partnerships with specialists, such as Neste, should enable big brands to implement broad-scale change. “Change does not happen because 2 percent outliers are buying sustainable products. Change happens when masses adopt,” Trehan said.

On the boldness of confronting plastics, an embedded part of nearly every product and supply chain, Trehan was clear: “either you keep talking about it, or you go on a journey and do something about it.”

IKEA decided to challenge the ideas that bioplastics don’t perform. The needs of the many – not only low income, but people who can’t spend a lot on home furnishing – will be the measure of success.

Closing out the plenaries was Tiina Alahuhta-Kasko, CEO of textile and fashion brand Marimekko, and Kirsi Seppäläinen of Stora Enso, who spoke about their quest to shape the future of sustainable fashion with sustainable sourcing.

Stora Enso is transforming from a traditional pulp and paper brand to a renewable materials brand. The company is developing new products based on wood and other biomass that does not compete with food. They focus on making more out of wood as a raw material, and meeting global challenges related to resource scarcity, growing population and land use issues.

“For us, the forest is our partner. And what do you do with your partner? You take care of it,” Seppäläinen said. You can make almost anything out of a tree, she reminded the audience. As part of that journey, Stora Enso is working with pursuing new markets and partners.

One of them is Marimekko, whose customers are interested in sustainable sourcing. According to Alahuhta-Kasko, Swedish design is often informed by nature, consumers are more eco-aware, and people want to know who and how their clothes were made. “We work continuously on the transparency of our supply chain,” she said.

“From birch to dress, and who is the winner? The consumer.” Alahuhta-Kasko twirled to model a striped Marimekko dress made from the new sustainable materials. “All of us.”