BUS604: Innovation and Sustainability

"I would like to move on to two things I am faced with now. First is the Dutch Sustainable Growth Coalition and the second is business models. When I started work at EY, Paul Polman and I discovered that we had a lot of Dutch companies that are high on the Dow Jones sustainability index. That was the moment we said we should join forces. How could we work together? The idea was to reflect together on sustainable growth business models. How can we fully integrate sustainability into business models? What can we learn from each other?

"We produced four reports. The first was about these business models - a theoretical framework, then examples. What are the indicators? Sustainability has to do with climate change issues, environmental issues, energy, human rights, transparency, your relationship with your employees and your clients - these are all elements of sustainability. That was the first idea, how we could integrate sustainability components into business models. And let's be concrete.

"The second question was, and that is also connected with this model: what does it mean for leadership and corporate governance? How do you organize this type of thinking within your own organization? What does it mean for the tone at the top? What about ownership within the organization? What about remuneration systems? What about business strategies, what about defining your key performance indicators (KPIs), what about measurement of - and reporting about - these activities? But there is another element: how to foster a culture of responsibility, how to improve awareness: what you might call ownership within the organization.

"Then there is the creativity of your own organization. For example, I was once listening to Pieter van Oord, CEO of Van Oord, and he said, in relative terms we do not spend so much money on R&D. You can criticize us for that but we benefit from the creativity of all our workers. It was very interesting. They use the knowledge, expertise, and creativity of their own employees for their organization.

"Let me say one more thing about the Dutch Sustainable Growth Coalition. The third issue we raised was sustainable innovation. The question was: how can companies contribute to the sustainable development goals of the United Nations and to the issue of climate change? It was a very interesting report because the question is: what can we do about it? I am convinced that asking yourself the right questions is key. Let me give you a concrete example. About two years ago I attended the World Entrepreneur of the Year meeting of EY in Monaco. There were famous CEOs - Ford Motor Company, Starbucks, Coca-Cola, WPP, and the rest. The key question to all the CEOs was: what is your legacy? How are you contributing to society? And then you get another conference. Raising the right question can be very helpful.

"It is also a matter of how to organize things. That is why the business model is so key. That brings me to my second point. Everyone is talking about sustainability. But the question is, what does it really mean for your approach as a company? This is a fundamental process. If you talk about sustainability it must be an integral part of your mindset. You must have the awareness. But then the question is, what does it really mean? Are we talking about the values of our company? Is there a connection with the business strategy? What does it mean for your KPIs? Do you have a stakeholder dialogue about these KPIs? Is it an honest story? Then it is a matter of how to implement your goals within your own organization - organizing critical mass. I think these things are really key.

"Peter Bakker is the president of the World Business Council for Sustainable Development. Once he gave an interview, which was headlined "Accountants will save the world". You can imagine, we were very happy with that quote. But it was not so much about accountants. It has to do with the fact that if a company is saying we want to integrate sustainability into our business model, we will change our KPIs, then the question is what about the concrete results: is there awareness to measure them? And are you willing to ask an external auditor to analyze them? Is it a true story? It is a matter of organizing it in the right way. There we have the circle.