Review of Masterclass in Sustainable Business

On Thursday 14 November, the annual Improven Masterclass took place in Bunnik, at the Landgoederij. This third edition focused on the theme of sustainable business, with a special focus on how can finance and IT become the drivers of a circular economy?

"Sustainability is neither left nor right, but common sense straight ahead"

Over 150 relations and colleagues listened to Prince Carlos de Bourbon de Parme, son of Princess Irene, tell an inspiring story about the opportunities but also the need for sustainability. Next, transition mana-ger and sustainable finance professional Diane Zandee - Manager Group Control ai. at Royal Schiphol Group - took the floor and elaborated on examples of applications of sustainability in business. Due to the call to action of these guest speakers, it could not be otherwise either that the "blue" Improven heart turned green.

The next generation consulting

The evening kicked off with Improven blue bubbles and a walking dinner. Then Jan Bosman, Managing Partner, opened the evening. He referred to the origins and origins of Improven. He emphasised that it is a consultancy club where the inspired professionals love their profession... "consulting with a smile". It is not only about content but also about creating added value and social commitment. You have to feel the passion - "Our blue heart is beating ever greener therefore," said Jan Bosman. This evening was meant to inspire each other to make the green hearts of organisations beat faster. Improven is also becoming increasingly active in the field of Corporate Social Responsibility (CSR). Examples are our cooperation with NL Cares and recently with JINC. However, there is always room for improvement and this requires a different way of consulting, also towards the customer. We cannot and will not ignore it.

Call to action

Prince Carlos says that the topic of sustainability has moved from grass-roots to a major theme in the boardroom. The Prince has championed the energy agreement, among other things, over the past 20 years and indicates that the transition in the Netherlands is finally taking shape. The Netherlands has never been more sustainable, according to the Prince. A linear economy where raw materials are depleted no longer works. It is a dead-end system. That is why companies need to move to a circular economy, "back to the drawing board". Right now, we are in a transition period where people know something has to change but there are no concrete ant-words yet. Organisations and governments are searching for the "how". Food for Consultants of course... Previously, sustainability managers were lonely in organisations where hot departments have now been set up. ABN, for instance, has set up a sustainable agency to manage circular transitions and Schiphol Airport has set the goal of being waste-free in 10 years. There are agencies that claim to be experts in sustainability, but as we said, "we are currently in a transition period". No organisation is currently an expert. So there are still plenty of opportunities. A call to action, then. The only question is whether you choose to do your pre-part with it. Data is the power behind this transition, Prince believes, and is the basis for identifying risks and opportunities. It therefore requires the right organisational fitness - appropriate to its nature and size - that determines how to best deal with innovations and sustainability. The Prince added that "sustainability is neither left nor right but it is common sense straight ahead".

Asked from the audience whether CSR entails contradictions and in what way organisations can best achieve a proper balance of interests, the Prince replied as follows: "Firstly, scho-len should include ethics and sustainability in the curriculum, and secondly, organisations, NGO and know-how should take advice seriously. Even if something can only be determined with 98% certainty. After all, that is how science is". In addition, His Royal Highness believes that taxes on labour should go down and those on raw materials should go up.

A circular economy the solution?

As a driver for a circular economy, Diane Zandee took the audience on her mission to bring finance and sustainability together. According to her, when transitioning from a linear to a circular business model, the whole chain needs to be adapted and a chain component never stands alone. However, the world of transition is not easy and many companies struggle with this, Diane says. As an example of a circular business case, Diane mentioned A Product as a Service, which creates a completely different way of collaboration. For instance, one customer does not pay once for a product and the customer becomes the owner, but the customer is a continuous buyer of a product, creating a long-term relationship. This makes a collaboration extremely complex, as how do you ensure that the chain remains closed? In addition, risks are shifted. "On the one hand, you depend on customers who stay with you for a long time and, on the other, you depend on suppliers who keep the chain closed."

The main question for many financials remains how to make money with this concept? You do this by looking very differently at the value the product adds, the need. Think of light hours. Schiphol has signed a contract with Signify, who are paid per light hour. Diane says it is important that the producer retains ownership because this creates incentives to use materials more sustainably. In addition, data are essential. There is an enormous exchange of data within and across the chain! Think of usage data to improve your product but also of distribution change. After all, new process steps will be added, including re-use. In addition, pre-financing increases because an organisation has to wait longer for its money than in the linear business model where the customer pays the amount of a product in one go. "The ratios shoot in all directions with this," Diane said. Currently, bank collateral is still often based on traditional ratios. How do we get these banks on board? For finance, this means that they have to deal with new financing issues and depreciation obligations that do not yet take into account materials that can be reused endlessly. Everyone knows that an accountant is looking for collateral...otherwise he won't sign off". But how do you (towards the audience) go about using this information? A good example is that, after some struggle, Diane has appointed a sustainability controller at Schiphol, which measures the organisation's performance on sustainability. According to Diane, it is about behavioural change. Seek cooperation with internal and external chain partners and look for the common long-term perspective. Herein, Diane says, lies that incentive of not short-term profitability but long-term value creation across generations.

The panel discussion

According to Prince, the use of a sustainability controller is a very good example of how it can be done. It sends a signal to people and organisations that keep claiming it cannot be done. There were many questions from the audience. Including the question about what about regulations. According to Diane, regulations certainly do not help implement concepts easily. However, a circular accounting coalition has recently been established to promote a circular economy. This coalition is thinking together with regulatory influencers about what could be improved and how legislation can be adapted accordingly. Unfortunately, as organisations are bound by regulations, they still make different choices at the moment. In this, the coalition will hopefully offer a solution.

Another good practical example, Prince said, is that construction companies are increasingly being held responsible for the maintenance and ownership of a project. This incentivises a construction company to build a bridge better because, after all, money and risks are involved. In addition, a circular business case can also bring cost benefits. Consider Mitsubishi, whose revamped model based on lift movements makes 20% cheaper than all their competitors. With the help of notaries, Mitsubishi has created a con-tract form where the risks are secured. They have made this contract public so that everyone can use the same model. When asked how sustainable Schiphol actually is, the Prince was adamant that Schiphol is not an airline but an airport and that the airlines are the biggest polluters, "Schiphol is doing very well". However, Schiphol can influence according to Diane by charging higher rates for more polluting planes - and they do.

The very last question was about why; why is the boardroom opting for the sustainable route? To this, Prince Carlos replied that there are several motivations, but that the biggest motivation is that politics as well as business worldwide have changed. Secondly, the devesting movement has taken a huge hit and physical changes in the climate are really leading to different risk assessments. According to Diane, "it's waiting for us to get those business cases around and find the funding to go with it". Leadership, in particular, is very important in this. According to Jan, the connection between leadership and sustainability is the topic for discussion during dessert and called on everyone to think about what they themselves can do to shape and shape this transition.

Author: Bibi Looijestijn consultant at Improven.