Is ESG mostly compliance and an administrative nightmare? Certainly not, it is a strategic opportunity!

In a series of articles exploring what strategic opportunities ESG offers, we spoke first with Paul Broersen, former (multiple) CEO and Partner in the business of Boer & Croon. 

Drives and inspirations
A significant motivation arose during my studies. Together with others, we had founded a company that provided tours and presentations at Gist Brocades in six languages. When new legislation forced Gist Brocades to reduce its waste streams significantly, they devised an innovative solution. They produced penicillin with fungi and alcohol and baker's yeast with yeast cells. They were skilled at working with microorganisms.

The idea arose to use anaerobic bacteria to clean up waste streams. These bacteria could even convert waste into raw materials for animal feed and produce methane gas, a valuable energy source for the company. As a result, they solved the waste problem, found a new energy source, and developed a solution that they could offer to others facing similar pollution problems.

This example inspired me enormously because it showed that by working smart, you can find sustainable solutions and strengthen the company. I have always applied this principle: trying to cause less pollution, use fewer raw materials, and use transport efficiently. Later, when I worked at companies like Heineken, Douwe Egberts, Kruidvat, and Brand Masters, I stayed focused on reducing packaging and increasing recycling and reuse, among other things, to need fewer raw materials, also because it is more profitable!

You are on the wrong track if you see ESG only as part of 'compliance.'
If you approach sustainability as something intrinsic - something you do from the heart of the business - then compliance will naturally follow. It is about making it a natural choice to integrate sustainability into your business operations, not because you have to, but because it feels good and, at the same time, brings more (financial) results and creates more value, both for the company and for society. Indeed, it is a celebration when you achieve more results while operating sustainably and developing a strong position and value development for the future. That's how you make all stakeholders happy!  

Companies seriously committed to sustainability include, for example, retailers not everyone would expect, such as Action and Zeeman. They again impose strict requirements on their suppliers, which offers excellent opportunities for those who operate sustainably.

This also shows that this course is the future, especially as companies that operate responsibly and sustainably often prove successful in the long term. So why doesn't every company do this? 'Unknown makes unloved'. Not everyone knows how to take a positive approach to ESG.  

Sustainability can be incorporated into any business strategy. It is not a 'world-weary' and 'cost-prohibitive' project. 
For entrepreneurs, it is essential to have a healthy business that aligns with current trends, and sustainability is one of the biggest of these. ESG initiatives are becoming increasingly important; consumers are asking for it, and younger generations - the future customers - particularly expect it. However, a recurring question remains: who pays for the cost of the sustainable transition? The transition requires investment and often has bumps in the road, but the underlying trend is undeniable and delivers. Ultimately, society cannot accept it anymore if a company does not participate in it, which is also reflected in legislation.

In the past, I have worked in teams developing many new products and services, such as Senseo. From the marketing perspective, it was always about responding to trends and consumer needs—which remains unchanged. However, ESG plays an increasingly decisive role in this. ESG should be anchored in the proposition and the product, thus at the company's heart. If you fail to do so, you lose relevance and position in the market.

Besides, it also gives companies a competitive advantage in tackling sustainability seriously. It takes some courage to be at the forefront of the industry, but that does not have to mean radically changing course. You can start by looking at your current operations through an ESG lens and implement sustainability step by step in every discipline, such as product development, assortment strategy, logistics and premises. Often, these strategies already exist, but by supplementing them with sustainable goals and prioritising them, you will continue to build a future-proof business.

Boer & Croon's 'Get it done' mentality shows with quick successes that sustainability goes hand in hand with profitability.
It is all not that complicated. Again, look closely at the existing business strategy and its sustainability ambitions. What do you want to achieve? Early in my career, I was given advice that I have always remembered: set your goal in time, make a 'wishful projection,' and then work backwards from that point. This 'backcasting' helps you figure out how to reach your goal, what barriers you need to clear, and what steps you need to take now to do so.

With Boer & Croon, we offer a practical approach that can make a difference, precisely because it gives operational substance to a strategy. We start very emphatically with the CEO and the management team, who must strongly embrace the sustainable approach. I can use my many years of experience to arrive at a powerful approach jointly. We then work closely with the client's entire team, ensuring that the strategy and way of working are truly anchored and that it does not collapse like a pudding when external advisers leave. With sustainability, this is essential: it should not just be a policy plan, but a vision that you really embrace -as said, certainly also by the CEO and board - and with which you take concrete steps. Start with low-hanging fruit - the quickly implementable improvements. That gives quick results and lots of fun! Communicate about it. It provides momentum to take up the following projects with enthusiasm. Naturally, the steps necessary to comply with the CSRD have also been taken.  

Sustainability can significantly improve a company's profitability and value development, especially if you think in terms of opportunities rather than 'difficult and complex'. The trick is to highlight the long-term benefits and normalise sustainability as an integral part of a modern, healthy business. Sustainable business also offers better future prospects—you stay relevant in the market and avoid going out of business. Now joining the strained labour market, the younger generation finds it essential to work at an organisation where sustainability is taken seriously. 

It is not the least of these companies that are leading the way in integrating sustainability into business strategy.
Most listed companies are already working hard on ESG. Mercedes-Benz, for instance, has already decided in 2019 to make the products - the cars including all the parts - and the entire company highly sustainable in about 20 years.  

Picnic is also showing how thinking differently can lead to sustainability. They use small, efficient electric cars with fixed routes and times for food delivery, saving a lot of energy with delivery and fewer CO2 emissions.

Lidl has made a sustainability strategy an integral part of its business strategy. It is a comprehensive and strong strategy that is good for the planet, people and animals and accessible to everyone as much as possible. This makes them very successful and one of the forerunners and pioneers of sustainability in the food market.  
Decathlon also invests in sustainability by offering product repair options. Ikea has a strong sustainability agenda with ambitious and clear targets. One minor but influential element is providing free spare parts so you can (re)use furniture for longer. This also increases loyalty. Many investors and private equity firms, such as Waterland and Avedon Capital, among others, also see ESG as an essential element of company value development, achieving excellent returns.  

In short, many companies start with a sustainability strategy that suits them—after all, you can't do everything at once—often as part of an integrated approach. In the following years, they push this sustainability further into other propositions and the entire business process and chain. This step-by-step approach over an extended period will undoubtedly lead to growing success and a healthy company! We are happy to support this process.