The opportunities of sustainable development

Changes regarding the reporting of sustainability are a constant in European legislation. As a result, we learn more and more about how companies deal with sustainability. But what exactly does sustainability entail and what are the consequences for Dutch companies? Endowed Professor Nancy Kamp-Roelands from the University of Groningen tells us all about it.

Ever since climate change appeared on our radar, companies have seen it as posing both risks and opportunities. Europe ambitiously aims to be completely carbon neutral by 2050. This means that companies have to drastically change their business model and consider their environmental impact. The companies have to develop a future scenario and create a clear timeline, including interim goals. While oil companies are still struggling with the timing of the energy transition, other companies are enthusiastically looking into possible opportunities. Take DSM for example, which started as a mining company but nowadays focuses on health, food, and bioscience. Another example is Signify, formerly known as Philips Lighting, which also focuses on the opportunities presented by the need for sustainability; they developed the LED light bulb, are offering the ‘leasing’ of light and are offering new products such as lighting for vertical (city) agriculture.

Sustainability

The impact of climate change is plain to see in the Netherlands. Temperatures are going up, sea levels are rising, and water shortages are imminent. It is only logical, then, that legislation is expanded to ensure that the business world puts climate change on its agenda. Since 2021, the Taxonomy Regulation is in effect, which establishes what ‘ecologically sustainable economic activities’ are, with the aim of increasing the reliability of sustainability information. From 2024 onwards, the CSRD (Corporate Sustainability Reporting Directive) will apply to all major listed companies and from 2025 onwards to all large companies, whether listed or not. The CSRD makes it mandatory to include more detailed and comparable sustainability information in the annual report.

Professor Kamp-Roelands is a chartered accountant and endowed Professor of Non-financial Information, Integral Reporting, and Assurance at the Faculty of Economics and Business at the University of Groningen. She has been working in the field of sustainability for 30 years: ‘Sustainability is an umbrella term. Its meaning changes constantly because the societal issues also change.’ Although the origins of sustainability were in environmental issues, it has since become a broader term. It involves the economy, the environment, and societal aspects.

The role of board members

Board members are seeing an increase in responsibilities regarding sustainability. Kamp-Roelands stresses the importance of their attitude towards sustainability: ‘See it as an opportunity. Companies are not just asked to be transparent about their current performance, but also about their strategy up to 2050. It is up to board members to formulate this long-term strategy. The clearer you can make that strategy, the better you can direct your company in a world where everyone has an opinion and where things change quickly and constantly.’ By including sustainability in their policy, companies can create new value. People often focus on the problems sustainability presents, but what is really important is how these challenges can be turned into opportunities.

Policies should focus on where a company can make the biggest difference: ‘You don’t have to do it all on your own. Dialogue and interaction with stakeholders are in fact extremely relevant. Sustainability entails complex topics, so make sure to also utilize knowledge from independent parties such as knowledge institutes. Try to not only reason backward from the long-term goals but also place them in solutions for societal problems.’ Kamp-Roelands sees that companies often report on operational aspects but that their strategy is not yet aimed at the fulfilment of long-term societal needs. This also requires a new type of knowledge and competence from their staff: ‘Think of what makes your company unique and how that can be used towards sustainable development goals.’

DSM & Signify

Let’s return to the examples mentioned earlier: DSM and Signify. These companies show that it is indeed possible to change your policy in such a way that you can benefit from the opportunities of sustainability. While DSM started out as a mining company, they changed their entire business model offering different types of products. They are responsible for all kinds of sustainable innovations. For example, they are now working on a methane-reducing food additive for cows, named Boyaer. Signify is also actively working on sustainability. They are focusing on a circular economy, where CO2 emissions are reduced and waste recycling increased as much as possible. Their service, LaaS (Light as a Service), for example, allows people to ‘lease’ light. In this programme, Signify remains the owner of the materials and is therefore able to ensure the circularity of resources and ensure that any resulting waste is managed sustainably.

No matter the company — the beautiful words that are often used in a sustainable policy should be backed up by concrete goals, a timeline, and a budget that will be invested to achieve these goals. Investors will increasingly be on the lookout for that. This will help in speeding up the transition to a sustainable economy and allows the business world to do its part in the fight against climate change.

---

The University of Groningen (UG) accommodates Chapter Zero Netherlands. The UG conducts much research related to the subjects Chapter Zero Netherlands takes an interest in. A lot of this research takes place at the Rudolf Agricola School for Sustainable Development, which focuses on sustainable development, and the Wubbo Ockels School for Energy and Climate, which is working on a fairer and greener energy transition. Would you like to know more about sustainable business practices? The University of Groningen Business School offers two relevant executive programmes: ‘ESG Reporting en Assurance’ en ‘Duurzaamheid: Management en Rapportage'. (Sustainability: Management and Reporting).