9 minute read 29 Mar 2018
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How a former coal mining company transformed through purpose

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US Americas

Multidisciplinary professional services organization

9 minute read 29 Mar 2018

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Purpose helped DSM reinvent itself to fight climate change, malnutrition and resource scarcity.

“We cannot be successful nor can we call ourselves successful in a society that fails,” says Feike Sijbesma, CEO of Royal DSM.

The global science-based company — active in health, nutrition and materials and employing 25,000 people in 50 countries — reinvented itself to help address some of the major challenges the world is facing by applying its core science-based competencies, profitably. DSM asked:

How can purpose profit the world — and business?

DSM decided to prove that commercial success and doing good for the world can go hand in hand.

To do this, they launched Brighter Living Solutions, a series of innovative products that have a measurably better impact on the planet and its people than equivalent mainstream solutions. Brighter Living Solutions now make up nearly two-thirds of the firm’s sales, and products include anti-reflective coatings for solar energy modules, ingredients for food and beverages that help reduce sugar and salt levels, ingredients to enable waterborne paint and even technology for 100% recyclable carpets. The Brighter Living Solutions line reflects DSM’s core purpose: to create brighter lives for people today and generations to come.

“I wanted to link our purpose and what we want to contribute to society to where our competences are — what we are good at,” Sijbesma says.

Geraldine Matchett, DSM’s Chief Financial Officer, says that the company is seeing a shift in how its investors understand and value DSM’s transformation. “Mainstream investors are increasingly starting to recognize that companies with a strong sense of purpose also tend to have quality growth and better risk management,” she says.

Collaborating to innovate

Sijbesma is convinced that no company can address big societal challenges alone; that’s why DSM is collaborating with other organizations to maximize the impact.

For example, DSM partnered with POET, the world’s largest biofuels producer, to create biofuels from corn crop residue — a renewable alternative to fossil fuels. It also partners with the World Food Programme helping to improve the nutrition of over 30 million people globally. And recently DSM teamed up with Evonik to develop algal oil that will offer a sustainable non-fish alternative for salmon farming.

Rob van Leen, DSM’s Chief Innovation Officer, says new solutions were made possible only by bringing together the knowledge of different partners who are all leaders in their field.  “We are always looking out for companies or people that are doing something which complements our own expertise,” he says. “‘Proudly found elsewhere’ is one of our key ways of innovating. We want our people to be proud if they find somebody that they can team up with to develop a solution that supports our purpose.”

Staying the course

While these partnerships have helped to further DSM’s purposeful ambitions, the company’s crusade hasn’t been without its challenges.

The financial crisis of 2007/2008 proved to be an inflection point for DSM, which faced pressure from vocal investors to ditch its purposeful goals in favor of making as much money as possible, as quickly as possible.

But even as a number of investors questioned the time and resources the company was placing into seemingly “non-core” activities like the partnership with the World Food Programme, Sijbesma stayed firm in his resolve that DSM’s future lay in a more purposeful direction.

“In 2008, after the financial crash, it was very tough for our company,” he says. “Our work with the World Food Programme had just started to have impact. Of course, it cost money and effort, and at the time all kinds of things were being cut.  But I said: people who are starving, we cannot say to them, ‘Well, sorry, the world has a financial crisis; can you hold your hunger for two years?’ No. We stayed the course.”

The firm’s discovery that it could make profitable products that had a positive impact on both people and the planet allowed DSM to fundamentally rethink the way the business made money and how it contributed to society.

Its purpose-led strategy has seen DSM’s stock rise by 61% since Sijbesma became CEO. DSM’s ability to attract and retain talent, particularly among millennials who want to work for a company with a strong sense of purpose, has also improved.

Purpose-led strategy

Matchett is hopeful that over time, capital markets will increasingly begin to recognize the value this brings. “By having a strong sense of purpose we are attracting and retaining great talent, who in turn then have a further impact on the business. I’m a great believer that over time, companies that have been living their purpose will be seen as quality stocks,” she says.

Valerie Keller, Executive Director, Global Markets, Ernst & Young LLP and Global Leader, EY Beacon Institute believes that DSM’s story could serve as an example for the next generation of purpose-driven firms. 

“DSM is a beacon of 21st-century business, demonstrating how creating value and doing good for society can go hand in hand,” Keller says.  “I hope that their story can help to inspire and equip other global business leaders in pursuing their own purpose journey.” 

Royal DSM is the second case study in the People of purpose EY Beacon Institute film series.

Summary

By establishing a clear purpose, DSM are creating profitable products that have a positive impact on both people and the planet.

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US Americas

Multidisciplinary professional services organization