Research Paper (postgraduate), 2014
18 Pages, Grade: A
2.0 Strategic Integration at Novozymes
2.1 Drivers for integration
2.2 How does Novozymes strategically integrate?
3.0 Stakeholder Engagement
3.1 Community Engagement
3.2 Customer Engagement
3.3 Engaging with NGOs
3.4 Multi-stakeholder engagement
3.5 Supplier engagement
4.0 Novozymes Communication and Reporting
4.1 Progress on the UN Global Compact’s 10 principles (Highlights)
4.2 UNGC Communication on Progress (COP) - Peer review
4.3 Novozymes' Communication Policy
TheUN Global Compact’s 10 principles
Current capitalist economic system practiced by the industry has caused numerous damages to the environment (Smith, 2010). As corporations compete for more gains and wealth, more and more resources are consumed globally and planet earth is no longer capable of producing the resources at the same rate that they were utilised (Chapin, 2009). Realising the criticality of environmental issues caused by industrialisation, more corporations around the globe to take action and improve their business processes through establishing corporate social responsibility (CSR) initiatives. CSR would refer to willingness of the company to incorporate social and environmental considerations in the decision-making and be accountable for the impact of its decision and activities on society and environment (ISO 26000). Based on Jobling (2013), according to the theory of corporate social responsibility (CSR), corporations may be the best instruments to promote social policy by which certain policies and practices can actually be achieved. Being the instrument means that the corporations would have the capability to adhere to environmental policy by developing effective green technology, instilling relevant green practices across the industry and at the same time repair the environmental damages they have caused.
Multinational corporations for example, can actually be the catalyst of green supply chain practices and management especially when they have the power to establish sustainable internal operation as well as the capacity to influence their suppliers consisting of hundreds smaller companies to turn their operations greener. Novozymes on the other hand is a company that moves a step ahead in conducting CSR initiatives. It has leaped from risk and cost avoidance to new business as displayed in Figure 1. Novozymes produced enzymes that make reaction more efficient, faster and often reduce chemical by products (Aster, 2013). Being the world leader in bio-innovation, Novozymes supplies to over 40 industries in 30 countries. What makes Novozymes contribution highly important in the industry are their products that enable other companies to significantly minimise resources usage and waste produced. Instead of viewing CSR as a liability or a way to give back to the community, Novozymes directly have CSR initiatives to its business advantage. The next section of this paper would explain how Novozymes strategically integrates CSR as part of its corporate strategy.
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Figure 1: The path towards deep integration of sustainability – according to Novozymes
Novozymes is deemed as the perfect example for a company that benefits most out of its CSR practices. This innovative company finds enzymes in nature and optimises them for industry usage. With such business portfolio that it carries, Novozymes is able to increase its industrial performance while at the same time safeguarding the world’s resources by offering superior and sustainable solutions for tomorrow’s ever-changing marketplace (Novozymes Corporate Website, 2012). Novozymes has achieved measurable goals through strong leadership. Reduction of millions of tons of CO2 emissions through customers’ application of Novozymes’ solutions was also mentioned.
i. Best CSR Professional
The Head of Sustainability Development, Claus Stig Pedersen was named best CSR Professional, at the annual CSR Awards in 2012 for developing and implementing successful CSR strategies within Novozymes. Having Claus heading the CSR initiatives has led Novozymes to achieve impactful result in its social and environmental performance. When it comes to translating and conveying the ever-changing CSR debate into actual initiatives in a company setting, Clause is one of the strongest players in Denmark and globally (Novozymes Corporate Website, 2012)..
ii. Reputation and competitiveness
Novozymes strongly believed that having CSR integrated in its business model could lead to higher reputation and competitiveness. Novozymes is a company that actually capitalises on CSR as an integral part of it’s core business. Through the responsible products that they produced, Novozymes has not only led other companies in sustainable practices but also managed to gain recognition from major bodies. It topped the Dow Jones Sustainability Index in the biotech sector for 11 years running and won the KPMG Denmark’s CSR Strategy Prize. In terms of competitiveness, sustainability helps a company to expand by creating new business segments and new products thus position the company above competitors.
At Novozymes, sustainability is integrated into daily business operations, from R&D and production optimization, to sales, marketing, supplier evaluation, communication and interacting with investors. Integration of sustainability into the core of its business, as opposed to adding sustainability to it, ensures a lean, business-relevant and value-adding sustainability approach and most importantly gives positive impact on profit.
i. The Novozymes Sustainability Development Board (SDB)
SDB is the vehicle for integrating sustainability into the company’s functional business activities and also the tool to secure departmental ownership of sustainability in the business strategy. Members in SDB include vice presidents from the Sourcing, R&D, Production, Sales & Marketing, and Finance partments. SDB members develop Novozymes’ sustainability development strategy and target that are integrated with the business strategy and takes stakeholder concerns into consideration. Thus the strategy formulated would be practical and relevant towards generating higher profit of the company (Siegel, 2012).
ii. Tying sustainability goals to compensation
To ensure that all employees are committed towards achieving sustainable targets, a portion of annual employee bonuses is tied to them (Aster, 2013). Similar to financial targets, if the targets were not met, employees would get less pay. Example of the target would be reduction of carbon dioxide footprint through the use of Novozymes product.
iii. Spreading sustainability thinking internal message
Internally, Novozymes evolved messaging across the employees to make sustainable thinking more proactive. The slogan used, “Rethink tomorrow” creates a foundation for all novozymes employees and drive them towards behaving in accordance to the green direction.
iv. Based on life cycle analysis (LCA)
Being the basis of all sustainability work, LCA is a very important aspect in sustainability strategic integration. Novozymes conducts LCA on all its solutions, from raw materials to production. However, the LCA doesn’t stop there. It also studies what happens when Novozymes solutions are applied by their customers and evaluate the impacts, savings and benefits. From the LCA, the areas for improvement could be determined and modification to existing product could be done to strategically integrate CSR concern.
Novozymes believe stakeholders are essential to organisation’s current and future successes. They engage with their stakeholders accordingly and create an organizational setup that integrates an organisation’s concerns into strategic decision-making. Novozymes stakeholders are institutions and individuals in the private and public sectors, as well as in society at large, that influences their business and vice versa. Examples of Novozymes stakeholders are customers, suppliers, employees, civil society and non-governmental organizations (NGOs).
Novozymes engage with stakeholders with a variety of needs and interests. Therefore, their stakeholder engagements often evolve on a case-by-case basis and vary significantly in nature. The outcome from engaging with their stakeholders is important input to organisation strategy development, thereby ensuring that Novozymes future activities are conducted in a sustainable manner and that the activities take into account key stakeholder interests.
As Novozymes becomes more global and complex, they recognize that a systematic approach to identifying and responding to their stakeholders’ concerns is important to Novozymes future success. As a result, they map stakeholders and their interests of relevance to specific issues when initiating new projects and activities. Below are the examples of specific stakeholder engagement and commitments Novozymes participate:
Novozymes believe community engagement is an important part of their business. Thus, they committed to give back to the communities around the world through community engagement activities. For example:
i. The Ruggie Framework - Novozymes support UN Universal Declaration of Human Rights (UNDHR)
ii. Citizymes program - Novozymes contribute to biotechnology education by engage in projects and partnerships worldwide to teach young people about biotechnology and environmental responsibility.
Novozymes believe that the best ideas and solutions come out of engagement with stakeholders. Examples of Novozymes' customer engagement:
i. Harboe and Novozymes - Novozymes work closely with Harboe to find the right technological solutions, and sometimes also on the co-development of claims based on documentation provided by Life Cycle Assessment (LCA) studies. They coordinating the launch of the enzyme and Harboe’s new beer, Clim8, based on the possibility to produce beer from barley with enzyme.
ii. Wal-Mart and Novozymes - Novozymes has been invited to be the keynote speaker and co-host at a sustainability conference held by the world's largest retailer, Wal-Mart. The purpose was to give Wal-Mart’s suppliers examples of how to create more and better consumer products with less negative impact, for example by using enzymes and microorganisms.
Novozymes engaged with the World Wide Fund (WWF) for Nature. Novozymes and WWF set out to map how and where low-carbon biosolutions could eliminate the first billion tons of CO2 and pave the way for a green economy. As an outcome of this initiative, the WWF produced a 24-page policy paper and a technical report. The conclusion is that industrial biotechnology has the potential to save up to 2.5 billion tons of CO2. The initiative and report led to engagement and dialogue with central policy-makers to promote low-carbon biotech solutions as an integral part of all major climate projects and initiatives.
Novozymes is a member of various sustainability institutions supporting their commitments, where they exchange experience with fellow members and learn about their priorities and approaches to sustainability. They engage with their stakeholders both at a global and local level, for example:
Table 1: Novozymes Global and Local Stakeholder Engagement
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