SUSTAINABILITY IN ITS LINEAGE

For Peder Holk Nielsen, sustainability is about thinking for the long term while building on one of the fastest-moving technology bases in business. The licence for long-term thinking must be earned with short term performance, he says.
Peder Holk Nielsen
Chief Executive Officer
Novozymes
“I’m a firm believer that, in order to fundamentally solve the problems we’re facing as societies, we need private-public partnerships.”
PEDER HOLK NIELSEN

At the core of Novozymes’ business model lies a simple credo: solve problems, create a business from doing so, then invest in solving more problems. This stems from the lineage it shares with the other companies in the Novo Group; they all originate from two pharmaceutical companies, Novo and Nordisk, both producing insulin since the 1920s and both with a strong sense of corporate citizenship throughout their history.

“It’s been ingrained in our corporate culture since 1923 that this company is there for one reason: to help people. So the idea of helping, making a business from it and reinvesting in helping even more has been with the company throughout its history,” says Novozymes CEO Peder Holk Nielsen.

This also means that a long-term focus comes naturally to the company. In 2000, Novo was split into three companies. Novozymes is the enzymes part of the group, producing industrial enzymes for a wide range of industries – ranging from food and beverage to biofuels and waste water treatment. The problems this enzyme manufacturer targets – fossil fuel dependency and the global food shortage, for example – are not solved easily, and none of the company’s goals will be  accomplished over the next quarter – or year. In a sense, the company was born with a long-term perspective.

“This desire to do things for the longer term is in the company’s genes. It’s probably based on the experience over time that this builds a more robust company. Focusing on the long term makes sense from an economic point of view, it makes sense from an employee point of view and it’s a great way of mitigating risk. In many ways, it incorporates the things that we rather recently have begun talking about as  sustainable business,” says Holk Nielsen.

However, he points out that a long-term focus must not be confused with an inability or aversion to change. As a company in the biotech sector, Novozymes is built on one of the fastest- moving technology bases in the world of business. In this situation, you have to combine a long-term perspective with short-term agility.

“There is ambiguity there. We can’t afford not to change. We just have to think for the long term every time we change something,” he says.

What he also means is that while Novozymes’ ownership structure is stable, with the Novo Group holding company having 68 per cent of the shareholder votes, this does not exempt Novozymes from meeting the same demands as its competitors.

“We’re thinking for the long term and about all three bottom lines, but the licence to do so is earned through performance – delivering each quarter. That’s the model we’ve evolved, and it’s working pretty okay for us,” says Holk Nielsen.

One of the ways Novozymes makes it work is through partnering – with customers, regulators and other stakeholders – in its “Rethink Tomorrow” innovation programmes.

“I’m a firm believer that, in order to fundamentally solve the problems we’re facing as societies, we need private-public partnerships. Even though I would say that companies in general are becoming more sustainable, certain issues – such as pollution – will only be solved through regulation, so we need administrations to get involved, but we also need business to bring the solutions to the table and make administrations aware that sustainable alternatives exist,” he says.

Luckily, it has become easier to engage external parties in sustainability partnerships. Among his own customers, Holk Nielsen finds a number of companies that did not have sustainable operations, and maybe had not even embraced the concept, 10 or 15 years ago, but which have now made a U-turn and are moving in the other direction. Sustainability is not just for companies that have it in their lineage. “Of course, it would have been tougher for this organization to embed sustainability if we had had to reject significant business areas, but it would not have been  impossible. I think that most companies, whatever their technology or market base, actually have the opportunity to make exactly the same choice. And luckily a lot of other companies are also making that choice now,” he says.


WHAT’S NEXT?
MEETING THE CLIMATE CHALLENGE

Combating climate change needs to be a key objective for corporate sustainability in the coming years, says Peder Holk Nielsen. The challenge is phenomenal and progress not fast enough.

“If we can’t meet the climate challenge, it will be even more challenging to reach our other sustainable-development goals, so I believe we need to prioritize this area. I’m spending quite a lot of my own time trying to counter the lobbying being done to tell the story that alternatives to fossil fuels are not competitive and just foamy stuff dreamt up by hippies somewhere in California,” says Holk Nielsen.