Eline Oudenbroek (Interface): ‘No Relevance Without Sustainability’

Ray Anderson, founder of Interface, who died in 2011, was the initiator of that journey. The story of how this carpet manufacturer had an ‘environmental epiphany’ in 1994 has often been described. The mission zero strategy Anderson then launched took him to the Dutch Van Heugten family, inventors of the Heuga carpet tile. Anderson realized that tiles were ideal for offices with their (then) cables under the floor. Where cables came from the floor, a tile could simply be removed (or put back in place if a desk was moved). Such a modular system was inherently more durable than the wall-to-wall carpets that had been common until then. Anderson took over the Heuga brand and continued to manufacture the tiles in the Netherlands. Today, the same is done in China, Australia, and the United States, but the idea of Interface carpet tiles comes from the Netherlands.

Most companies have a goal of achieving net zero by 2050. Interface achieved this already in 2019 and now has a new mission - Climate Take Back - with a target date of 2040. What do you want to have achieved by then?
‘By 2040 we want to be climate-positive and regenerative, that is, to give more back to the earth than we extract from it. The first step was to turn off the petrochemical raw material tap. We are almost there. We replaced our yarn, which still came from the petroleum industry in 1994, some time ago with 100 percent recycled yarn made, for instance, from nylon from discarded fishing nets. The backing of our tiles, however, was still bitumen. Two years ago, we replaced that with entirely biobased product. That required a huge investment in the whole production chain, but now we have almost forty products in 378 colors which we can make carbon negative. In other words, this stores more CO2 than we use to produce it. At the company level, we also want to move away from the CO2 offsetting that we sometimes still must use. Moreover, we have committed ourselves to science-based targets. For 2030, the goal is to reduce 50 percent of our scope 1, 2 and 3 emissions (direct and indirect emissions, ed.) compared to 2019. Scope 1 and 2 are peanuts with only two percent of emissions, but we are also well on track in scope 3, mainly thanks to product innovation. We do that on absolute numbers - so as the market grows, we have a bigger challenge.’

Some companies struggle with the question of the extent to which their current business model can be made sustainable. How is that at Interface? Are you equipped for the next step?
‘Ultimately, we might want to move towards a business model with ‘carpet as a service’, where our carpets remain our property in a lease construction. That would make the step to an ultimate closed loop-process easier. Thanks to the bio-based material in our carpet tiles, we store CO2 and prevent it from entering the atmosphere. That is temporary. After all, when those tiles are eventually disposed of in landfills or burned, that CO2 goes back into the atmosphere. The environmental gain is in keeping the material in your process continuously by taking the tiles, reusing, or recycling them. We tried ‘carpet as a service’ before, but we were too early with that. For the financial markets, the residual value was too unclear. We have developed methods to take back our products, separate them, and reuse both the yarn and the backing. The focus is currently on the return process of our products. When the flooring is replaced, it is a challenge to bring the old tiles back to Scherpenzeel in a carbon-neutral manner. For this purpose, legislation is needed, like what is already happening with appliances or mattresses, that incentivizes the disposal of carpets. This would initiate the right return flows and enable us to initiate the reuse or recycling process.’

As an American publicly traded company, you must deal with the compulsion of quarterly results. Does that never clash with Interface’s long-term vision?
‘We are indeed profit-driven and fortunately still doing well, but our shareholders expect us to adhere to our long-term sustainability vision because we have been at this for 30 years. Companies that are just now investing in sustainability and present this only as a cost increase, are seeing some of the shareholders balking. Several companies struggled with that but made the decision. Some had to eventually step back. In doing so, as far as I am concerned, they are taking a risk, including in terms of attracting talent. The current generation is looking for work where they can express more than just their intelligence and where it's about more than just earning money.
And then there will be legislation, such as the European Green Deal, CO2 pricing or the Dutch textile UPV (UPV stands for ‘extended producer responsibility’, ed.), which makes importers or producers of clothing and household textiles responsible for the collection, processing, recycling, and reuse of their products. I strongly support such legislation. It forces companies to really set and meet targets. Moreover, as far as I am concerned, they do so without the easy offsetting. That is fine, and necessary, if you do not have another solution yet, but eventually you will have to reduce your impact in absolute numbers. The planet has no use for percentage decreases in emissions, it only has use for absolute decreases.’

Besides waving legislation around, how do you convince shareholders that investing in sustainability is to their advantage and not at the expense of profits?
‘In the long run, you only make a profit if you make a relevant product, and sustainability is part of that relevance. Companies can only survive if they bring a sustainable product to the market and make all their processes sustainable by, for example, electrifying them or basing them on hydrogen. Even without legislation, you know it is going that way. The realization that there is no business case in being non-regenerative is slowly starting to sink in.
Of course, in a down economy it is more difficult. We too have seen the absolute market for offices shrink since corona, but our market share has grown - precisely because of the increasing relevance of sustainability. We see increasingly more of our industrial customers - in addition to offices also data centers, airports, and universities - opting for a more sustainable product. Because it fits their mission and because they are just as committed to becoming more sustainable.’

Why did Interface’s sustainability mission succeed and what can other companies learn from it?
‘Culture is absolutely the most important driver. There are few companies that have achieved so many results so early on where sustainability is still so prevalent in the DNA - even though our founder passed away some time ago. If everyone in your organization is not touched at the heart by your story and does not think how to contribute to achieving that mission every day, it is almost impossible. I was surprised last year when it turned out that we have two stars in the CO2 reduction program Lean & Green for companies in organization and transportation. I did not initiate that, but the logistics director with the people in the warehouse who oversee the shipping of all our products. The fact that people on the floor go that extra mile helps me enormously. At the same time, you must work to ensure sustainability. We have sustainability leaders, and our CEO Laurel Hurd has set up a working group of people from various countries and departments, such as sales, marketing, and coordination. They feed her with what is going on, where we are leaving something out and what we need to work on.’

Interface is constantly moving into new areas. How uncomfortable is that for your suppliers?
‘We pay a little more for our raw materials because we know that, ultimately, we gain market share in the chain by being relevant. The circularly produced and recycled yarn we take from our supplier is a little more expensive to make than - as it is called - virgin yarn. We developed that with them by investing together. Initially, we negotiated exclusivity to gain an advantage in the market. At some point we made this product widely available. The recycled yarn from fishing nets is now an industry standard ... almost no one knows it was developed with us.
It is not for nothing that one of the pillars of our new mission is: lead the industrial re-revolution. As a publicly traded company leading in sustainability, we want to encourage others to start walking with us. As an industry, we have unwittingly wasted the earth together, but we also have the money, reach and brainpower to make it better again in the short term. It has been said that it takes a quarter of the market to reach a tipping point. We are slowly reaching the point where enough industrial customers want a sustainable product. Companies that have not yet reached that point or are being overtaken by legislation, will then lose relevance.’

You are a Supervisory Board member in several companies. How crucial is the role of supervisory directors in the sustainability story?
‘Very crucial, especially when it comes to appointing the CEO. Our CEO Laurel Hurt was hired during the pandemic, at a challenging time when it was clear that the office furniture market was shrinking and really was not going to grow again for a while. They could have looked for someone who would ruthlessly cut and rationalize American style. Yet on the contrary, they are deliberately and for quite an extended period looked for someone who, although very sales-driven, at the same time fits our culture and thus puts sustainability first. Overall, I see sustainability increasingly leading to discomfort and awkward conversations in the boardroom. That is a good thing. Everything, always, is not about money, but about the whole picture. How do we find and captivate people? How do we ensure that customers recognize us as a company with relevance rather than as a dinosaur that still makes a heap of money but that you no longer want to belong to? That is becoming increasingly important.’

You have a background as a general manager at companies that produce machinery such as construction cranes, excavators, and milling machines. Why the move to Interface and supply chain?
‘As an interim manager, I have helped several SME companies regain their health by also looking at all kinds of aspects of sustainability, because I find it important. When someone suggested Interface to me, my first thought was: carpet tiles are not quite my thing. On second thought, it seemed exciting to me to collaborate with people who design products in which atmosphere and emotion are important, while I was used to primarily considering efficiency. Moreover, the position attracted me. I think supply chain is becoming the profession of the future. After all, geopolitical tensions and climate change are creating more and more problems in the chain. Since supply chain affects all your processes, every company should at least have a supply chain officer and I even expect CEOs to come more often from that corner in future. I only found this position really cool when I delved further into the company and realized how leading in sustainability it in fact is, and it was the perfect fit for my personal mission.’

Are you not overly optimistic about the feasibility of net zero by 2040? Not all companies have the idealism and drive of Interface.
‘I admit I am in a bubble. This is precisely why I also try to reach those parts of the market where the norm is quite different. We talk so much about our mission in part because we want to inspire and connect people who are trying to make changes in the areas where it is difficult – like Shell and Hoogovens. They have yet to really cut the way through the jungle with a machete, where we are already walking on a gravel path. We want to show them that it really can be done. That takes idealism. Not the half-hearted idealism of ‘we think it can be done,’ but the idealism of ‘we know it can be done and we are going to do it.’ Leaders who with heart and soul commit to it, will meet their targets.’

This interview was published in Management Scope 02 2024.