Feike Sijbesma: 'Nobody can be Successful in a World that Fails'

Feike Sijbesma: 'Nobody can be Successful in a World that Fails'
Former DSM CEO Feike Sijbesma is still intensely involved in addressing the concerns regarding the global food and climate issues from his various roles. The Co-Chair of the Alliance of CEO Climate Leaders is optimistic about the willingness of companies to contribute to a sustainable and fairer world. 'Now that investors are calling for sustainable business, companies can no longer hide behind them, likewise governments cant hide behind the progress companies make.'

You could perhaps call Feike Sijbesma 'mister sustainability'. Under his leadership, DSM transformed between 2007 and 2020 from a producer of bulk chemicals to a provider of healthy food ingredients for people and animals and specialist (green) materials, with sustainability and innovation as the main drivers. After leaving as CEO in 2020, his current roles include Co-Chair of Global Center on Adaptation (GCA), the global center for climate adaptation (along with former United Nations Secretary-General Ban Ki-moon) and Co-Chair of the global Alliance of CEO Climate Leaders. He also helps with local food production in Africa and is Chairman of the Supervisory Board of Philips and member of the Supervisory Board of Unilever.
He has already received several awards for his contribution in the field of sustainability. It took him a decade of personal transformation to embrace this topic, he says. ‘In my career, I grew up with economist Milton Friedman and celebrity CEO Jack Welsh of General Electric, who were to be held up as an example to all of us. Both were about making money and shareholder value. The first Dutch corporate governance code also emphasized the importance of shareholders. Gradually I have come to realize that this is too short-sighted. The purpose of the economy is to exchange goods and services, making use of everyone's competences, so that we can all live happily and prosper on this earth, with rights and opportunities for everyone. Making money is a means to this end, but cannot be an end in itself. You could ask yourself whether we aren’t getting a bit derailed sometimes by making the derivative goal - making money - so important.’

What made you change your views and to what extent was your personal transformation the driving force behind the transformation you initiated as CEO at DSM?
'As I made relatively quick strides in my life and career and became more influential, I realized that with that comes increasing responsibility. I started to read, talk, travel and think a lot about what you can do with the impact you have, and that is how my vision of the purpose of the economy - creating a better world - evolved. When you think that through, it automatically implies that companies need to be meaningful to society - what we call purpose today. That has been one of the driving forces behind the transformation at DSM. On top of that, I am a biologist by birth. I was brought up with Darwin's evolutionary theory of the survival of the fittest, in which the fittest is not the biggest, fastest or strongest, but the species that can continuously adapt best to a changing environment. I think this is true not only for species, but also for organizations.
When, as CEO, I thought about whether DSM was still future-proof, fit for the future, I came to the conclusion that in my opinion it was not and that we had to change. Given my vision of the economy, the direction was obvious. We had to become a company that adds clear value to a better world and that can generate the financial resources to make that happen, because that would also make us future-proof ourselves.'

That companies should be purpose-driven is now common thinking. In 2007, when you became CEO of DSM, it was much less so. What obstacles did you encounter, and how did you overcome them?
‘The Milton Friedman and Jack Welsh way of thinking was indeed still very much alive, so this led to the necessary discussions with shareholders and the industry. I sometimes found these discussions quite unusual. Of course, companies have to make money and generate returns, but you cannot see that separately from another element in the stakeholder model, namely the difference between short and long term. The transformation of DSM was focused on the long term, and that is sometimes difficult in a context with shareholders who often sell their shares after two or three years, or even sooner. However, the more we focused on the long term, the more frequently we started communicating with shareholders, to include them in our journey and gain their trust.
Ultimately, in the 13 years I was CEO, we achieved 450 percent stock returns. Under the leadership of my successors Dimitri de Vreeze and Geraldine Matchett, this continues. So DSM's transformation has also become a very successful story financially, except that it certainly did not go up in a straight line and there were also lesser quarters and years. So shareholders who were in it for the short term and didn't want to wait may not have always benefited. Those who went for the long term reaped the benefits. This long-term return is important, often involving investments by pension funds that need to be able to deliver pensions to retirees over many decades.'

Were you supported by DSM's Supervisory Board from the start, or did the message have to sink in with them a bit as well?
‘They finally understood that I was concerned about DSM's future prospects if we did not change. The Board and certainly the Chairman of the Supervisory Board supported me. The discussion was mainly about the route. The choice to do more in the field of sustainability and healthy food implied that we had to say goodbye to many parts of DSM, and make many new acquisitions. In my opinion, you cannot realize such a transformation in one big step. If you sell everything at once, you're sitting on a mountain of money, and you make yourself vulnerable. And besides, if you want to operate in new fields, you first have to explore a bit and learn what that new field looks like and what exactly you want to invest in.
So we did a whole series of divestments and acquisitions over a period of many years, and were gradually able to define more clearly what the new company would look like. I talked a lot about this with the Supervisory Board. Not everyone understood when I wanted to say goodbye to business units that were still making us good money, for example the former directors who had built them up. Then I explained that I was standing on their shoulders and continuing to build. I also explained that you will have to sell profitable business if you also want to get money for it, and that money was probably badly needed for the acquisitions that would in turn contribute to our change of course. If you want to move and take up a different position, you have to have the courage to lift the anchors - because those were the parts we were divesting - in order to fish in a different spot. In the DSM of the past, operational excellence and cost savings were some of the most important elements for success. In today's DSM, they are research & development, innovation and a good response to market movements. Such a turnaround demands a lot from the organization, because it also means that you need different competencies and different people here and there.'

How can companies determine for themselves what their social contribution can be? And what should they do if the existing competencies do not match this?
‘You can reason: Which competences do I have, and how can I be more meaningful to the world with them? Or you can reason the other way around and say: In which areas do I want to be meaningful and do I have the appropriate competences to do so? At DSM, it was more the latter. We really wanted to make a switch to other areas, and in doing so we took a good look at the SDG goals of the United Nations, among others. Ultimately we decided that we wanted to make a difference in the areas of nutrition, climate and sustainability/circularity by developing products that the world needs and with which we can make money. Doing well by doing good: Being economically successful by being meaningful and also creating ecological and social value.
Was I always absolutely sure which way to go? No, I have also had my doubts, weighed them up and down from time to time, but I have dared to make the changes. Of course, I was also often searching, but I was determined to go in a new direction. Many companies nowadays talk about corporate social responsibility and corporate citizenship. That is not a bad thing, but to me, it feels too much like something you do on the sidelines, alongside the real business. In my opinion, companies need to look at how they are meaningful at their core and create broad added value for all stakeholders, the employees, customers, shareholders and society itself. That requires real soul-searching and daring to look in the mirror. For example, what do you do if you make products that are really harmful to people or the planet? We can only make progress if more companies dare to change course, because nobody can be successful, or in fact call themselves successful, in a world that fails.'

In your opinion, should topics such as sustainability and purpose be more strongly embedded in the governance of organizations?
'It is already embedded in the Dutch corporate governance code that as a company you have to take care of all your stakeholders. It includes a clear mandate to add economic, ecological and social value: People, planet, profit. I don't know if you should go any further. I do not like the idea of codes or laws laying down in detail how something should be done. Each company will have to do it in its own way. Is it the role of the Supervisory Board to ask the management about this? Yes it is. Should the management develop a vision in this area? Absolutely.'

And in its own governance setup? For example, should supervisory boards be required to have a sustainability committee?
‘In practice, this is sometimes the case, but it also happens that a full supervisory board devotes a certain number of meetings a year to it. In my opinion, both models are possible and good. What is important is that the Supervisory Board specifically frees up time and attention for this and, above all, looks at how the topic can best be embedded in the entire business operations. Philips, for example, where I am a member of the Supervisory Board, is very committed to circularity. They make a lot of large machines and appliances that eventually have to be dismantled. They think about the question of what should happen to all the components at the design stage, and not just when they are being dismantled. That is a good example of how I would like to see it everywhere.'

You are Co-Chair of the Alliance of CEO Climate Leaders, a group of 150 CEOs who, in an open letter to governments and world leaders at the COP26 climate summit in Glasgow, commit to halving CO2 emissions by 2030 and net zero by 2050. They call on governments to take measures such as CO2 pricing. This is almost a reversal of how it usually goes. Are politicians doing too little?
‘Not only the average lifespan of a CEO is four years, but that of most politicians is not much longer. So in politics too, just as in companies, there is sometimes short-term thinking, on the way to the next election. I am a great advocate of thinking in the slightly longer term. In the climate debate, there has been a shift since Paris. In the past, governments said, "We want to, but we cannot because companies don't want to - because it is going to cost the economy, jobs and competitiveness." Companies said they wanted to, but they couldn't because of their shareholders. The different players sometimes hid behind each other and made themselves dependent on other actors. That is now changing.
In our open letter, we state that we will massively reduce our carbon emissions, be transparent and embrace a price on CO2. In the last sentence of the letter, we call on governments to be more progressive as well. Some people were surprised by that. Our message is: We are going to move, and so you can no longer use us as an argument for not taking action. Something similar is happening at companies. Now that more and more investors are calling for sustainable business, companies can no longer hide behind them. Are we there? No, not quite yet. Is it going too slowly? Yes, but I see the shifting panels as a positive development.’

Since leaving DSM, you have been a non-executive director at Philips and Unilever, you advise companies and you fulfil a number of NGO-like roles. Where do you feel the most responsibility at this point in your career?
'I spend most of my time on the global food and climate problem. Incidentally, just as I did at DSM, but now in a different setting. I find the climate discussion a very important topic. Of course, we have to work to limit the extent and speed of global warming, but we are already dealing with the consequences of climate change. But in addition to prevention, mitigation, I think transformation, adaptation, is also important. Think for example of the recent floods in the Netherlands and fires in Greece, but also of Bangladesh and Ethiopia, where the strong change in climate is reducing agricultural yields and thus causing hunger, while you really can't blame the inhabitants of those countries for causing global warming. The Global Center on Adaptation, of which I am Co-Chair with former UN Secretary-General Ban Ki-moon, tries to help the most vulnerable and poorest areas and countries with knowledge and advice on climate adaptation. So I am still working on the issues of climate, nutrition and the inequalities associated with them. Of course it is a very different role from being CEO at DSM, but I am continuing my journey to contribute to a better world during my lifetime.'

This article was published in Management Scope 01 2022.

This article was last changed on 15-12-2021