Taking on the Sustainability Challenge

Based on the Desso Case Study by London Business School

Following a management buyout of Desso from the Armstrong Group1 in 2007, Stef Kranendijk (the former Desso CEO) and other members of the top team including Alexander Collot d’Escury (then Chief Commercial Officer and today CEO) had a major task on their hands.

As the newly appointed management of the global carpets, carpet tiles and sport pitches company, active in more than 100 countries, they developed a bold long-term business and sustainability vision to sell to all key stakeholders (customers, employees, suppliers, shareholders, the board). It was inspired by the Cradle to Cradle® design concept, framed by the German chemist Dr. Michael Braungart and the US architect William McDonough.

At the heart of the concept was the idea that businesses should aim for eco-effective policies in which they would automatically have a good environmental footprint. This is the basis for what is also known as the circular economy or closed loop manufacturing. It calls on businesses to redesign their products so that they are made out of materials that consist of healthy materials and that they can be disassembled at their end of their product life and recycled either into the biosphere or the technical sphere over and over again. This regenerative strategy offered a much needed alternative to the wasteful and unsustainable linear economic model of extraction, production and disposal known as the linear economy.

Desso had run sustainability and CSR programmes before. But Cradle to Cradle® was going to involve a much tougher commitment to change. It meant they were committing to producing goods that consisted of non-hazardous raw materials that also did not release potentially harmful toxins and were designed to be disassembled in a healthy way.

Bringing in the external consultancy, the Environmental Protection and Encouragement Agency (EPEA) run by Cradle to Cradle® founder Dr. Michael Braungart, Desso drew up two roadmap phases:

  • Phase One (2008-2015) – eliminate all chemical components that were considered too high risk as set against 19 environmental and human health criteria, assessed by EPEA. This phase also included using more renewable energy sources, and to start the construction of a take-back system.
  • Phase Two (2015-2020) – all products should either be Cradle to Cradle® certified or designed according to the Cradle to Cradle® design principles and 100% of the energy would be provided by renewable sources.

Making change happen

Top management maintained a consistent approach which helped to get buy-in from the employees as did holding presentations and workshops to discuss the changes. In addition, a huge effort was made to retrain sales teams.

The next barrier to overcome was winning around suppliers. Their initial reaction was to claim they were already complying with international rules like REACH (Europe’s rules on chemical regulation). Why should they account for every molecule that made up their materials to Desso?

Desso worked hard on changing their mind through presentations, getting their feedback and making the process as easy as possible for them. Some of the shareholders were also concerned that the policy was driven by altruism and would be highly risky, especially in the darkening dawn of global recession.

However, with the shareholders’ faith in the quality of the management team, they were given a “grace period”, recalls Sustainability Director Rudi Daelmans.

This report is based on the original case study, Taking on the Sustainability Challenge, Parts A & B, written by Professor Ioannis Ioannou, Assistant Professor in Strategy & Entrepreneurship at London Business School and Amandine Ody-Brasier.
1 The Dutch private equity firm NPM Capital invested in the buyout and became a majority shareholder; they sold their shares to the European private equity firm Bencis Capital in 2011.