Greta Thunberg’s exposure at UN Climate Action Summit 2019 was another important driver for awareness to sustainability. Awareness is important because it drives change. Probably one could argue that there is already great awareness of this topic in society. But apparently not yet enough to drive change in the levels that experts deem necessary.
Monique van Maare, social business expert at IBM, published a tweet where she showed a photo of a presentation with the text “In 10 years, corporate strategy and sustainability will be the same thing”, with her own feedback “Call me an optimist but I think it will happen earlier”. Amen to that.
On October 8th I visited the Offshore Energy 2019 exhibition in Amsterdam on behalf of Altares Dun & Bradstreet. We participated in the Transparency House at this event, as part of an initiative of the NDI (Nationaal Duurzaamheid Instituut; which means in Dutch “National Sustainability Institute”). The goal was to increase awareness of sustainability in offshore energy, and explore with potential business partners how business practices can become more sustainable.
What Is Sustainability? Definition
When talking about sustainability in the energy sector, often people think about low-emission methods of producing energy/electricity. Yet my definition of “sustainability” is much broader. Namely, it includes also topics such as modern slavery, pollution, employee heath / safety / security / discrimination, contribution to society, ensuring that you do not indirectly support crime or fraud, and more. The NDI acknowledges the following areas of sustainability: (1) Corporate Social Responsibility, (2) Sustainable Procurement, (3) CO2 reduction, (4) Circular Economy and (5) Health & Safety.
Another very interesting definition was given by Tensie Whelan and Carly Fink in their HBR article The Comprehensive Business Case for Sustainability: “We define sustainable practices as those that: 1) at minimum do not harm people or the planet and at best create value for stakeholders and 2) focus on improving environmental, social, and governance (ESG) performance in the areas in which the company or brand has a material environmental or social impact (such as in their operations, value chain, or customers). We exclude companies with a traditional CSR program that supports employee volunteering in the community – this does not by itself qualify as sustainability”.
Impressions From The Exhibition
One main observation was very clear to me as I walked through the booths at the exhibition: the landscape of companies operating in the offshore energy sector is characterized by its complexity and diversity. Among the many exhibitors at the event, most companies support a very specific need in a more complex value chain (some examples are listed below). To illustrate this variety, I’ll name a few of these companies:
- Slingco Limited presented its heavy lift slings (i.e. equipment, hardware for offshore sites)
- SafeLane Global specializes in clearing explosives remnants (i.e. services, both consulting and operations)
- Spliethoff provided an interesting demo of a crane operating in deep sea (again, a very specific service).
- ZF Marine designs and develops propulsion systems for ships (i.e. technology)
- SDC Verifier provides engineering software for checking structures according to different standards (i.e. IT/software provider)
- Merlin Software BV offers very specialized software for crisis management; definitely an important area at offshore sites (i.e. IT/software provider)
- Merford presented at the exhibition its operator cabins for cranes (a very specialized product, combining hardware and software).
Quite a variety of suppliers, each solving one small and specific piece of the puzzle of running offshore energy sites. Above all, acknowledging this variety is important because it implies that operating offshore energy sites requires the involvement of a large network of suppliers, their subcontractors and their subcontractors. Each supplier provides a very specialized product or service. With so many suppliers and their subcontractors, does the beneficiary of the offshore site actually know who are all the involved parties in its value chain, how sustainable their operations are, and which risks are associated with them? Is the beneficiary therefore sufficiently aware of the risks in its own value/supply chain? Bear in mind that these can be “traditional” financial risks as well as sustainability risks or any other types of direct or indirect risks.
My conclusion from this complexity is that supplier Due Diligence – based on rich data about suppliers, their global footprint, ownership structures and operations – is more important than ever, especially in a sector with such complex value chains.
Sustainability Initiatives At Offshore Energy 2019
All participants of the Transparency House are engaged in sustainability. Thus it’s hard to decide which ones to mention. Eventually, my key takeaways include two companies, one of which participated in the Transparency House.
The Cost of Sustainability
One of the companies that I spoke to at the event (I won’t reveal the name) presented their products (physical products), and explained that these products come in two shapes. First, they have the “traditional” product. And next, they have the “sustainable” version of the product. The latter is made of reusable materials and uses built-in solar panels to provide its own power. The sustainable version of the product costs 30% more than the regular one. So I asked whether clients are willing to pay the 30% extra cost for a sustainable product? In response, the company representative told me that so far the answer is negative. Clients don’t buy the sustainable version.
Most companies are driven primarily by financial metrics, and paying extra for sustainable procurement isn’t obvious. Such reasoning reminds me how Governments had stimulated the purchase of electric cars for many years by reducing taxes for such cars, thus making such cars more attractive for the market. Sales of electric cars peaked, and subsequently, car manufacturers invested in producing more and better electric cars. It became commercially attractive for car manufacturers to invest in developing new technologies to improve these environment-friendly cars. In other words, Governments can play an important role in the adoption of sustainable products if they create financial incentives for businesses (and consumers) to buy these products. While one should not rely solely on the Government to push sustainability (every business has a societal responsibility to act, even without regulation), the regulator can help by stimulating sustainability initiatives.
Zytec – Game-Changing Technology?
Those who visited the Transparency House could see a demo of a potentially game-changing technology, developed by the Dutch company Zytec. Their contact-free magnetic coupling for rotating equipment can be used in pumps, fans, generators, compressors, conveyor belts and more. Its advantages include reduced energy consumption, reduced operating costs (the contact-free coupling results in less wear and tear and thus less maintenance) and reduced employee safety risk (less frequent maintenance in offshore sites reduces employee safety risk). The payback time for the technology is just 1.1 years, which sounds like a no-brainer. The Zytec technology was presented at the exhibition in collaboration with SEM Project Support, the Zytec certified partner for delivering and installing this technology in the maritime sector. Thus, are you working in industry, Water and Waste Water, Heating Ventilation Air-Conditioning (HVAC), Chemical Industry, Oil and Gas Industry, Maritime Sector, Pulp and Paper Industry and Mining? If so, check out the Zytec technology!
Thus, are you working in industry, Water and Waste Water, Heating Ventilation Air-Conditioning (HVAC), Chemical Industry, Oil and Gas Industry, Maritime Sector, Pulp and Paper Industry and Mining? If so, check out the Zytec technology!
The Transparency House has been an initiative of the NDI (Nationaal Duurzaamheid Instituut, whose founder is Kelly Ruigrok. She deserves a big applause for her endless energy, her drive for sustainability and her ability to bring together stakeholders and to make them turn words into actions. For a better world. Finally, also applause for Mieke Bakker-Mantjes who was responsible for much of the work behind the scenes of the Transparency House.
Suggested Reading: The Comprehensive Business Case for Sustainability, Harvard Business Review (HBR)