Business case for sustainability


ESTABLISHED in 1963, Dutch Lady Milk Industries Bhd (DLMI) is the leading dairy company of Malaysia and over the decades, we have embraced our higher responsibility of nourishing our planet and people in every stage of life.

In other words, we collectively strive to fulfil the nutritional needs and expectations of Malaysians while ensuring we are managing our resources responsibly.

This is why we are deeply committed to our philosophy of sustainability.

Our interpretation of the definition of sustainable development or sustainability is far from an apocalyptic narrative.

As per the United Nation’s Our Common Future or the Burtland Report, sustainability is all about improving efficiencies (doing more with less so that you are using less resources and creating less waste while operating and growing a business).

It is also about creating equity (making things better between generations and within each generation of leaders, stakeholders, and society).

The principles of efficiency and equity alone can strengthen the business case for sustainability, when understood and implemented right.

“At DLMI, we look at sustainability from the standpoint of efficiency and equity.

“For instance, our global purpose of ‘Nourishing by Nature’ is the force behind all choices that our parent company, FrieslandCampina, makes.

“In Malaysia, we are driven by our purpose of ‘Nourishing our Nation. The focus is on efficiency, meaning improving sustainable farming and manufacturing practices and equity that includes access to nutrition, health, fair income opportunities and all these for today and for generations to come,” says Ramjeet Virik Kaur, managing director of DLMI.

However, one of the many challenges that leaders (in Malaysia and the region) are facing is to convince their boards on the business case for sustainability.

Part of the larger acceptance issue is that sustainability is seen as a compliance risk rather than an enterprise risk.

Compliance risk means it is seen as another tick box exercise exacerbated by hundreds of standards and frameworks, with additional pressure of conforming to emerging regulations and policies.

However, the trick is to understand the scope of sustainability.

Any and all risks, including economic, environmental, social and governance risks, that can potentially harm not just the reputation but also the financial and people performance of businesses as well as their resilience must be in full visibility of the board when taking mission-critical decisions.

With this clarity and perspective, businesses can move beyond compliance and see the urgent need to manage sustainability as an integral tool to protect current and future enterprise value and stakeholders interests.

How can this be done?

The responsibilities as defined by the Act or through Charters for the boards are not new, but the all-encompassing approach to risks (EES&G – financial and non-financial) must be interpreted as a Fiduciary Duty or Duty of Care.

The business judgment rule cannot cover ignorance or “I did not know” excuses.

What probably needs to be done is to critically look at the Board Charter and how we articulate the fiduciary duties in a way that can prove most beneficial to any EES&G integration efforts.

“At FrieslandCampina, the Board Charter refers to a very important aspect of business, i.e., long-term value creation and in this context, we have recently revisited and revised our Board Charter at DLMI.

“We are now more explicit on what long-term value creation means also in the sense of EES&G risk monitoring and management, which will drive value for both shareholders and multiple stakeholders to the business.

“Setting the tone at the board-level is the first of many critical steps to getting the business case and sustainability governance right”, shares Ramjeet.

It is critical to note that sustainability efforts must be complemented by a strong business motive, adequate orientation of the board and proponents within the organisation to champion the cause regularly.

With a business case defined, it is easier to justify certain strategies over general industry approaches because they are grounded in investment decisions backed up by data.

The outcomes as a result, coupled with a sense of purpose, can be measured in real terms towards accelerating sustainability performance and creating positive impact.

At DLMI, over the next five years, we will be accelerating our efforts to fulfil our global sustainability commitments as well as our local EES&G agenda through partnerships with multiple stakeholders, critical in boosting our business case.

Sustainability will continue to be part of our business DNA in order to shape a resilient and better future for all.

This article is contributed by members of the CEO Action Network.


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