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ustainability, innovation and growth at DSM.

In the 19th century, British naturalist Charles Darwin noted that it was not the strongest of the species that survived but the most responsive to change. In the rapidly evolving economic landscape of the 21st century, successful international companies will also be those that adapt best to the challenges posed by emerging megatrends. The latter include population growth, a seismic shift in wealth from developed to formerly developing countries, climate change and surging energy demand.

Since 2010 Royal DSM, a Dutch multinational life sciences and materials sciences company, has been developing a strategy not only to respond to but to capitalize on these trends. The strategy has four main drivers: a focus on high-growth economies, the development of cutting-edge innovation capability, an emphasis on sustainability as a concept to differentiate DSM from competitors, and the use of acquisitions and partnerships to grow.

For Feike Sijbesma, company CEO since 2007, businesses cannot wait for governments to contain the insatiable human appetite for consuming more resources than the planet can afford. Companies must act.

'Unfortunately the modern world that man has helped to create isn't always ideal for sustaining a stable and prosperous future. This is precisely why sustainability is now our fundamental business driver. It's not just a condition for doing business, but it is an objective in itself to become more sustainable,' said Sijbesma.

Adaptability was already part of the company's DNA. From its origins in 1902 as a state-owned coal mining company, DSM first evolved into a commodity chemicals manufacturer. With its heavy focus on innovation, it developed groundbreaking chemical products and synthetic polymers, including, in the 1980s, the world's strongest fiber. By 1996 the company had been fully privatized, which set the scene for its transformation into the giant life sciences and materials sciences concern of today.

Sustainability as a driver of innovation

For the United Nations, sustainable development means meeting the needs of the present generation without putting at risk the future of the generations to come. But with the 2007 crash and the ensuing recession, the emerging sense of international urgency on environmental and social issues disappeared.

In presenting its new strategy, DSM had to make the case to investors and financial markets that sustainability could be a key driver of value creation over the long term.

In 2006 DSM had created an Innovation Center to encourage entrepreneurship throughout the company, launch innovative new businesses and support innovation in the different business groups. It was built around a strong open innovation agenda, which focuses on collaboration with customers, short product life cycles and high market dynamics.

By leveraging the wisdom of external crowds, open innovation ensures that the company develops products adapted to ever-changing customer requirements and does not miss out on relevant grassroots innovations.

The company also embraced the Triple P concept for business sustainability: People, Planet and Profit. Under the first part, known as PEOPLE+, DSM aimed to improve people's lives through its activities, products and innovations. The second, ECO+, set out to improve the environmental footprint, including that of suppliers. The third highlighted the need to create profitable businesses and value for shareholders while meeting DSM's objectives of providing solutions to global societal needs.

The Triple P idea touches all the company's activities and thinking and is even incorporated into its annual report format.

The investment case

Getting investors to buy in to the new approach is not always easy. Investment horizons have decreased dramatically over the last few decades, undermining companies' ability to confront long-term challenges such as climate change. Some attempts have been made to tackle this conundrum, including through voluntary adherence by institutional investors to the UN's Principles of Responsible Investing (PRI), which stress environmental, social and corporate governance issues.

A number of benchmarks have been created to track the progress of companies on sector-specific economic, environmental and social drivers, among them the Dow Jones Sustainability Index (DJSI). Since 2004 the DJSI has named DSM the worldwide sustainability leader in the chemicals sector six times.

In 2012 Harvard Business School Professor Robert Eccles published an academic paper based on 18 years of data that provided the first solid evidence that companies with longstanding cultures of sustainability outperformed their peers. He put the difference at about 4.8 percent per year. The paper also supported the view that these companies generated better ROA and ROE than their 'low sustainability' peers.

For DSM it is an ongoing process. Being a good corporate citizen means integrating more sustainability thinking and taking it to the next stage where people and planet metrics become accepted tools for company valuation, contributing visibly to profits.

'Sustainability is not only about compliance or corporate social responsibility. It has become a business driver based on our core values. Throughout DSM, sustainability is integrated in how we do business. Our products and solutions positively contribute to the world's current and future challenges,' said Sijbesma.