VM magazine - Transition: how do you get the Association moving?

By: Peter Tack[1]
Published in VM magazine – van ‘The Dutch Association’ (DNA)

In this article, we see how companies are taking up the challenge of becoming more sustainable through their trade association. A well-known saying goes: alone you go faster, together you go further. This may be true for relatively simple projects. With complex transition tasks to sustainability, the motto could be: together you go slowly (but surely), alone you get stuck (or you don't even get going). We see how this works in practice in two very different cases. One (Kartoflex) is aimed at reducing the CO2 footprint in the cardboard sector. The other (Paychecked) focuses on transparency and good employment practices in the transport chain.

Despite the differences, there are lessons to be learned from both stories that generally apply to the success or failure of change initiatives. We measure the cases against four crucial conditions for real change, in which a funnel method - the Sustainability Matrix - helps with a systematic approach.

Incidentally, 'sustainability' is a coat rack on which a lot is hung. This is evident from the well-known 17 'Sustainable Development Goals' (SDGs) and 169 sub-goals within them of the United Nations. The focus should be on (sub)goals that are appropriate to the industry, as the two cases show.

A major obstacle to really getting moving is that companies base themselves on short-sighted cost and profit calculations in which the costs of 'collateral damage' of their actions (waste, pollution, exhaustion, exploitation) are passed on to defenceless groups or to nature.[2]

To reverse this behaviour, the EU is setting sustainability goals in legislation and regulations such as the European Green Deal and the Corporate Sustainability Reporting Directive (CSRD).

However, the real achievement of sustainability goals can never be organised and financed by a government alone. The ball is in the business community. We present two cases below as examples.

The CO2 reduction project of Royal Kartoflex

Royal Kartoflex is the trade association of manufacturers of cartons and flexible packaging in the Netherlands. Originally, Kartoflex focused on the employer's function: terms of employment (collective labor agreement), HRM, pensions, health and safety matters (the people side), but now Kartoflex has also embraced circularity, food safety and reduction of CO2 emissions (i.e. the product and process side) as new policy areas.

The assignment

Under the motto '30 in 2030', the association wants to be able to demonstrate an industry-wide CO2 reduction of 30% by 2030. This is in accordance with European rules. From 2024, companies with 250 or more employees must report on the impact of their activities on people and the environment, in accordance with the CSRD directive. Furthermore, by 2030, 40% of the energy generated in Europe must be clean. In that context, as a company, you have to account for what CO2 you (still) emit.

The approach

In order to give Kartoflex's member companies insight into their own situation through thorough CO2 accounting, they were initially offered 'SmartTrackers'. This is an ambitious software tool for CO2 management, including education and knowledge sharing through workshops. The association also partially subsidized the costs of this tool for the first few years.

However, there were large differences in transaction speed between the companies. The frontrunners, usually the larger companies, have the momentum going. But there are also entrepreneurs who save energy and applaud sustainable entrepreneurship in itself, but lack tools. "How do I handle all this?" Smaller companies in particular are reluctant to deal with the administrative burden of acting sustainably based on facts and figures. And they can't just free people up for it either.

To accommodate that member segment, the association came up with an alternative: a simpler and free CO2 check as an accessible entry level. Both options coexist.

The CO2 check also includes workshops, in which companies receive support in developing their savings plan after their check. Here, too, best practices are shared. While one is still looking for a solution for dimming warehouse lighting, another is already working on motion detectors. The entire industry benefits when members set a shining example for each other in the energy transition.

The 'PayChecked in Transport' quality mark from evofenedex and TLN

The transport sector plays a pivotal role in the economy. Within this, abuses can occur such as underpayment of drivers through constructions to circumvent rules for minimum wage and collective bargaining agreements. The Act on Tackling Sham Constructions (WAS) forms an important legal framework to tackle underpayment by making the entire chain responsible. In response to the WAS, evofenedex (the business association of shippers and clients) and TLN (the trade association for the transport sector) have introduced the 'PayChecked in Transport' quality mark.

The assignment

The quality mark was established seven years ago, initially only aimed at countering or preventing bogus constructions. Transport companies can be inspected for compliance with the collective labor agreement for professional road haulage. Recently, it was decided to broaden the quality mark to include aspects of corporate social responsibility.

The approach.

In the first few years, the label mainly attracted companies in the freight transport sector that wanted to see their good employment practices recognised. In the years that followed, more and more courier companies joined the quality mark. The reason is that clients such as PostNL, DPD, GLS, DHL demand or require the quality mark from their subcontractors/carriers after previous negative experiences. But there are also examples of this in large-scale transport, such as food retailer Jumbo, which, as a client, requires the quality mark from their carriers.

Regulators such as the Dutch Labour Inspectorate are following the quality mark with interest. However, it is not an instrument of the regulator and therefore cannot be enforced by operation of law. In order to attract more members to the quality mark, the board of Paychecked has opted for a 'broadening scenario'. In this scenario, it is about increasing the reach and 'market share' among the clients of road transport companies and increasing the brand value of Paychecked as a total quality mark of the road transport chain. The emphasis is no longer on (defensively) only complying with the WAS, but also (more broadly and proactively) on 'fair pay and fair work' and on corporate social responsibility. Instead of negative incentives (enforcement by the inspectorate; getting rid of a bad image), the quality mark must emanate positive incentives: proof of good employment practices, good 'commissioning' and social entrepreneurship.
In this scenario, the quality mark is also a distinguishing element in the battle for talent in a tight labour market for drivers.

How to achieve real change

Kartoflex and Paychecked are examples of how a sector positions itself in the sustainability field and chooses which SDG theme best suits its mission and which sub-goals within it it wants to focus on and with which actions. That requires a lot of research. A practical tool for this is the Lejeune Sustainability Matrix, about which more later.

But how do you really get moving as an industry? This will only happen when four crucial conditions are met[3]. If one of these is not met, the transition is doomed to fail. The conditions are brought together in a model with the following conditions:

Necessity

There must be an urgent reason. Only a hobbyhorse of the chairman or the director of the trade association lacks the necessary driving force. Only if, for example, customers start to impose strict requirements or when the government imposes legal obligations, can the change no longer be avoided. The sense of urgency is then high. In short, real change will only happen if it HAS to.

Vision

Necessity alone is not enough; Vision is also needed. So you know where you want to go. Preferably a beckoning perspective: something that attracts you, a positive stimulus. For example, the prospect of an industry where bunnies no longer have a chance. In short: real change only comes when we WANT something.

Willpower increases enormously when the members also benefit individually from the collective change. For example, through lower operating costs or a more positive corporate image.

Means

If you are convinced that you have to do something and also know what you want, but you can't do it due to lack of resources, you get frustrated. Resources are of course time and money, but also knowledge and skills. For an association or its members, a desired and necessary sustainability project may come up against a lack of competence to carry out such a complex project. In short: in order to achieve real change, we must also BE able to do it.

Action

Suppose you have to, you want it and you can do it, but you don't dare to take the first step. Then three lights are 'green' but that one 'red' light stops everything. Many clean plans still fail because of fear of the unknown (cold feet). The trick is to take small steps in the beginning, away from the comfort zone: a beginning of change. In short, change only comes when you start by DARING and therefore really doing something.

In the transition to sustainability at the sectoral level, there is an additional problem: in a market surrounded by competitors, (almost) no one is taking the road to sustainability of their own accord. Why would you, as a loner, take an initiative that costs you time and money, and with the risk of harm? This fundamental reluctance can only be broken by (a) taking collective action and (b) creating support for it through feasible first steps that quickly yield some reward ('low hanging fruit').

Figure 2 summarises how each of the four conditions must be met in order to achieve real change towards more sustainability.

Looking for sustainability goals and drivers

The two example cases show that the transition to sustainability can be about a wide variety of themes, with very different motivations. The trick is to find out which of the 17 Sustainable Development Goals (SDGs) and which of the 169 sub-goals below them best fit the mission and vision of an industry. To systematically search for this, the Sustainability Matrix can be used. See Figure 3.

The matrix works as a funnel to arrive at the selection of two or at most three SDGs relevant to the industry and then to attach a manageable number of sub-goals to them. We assume that the MUST of the transition in step 1 of the funnel is a given. The Sustainability Matrix then makes the transaction attractive by linking it to the core values of the industry and the self-interest of the members (step 2 of the funnel promotes WANTING). By critically sorting SDGs and sub-goals, a manageable number of transition projects remains (step 3 of the funnel promotes ABILITY). From these, it is possible to choose which of them are the simplest and least risky to start with (step 4 of the funnel promotes DARE).

This makes the transition to sustainability feasible: together you may not go fast (but you will certainly go), but you will get stuck sooner (or you won't even get going).

From the above, it can also be concluded that the role of the association is shifting. From being a traditional advocate of the relatively limited importance of the industry, she is increasingly becoming a driver of change, especially from cross-sectoral and future-oriented transition to sustainability. And that is also a social interest.[4]

[1] This article is a follow-up to the Lejeune Industry Day with the theme 'From sustainable thinking to sustainable DOING' (see VM 2023-2). Thanks to Jules and Luc Lejeune for thinking along and to Hans van Schaik for reading along.

[2] Michel Scholte, in his keynote presentation at the Industry Day.

[3] This appealing and often cited model for complex change was conceived as early as 1987 by the American entrepreneur/consultant Mary Lippit. See https://sergiocaredda.eu/organisation/tools/models-the-lippitt-knoster-model-for-managing-complex-change/

[4] David Nassen contra Jan Rotmans in: https://www.linkedin.com/posts/davidnassen_transities-sectororganisatie-leden-activity-7122956362031972353-_fx4?utm_source=share&utm_medium=member_desktop

Download PDF in Dutch ? Click here

This article in VM magazine is a follow-up to the Lejeune Branch Day with the theme 'From Sustainable Thinking to Sustainable DOING'. Special thanks to Jules and Luc Lejeune for their input and to Hans van Schaik for proofreading.