The Green Masters of CSR

(Left to right) DFG’s Chief marketing officer/chief sustainability officer, Marcel Zandvliet, and DFG’s CSR manager, Raimon Loman. Photos: DFG/Melinda-Lou van der Linden.

Reflecting on Dutch Flower Group’s sustainability aims, the company’s Corporate Social Responsibility (CSR) manager, Raimon Loman and chief marketing officer/chief sustainability officer, Marcel Zandvliet, set out why CSR matters to the world’s largest floral wholesaler and why CSR should matter to all global supply chain actors too. Warning: suppliers that ignore DFG’s CSR strategy do so at their own risk.

There’s a Dutch saying, which literally and therefore uneasily translates as, ‘you cannot eat from a pretty plate’, meaning that outer beauty is only skin-deep, while what is on the inside is what really counts.

In different, more floral-related jargon, it is not enough for growers and traders to only offer drop-dead gorgeous blooms, lush green plants, and exceptional service.

Because in today’s world, consumers have increasingly higher standards for corporate dedication to sustainability and social rights. Simply put, businesses should not only be interested in the single bottom line figure of profit in their books, but they must also do good for the planet and its people. Companies also face greater scrutiny from media, NGOs, customers, employees, regulators and investors, and these groups are ready to call for action when they feel corporate decisions are wrong.”

Corporate Social Responsibility

As a result, businesses are increasingly protecting their public reputation by adhering to corporate social responsibility (CSR) principles. This business model helps a company show transparency and honesty with its stakeholders and the public. Essentially, it’s about holding yourself accountable for your organisation’s impact on all aspects of society, including social, environmental, and economical.

“CSR is part of our mission and corporate DNA, coupled with a genuine desire to create a positive impact for the world, along with value for our business,” says Marcel Zandvliet, CMO /CSO at Dutch Flower Group. To demonstrate, he uses a bullseye diagram from a PowerPoint Presentation. In the very middle, the ‘Together, we create a happier and greener world’ message summarises the company’s purpose. To make this happen, Zandvliet adds, “we need key drivers such as passionate people, smarter supply chains, partnerships with growers, digitalisation plus firm green credentials, and that’s where my colleague Raimon and I come in.”

While the happy green message for some may sound like an overly optimistic refrain of an Up with People song, or a line from the green gospel urging humanity to care for God’s good earth, for others, CSR is the top priority in the B2B world. Because being unethical can tarnish a company’s reputation. And frankly speaking, between the ‘greed is good culture’ and a ‘green-good culture’, the choice is easily made as CSR will benefit us all in the long run.

Together, we create a happier and greener world’ message summarises the company’s purpose.

Why is CSR so important?

DFG is expected to post a €2bn turnover this year. It is a globally acting conglomerate of more than 30 trading companies selling bouquets, flowers, plants, and everything in between to traditional wholesale, retailers, and online flower and plant delivery services.

This family of companies generates approximately half of its annual revenues through supermarket sales, and Raimon Loman stresses that in that market segment, there’s virtually no escaping from CSR.

“In the retail market, CSR is a license to operate. If we as DFG are not managing our environmental and social risks, we would no longer be permitted to supply supermarkets,” says Loman.

CSR is also used to guide the company and the entire floral industry along the path to forthcoming EU legislation, of which the Corporate Sustainability Reporting Directive (CSRD) and the Directive on Corporate Sustainability Due Diligence (CSDD) stand out prominently.

The first directive aims to increase transparency on corporate performance in terms of sustainability. Companies not previously required to report under the predecessor to CSRD will now be expected to comply with a broad range of reporting requirements by 1 January 2024.

Loman explains, “Under CSRD, companies will be required to publicly disclose information about environmental matters including carbon emission, biodiversity, and how your company impacts social factors such as human rights, working conditions, equality, and non-discrimination in the value chain. Approximately 130 factors must be checked and measured, which requires much paperwork.”

CSRD will apply to all large EU companies, that is, companies exceeding two of the following three criteria: more than 250 employees on average during the financial year, a balance sheet totalling more than €20 million, and a net turnover over €40 million.

At the same time, DFG wants to be ahead of the EU’s directive on Corporate Sustainability Due Diligence (CSDD), a sort of x-ray of the company looking for potential liabilities and problems with the target company. It aims to ‘foster sustainable and responsible corporate behaviour and to anchor human rights and environmental considerations in a company’s operation.’

Though its impact on our industry is not fully clear, Zandvliet has it on good authority that “businesses will be held accountable for adverse impacts of their actions, including in the value chain inside and outside Europe. Organisations will be required to provide information on the origin of their products.”

The new legal framework will apply to large corporations first, but SMEs must follow suit. Therefore, Zandvliet thinks downstream companies must engage with their upstream floral supply chain. “We will ask them to identify their risks. So, even if you are a small grower wanting to have your flowers incorporated into our bouquets, you must adhere to this due diligence, as it is also ours. You will be required to take action, whether you have annual revenues of €100,000 or €40 million.”

People, planet, but what about profit?

In its slipstream, CSR can help companies improve their reputation and reduce costs by, for example, installing a solar roof, using less packaging, and conserving water. But will CSR also improve profit margins?

Zandvliet responds, “This is not our approach. We find that CSR is part of our business continuity plan and that there’s no other option than channelling the sustainability movement into momentum. Our supermarket customers are urging us to manage our risks because if not, they can no longer put our products on their shelves. There’s also pressure from NGOs urging us to act because otherwise, our beautiful floral category will be in trouble.”

Loman adds, “DFG wants to use its specific strengths -size and market specialism – to help solve global issues and has a clear view of how we can change the world for the better. So, CSR is also about personal and corporate drive and is not considered from a business perspective only. Eventually, it’s about the planet and its people, which are in danger. It may sound a bit philanthropic, but this is our true belief.”

Zandvliet notes that CSR is also a tool to attract and retain employees. “Last year, we received a call from our HR colleagues who told us that some job applicants were keen to join our company but wanted additional information about our sustainability paragraph and the meaningfulness of what we do through our Dutch Flower Foundation.”

With great power comes great responsibility

DFG is the blooming result of the 1999 merger between two quintessentially family-run businesses: Van Duyn Group (established 1969) and OZ Group (1959). Experience in the floral industry goes back decades. So, Loman candidly admits that CSR comes with a sense of noblesse oblige.

“We are at the forefront of CSR. In 2013, DFG co-founded the Floriculture Sustainability Initiative, with members committed to having 90 per cent of their internationally traded production sustainable by 2025. Since 2017, we have been one of the accelerators to speed up sustainability in our sector. In 2019, we were one of the first to put our signatures to the International Responsible Business Conduct (IRBC) in the floriculture supply chain. These initiatives are meant to make our industry a more sustainable place. Not just because we want to show off, but to provide inspiration and fuel motivation. By highlighting the issues, we need to collaborate on. And yes, we are the biggest in the world regarding floral trade specialism, but ultimately, we cannot change the world on our own.”

IMPACT25

That’s why so much effort is being put into communicating IMPACT25, the 44-page document in which DFG describes its CSR strategy to its supply chain of growers, customers, and other stakeholders within the value chain. By aligning IMPACT25 with the UN Sustainable Development Goals (SDGs), DFG hopes even better to serve the pressing issues during the 21st century and beyond.

Zandvliet acknowledges that for DFG’s supplying flower and plant growers, particularly those representing smaller-sized businesses selling through the Royal FloraHolland auction clock, it is crucial to take the guesswork out. “They hear something about the auction ordering digital reporting of environmental performance and mandatory certification, causing quite a commotion and confusion.”

The belief is that many growers still need to be given the complete picture. Zandvliet expresses, “They argue they were first asked to certify under option a, and later also under options b and c. The outcome is counterproductive, with growers turning their backs on certification altogether. Almost as if growers want to make clear that enough is enough.”

The feeling is that more open and honest communication at the auction level would have led more quickly to mutual understanding. Zandvliet elaborates, “Explain to growers who are auction members that what they’re asked to do today is only a tiny portion of the certification effort they will need to adopt soon. And that by ticking all three boxes – good agricultural practice, environmental, and social – they are already fully FSI compliant and 90 per cent prepared for upcoming EU legislation.”

He adds, “From their perspective, I can accept the auction decided to reframe its certification policy following a backlash from members. However, in the light of sustainability, it’s not easy to understand why the auction opted for a time-out, not enforcing and applying sanctions until further notice.”

Blurred regulatory lines at the auction are leaving growers and buyers in limbo. Following lengthy discussions with the auction, its Member Council finally agreed that the clock front should mention that sellers are FSI certified. From that moment, the auction supply regulations stipulate FSI compliance. Yet, blatantly, what is missing is an enforcement mechanism.

Something that Loman would welcome with open arms. He explains, “Our biggest challenge today is to increase the percentage of FSI-compliant products bought through the auction clock. Data show that up to 80 per cent of auction-bought volumes are non-FSI compliant. We have moved heaven and earth and talked to all our purchasers. Eventually, we hope that growers will realise what continuing as non-certified means, that sustainability is here to stay and that in the light of the Green Deal and CSR, we need transparency and that companies like us will be forced to purchase only FSI-compliant products.”

Green indicates that by the end of 2021, 70 per cent of volumes was sustainably purchased. Orange calls for immediate action. The orange chunk is certified but doesn’t yet have all certificates to comply with the FSI Basket of Standards.

Method of measurement

Agreeing on DFG’s IMPACT25 is one thing but establishing a means of measuring its level of impact is another challenge. Since 2016, the Sustainable Sourcing Scan (SSS) – a co-exercise by DFG, the Dutch Association of Wholesalers in Floricultural Products (VGB) and market analyst Floridata – has helped get the figures right.

Loman: “Each month, all companies within Dutch Flower Group feed their purchase data into the scan, which uses FSI-aligned metrics. The tool system gives them insight into the percentage of sustainably purchased volumes and where the action is needed to increase the volume of certified products.”

To date, the SSS tool indicates that 71 per cent of flowers and plants – counted in stems and pots/units, respectively – purchased by the DFG companies meet the sustainability baseline, down from 73 per cent in 2019 and 81 per cent in 2020. When broken down into categories, potted plants, with 81 per cent, fared sustainably better in 2020 than cut flowers, showing 70 per cent.

In explaining why 2021 and 2022 have been relatively weak performing, Loman says that from 1 January 2021, FSI added the environmental scope and, in the near future, will include other social requirements for producers in low-risk countries.

Pointing to the different colours in the doughnut chart (right, top), Loman highlights how green indicates that by the end of 2021, 70 per cent of volumes was sustainably purchased and how orange calls for immediate action. “The orange chunk is certified but doesn’t yet have all certificates to comply with the FSI Basket of Standards.”

In taking a half-full positive approach, work towards green is on its way, which is all very good and acceptable. But Loman decisively warns the other way, “As a CSR manager, I am colour blind, unable to spot grey or orange. If you are not green, you are red; that’s it.”

What certification is needed?

What certification is needed for which grower in which country? As a rule of thumb, one can say that FSI compliance requires GAP certification – for example, MPS GAP or GLOBALG.A.P. – to tick the farm assurance scheme box.

In the environment, growers need MPS-ABC or GLOBALG.A.P.-Impact-Driven-Approach (IDA). The latter is a system that helps flower and ornamental farms collect, process, and store their environmental sustainability data. (Click to read more about this system that helps from FCI June 2022.)

Loman elaborates, “Growers in risk countries, as set out in Amfori/BSCI’s risk classification based on the Worldwide Governance Indicators from the World Bank, will also need a certificate from FSI’s Social Basket. Risk countries include major flower-producing countries such as Kenya, Colombia, Ethiopia, and Ecuador.

The FSI basket includes 16 sustainable standards and schemes rooted in different continents. Loman explains, “Naturally, a Kenyan-based grower will prefer the KFC scheme, Colombians or Ecuadorians or growers from Central America for Florverde. For European growers, the MPS or GLOBALG.A.P. schemes are predominantly the certifications of choice.”

The FSI basket includes 16 sustainable standards and schemes rooted in different continents.

The challenges

Apart from the mentioned need to have auction growers on board, Loman sees two other challenges.

The first one applies to the need for UK growers to achieve environmental certification. He says, “They can opt for MPS-ABC but prefer GLOBALG.A.P.-IDA certification. There are some technical issues, but I understood that UK growers will soon be able to obtain also IDA certification.”

True sustainability needs transparency, particularly among traders. Here, Loman sees much room for improvement. “It is a data issue. For example, if I purchase flowers from an intermediary, the product comes in under their name, while they are not the grower of the product. This calls for upstream supply chain management to identify the grower and his GLN number. We have made some progress, but this remains a challenge.”

FSI members, as DFG, have the ambition to have 90 per cent of their internationally purchased volumes sustainable by 2025. Why not the full 100 per cent?
Zandvliet concludes, “When we established FSI, we were aware that some parts of the global floral business were challenging to certify, notably cut foliage harvested from the wild. We liaised with our foliage peers, such as Coloringinz, Adomex, WBE and Green Flor, explaining that if we can act on this together on a non-competing base, we may come above 90 per cent. So, we started a cut foliage project. And hopefully, within two years, we will have a solution.”

Part of the sustainability success boils down to structured, uniform data and measurements in an automated system. Loman ends, “In an absolute sector-first, we have teamed up with Science Based Targets Initiative (SBTi), showing us a decarbonisation roadmap and how to align our CSR with the Paris Climate Agreement. It forces a company to create a carbon reduction plan for its product and supply chain. You need to measure it and then create reduction targets in line with the 1.5-degree mantra of the Climate Paris agreement. Only last month, the Biden-Harris administration decided to step up by aligning its supply chain with SBTi. So, we are in good company. Without sustainability, there is no future.”

This article was first featured in FloraCulture International in December 2022.