8 August 2023
Senior Director of Global Finance for DKSH Business Unit Healthcare
In a world where businesses are increasingly expected to play a more responsible role in society and the environment, the challenge of striking a balance between financial performance and social and environmental responsibility is more prominent than ever. DigitalCFO Asia spoke with Raluca Faciu, Senior Director of Global Finance for DKSH Business Unit Healthcare to shed light on how DKSH addresses this paradox and integrates sustainability into their business strategy, with a positive impact on financial performance.
Reframing Thinking: Social and Environmental Responsibility as a Driver of Business Performance
Raluca believes that reframing the perspective is essential, as social and environmental responsibility can be synonymous with good business performance. At DKSH, they revamped their sustainability commitments to focus on four key objectives: enabling their people to flourish, making their value chains more sustainable, becoming climate neutral, and making a positive local impact.
Enabling People to Flourish: Investing in and retaining the right team drives business growth, fosters innovation, and promotes diversity, which leads to better long-term performance.
Making Value Chains Sustainable: Optimization and cost savings are advantageous for the bottom line, and DKSH now approaches operations with sustainability in mind, which is better for the planet and communities.
Becoming Climate Neutral: Climate neutrality prepares the business for potential future carbon taxation and reduces the reliance on expensive energy sources.
Positive Local Impact: Purpose-driven organizations, with a clear direction, tend to outperform competitors and are more profitable.
Integrating Sustainability into the Business Strategy
DKSH’s Purpose is to enrich people’s lives, with a specific mission for DKSH Business Unit Healthcare to ensure healthcare for all and provide access to quality healthcare products and services to patients and healthcare practitioners in their markets. As they develop strategies and targets to achieve this goal, social and environmental targets are intentionally embedded within their overall strategy, ensuring alignment between their business, financial, and sustainability ambitions. Several examples illustrate how sustainability is integrated into their business practices.
Recently, DKSH launched its first sustainability-linked loan, wherein interest terms are tied to sustainability targets, reflecting their commitment to corporate responsibility. In the Healthcare Business Unit, they have developed and expanded the Patients Solutions Program as a specialized value-added service. In collaboration with clients, this program guides patients through their care journey beyond the clinical environment, combining online and offline capabilities. This initiative has positively impacted over 30,000 specialty care patients across eight markets and resulted in double-digit growth in net revenue.
To further embrace sustainability, DKSH is actively integrating sustainable practices into their supply chain operations. Given that distribution and logistics are significant cost factors, they have heavily invested in automation and sustainability technologies within their healthcare distribution centers. This includes the adoption of solar panels, paperless processing, and automation technology. Additionally, DKSH is piloting electric vehicle initiatives and optimizing transport routes through efficient transport management systems, resulting in cost savings, enhanced efficiencies, and increased output.
Recognizing the importance of their people, DKSH places a strong focus on diversity at all levels of the organization. They have established dedicated global targets for diversity and implemented the Belonging@DKSH initiative, promoting diversity, equity, and inclusion. Through engagement surveys, DE&I e-learning events, workshops, and updated recruitment and talent development practices, DKSH aims to create an empowered workplace with a diverse mix of perspectives and characteristics.
Raluca, who holds a senior leadership position within DKSH, emphasizes the value of diversity and belonging based on her personal experience with the company. Over her almost six-year tenure across three roles, she has witnessed how an inclusive culture fosters thriving teams. When employees are encouraged to be themselves at work, the entire organization thrives, resulting in greater achievements. Ultimately, DKSH demonstrates that embracing social and environmental responsibility goes hand in hand with achieving business success.
Challenges and Solutions: Changing Perceptions and Building Trust
“One of the biggest challenges lies in the perception that investing in social and environmental responsibility does not lead to financial performance. This is simply not true,” says Raluca.
In her view, they are complementary. More and more of DKSH’s patients, customers and client partners are beginning to understand that being a good corporate citizen leads to more sales and healthier, sustainable growth. For instance, in Singapore, 31% of Singaporeans are willing to pay more for sustainably-sourced goods and 36% are actively seeking out more sustainable alternatives.
Initiating a shift in perception begins internally within the organization, involving its people and individuals. DKSH is increasingly adopting a consistent and intentional approach in communicating their social and environmental initiatives, emphasizing their direct correlation to the company’s mission and strategy.
Senior leaders play a crucial role in this effort by prioritizing the well-being, development, and diversity of their employees, while also striving to minimize the company’s environmental footprint and make positive contributions to the communities they operate in. By highlighting how these initiatives contribute to the overall success of the business, DKSH is gradually building trust in the concept of balancing financial performance with social and environmental responsibility, fostering alignment throughout the organization.
Communicating Commitment to Stakeholders
DKSH has been actively sharing updates on its sustainability efforts since 2018, even before it became mandatory. Over the years, the company has established dedicated sustainability teams at both group and individual Business Units levels. These teams play a pivotal role in shaping strategies and effectively communicating sustainability initiatives to stakeholders. To ensure comprehensive communication, DKSH adopts various methods to convey its progress in sustainability:
Reporting: As a stock market-listed company in Switzerland, Malaysia, and Indonesia, DKSH publishes regular and transparent Sustainability Reports. These reports provide stakeholders with an overview of the company’s sustainability performance. Notably, the most recent reporting also includes disclosures on climate change-related risks, adhering to recommendations by the Task Force on Climate-Related Financial Disclosures (TCFD) ahead of the new Swiss legislation taking effect in 2024.
ESG Ratings: Recognizing the increasing relevance of external ESG ratings for business partnerships, DKSH actively contributes to ten external ESG ratings, including MSCI, ISS ESG, Ecovadis, and CDP. To monitor progress over time, DKSH has created a DKSH Sustainability Index that diligently tracks the company’s performance in these external ratings. The upward trend in the index value reflects the company’s commitment to continuous improvement.
Policies: DKSH frequently communicates its various policies, including the Sustainability policy itself and related ones like the Supplier Code of Conduct and compliance-related policies. Employees receive ongoing training throughout the year to ensure alignment with these policies.
Memberships: DKSH’s memberships, such as the UN Global Compact, exemplify its dedication to higher sustainability ambitions. Participation in such initiatives underscores the company’s commitment to advancing sustainable practices.
By adopting a multi-faceted approach to communication, DKSH proactively shares its sustainability journey with stakeholders. From transparent reporting to active engagement in external ESG ratings and industry memberships, DKSH demonstrates its commitment to sustainable practices and responsible corporate citizenship. As the company continues to prioritize sustainability, its stakeholders can expect to witness continued progress in this crucial aspect of business operations.
Measuring Impact and Driving Continuous Improvement
DKSH’s measurements are closely aligned with the four key sustainability objectives discussed earlier. To facilitate effective tracking of progress, the sustainability team has devised a comprehensive scorecard containing clear targets and Key Performance Indicators (KPIs). This scorecard enables DKSH to monitor advancements over time and ensures accountability in meeting sustainability goals.
The metrics monitored encompass various environmental and social aspects. On the environmental front, DKSH tracks greenhouse gas emissions, energy consumption, and waste generation. These indicators help evaluate the company’s efforts in reducing its environmental impact and fostering sustainability in its operations. Social indicators, such as employee satisfaction, diversity, and community engagement, are also closely monitored, reflecting DKSH’s commitment to creating a positive social impact.
In line with their dedication to Environmental, Social, and Governance (ESG) progress, DKSH adheres to the Global Reporting Initiative (GRI) standard. The company relies on the Greenhouse Gas Protocol (GHG Protocol) guidelines, as established by the World Business Council for Sustainable Development (WBCSD) and World Resources Institute (WRI), to assess its operational emissions.
To ensure collective commitment and progress, all Global Business Unit Heads have specific sustainability targets and KPIs integrated into their annual business objectives. These sustainability objectives run parallel to the financial goals, demonstrating DKSH’s proactive approach to fostering sustainable growth and development. With ambitious targets set each year, DKSH aims to continuously improve its sustainability performance and positively impact the communities and environment it serves.
The dedication to sustainability cascades throughout the organization, with every employee being accountable for contributing to DKSH’s sustainability journey. By adopting a holistic and accountable approach to sustainability, DKSH remains committed to making a meaningful difference and driving positive change in the pursuit of a more sustainable future.