Home » Remarks at the IFB’s event on “Principled Leadership to Practical Action”

Remarks at the IFB’s event on “Principled Leadership to Practical Action”

On 23rd March 2023, the Institute for Family Business (IFB) organised a member’s event to explore whether family businesses can carve a different trajectory and offer a more principles-based approach to responsible business that others can learn from. Hosted by IFB Partners Boodle Hatfield and entitled “Principled Leadership to Practical Action”, the event contributed to enriching the participant’s knowledge of responsible business practices and demystifying the landscape of responsible business.

Below are my remarks.

IFB Event: Principled Leadership to Practical Action

Date: 23rd March 2023

1. Sustainability philosophy

At Tratos, we started the sustainability journey a long time ago, even without knowing the proper name. Since 1980, we have been producing “green cables”, using our hydropower plant, and recycling almost everything. 

Tratos has conducted its cable-making business in a way that balances economic, social, and environmental concerns. Tratos aims to generate profit while also taking into account the impact of its operations on society and the environment, and considering the long-term implications of its decisions.

Some of the key objectives of a sustainability philosophy that I want to share with you include:

Environmental responsibility: Every business must take measures that reduce the business’s impact on the environment by conserving resources, reducing waste and pollution, and promoting sustainable practices.

Social responsibility:  A sustainable family business takes into account the well-being of its employees, customers, suppliers, and the community in which it operates. This may involve promoting diversity and inclusion, ensuring fair labour practices, and giving back to the community through philanthropy or volunteering.

Economic responsibility:   A sustainable family business seeks to generate profit in a way that is ethical and sustainable, taking into account the long-term implications of its decisions on the business and its stakeholders.

Innovation:  A sustainable family business looks for new and innovative ways to create value while minimizing its impact on the environment and society. At Tratos we have instilled a culture of innovation, which has shown that without it, the company shouldn’t have survived the harsh market conditions. Tratos is also committed to continuous innovation and transformation to a more circular business. This means that the company strives to minimise waste, reduce its environmental impact, and make use of sustainable materials and resources. It also aims to create products and services that can be reused, repaired, refurbished, or recycled instead of being thrown away. 

Transparency:   A sustainable family business is transparent about its operations and practices, communicating openly with stakeholders and taking responsibility for its actions.

2-The impact of a sustainability strategy can be measured using a range of factors, including:

Tratos’s Sustainability Strategy has three equally important pillars: Economic, Social and Environmental. The experience has shown that measuring the impact of a sustainability strategy is complex and multifaceted, and requires the use of multiple metrics and indicators.

In measuring its impact at Tratos we continuously evaluate:

Environmental impact:  This includes measuring the business’s carbon footprint, water consumption, waste generation, and other environmental factors. Tracking the reduction in these factors over time can be a useful indicator of the effectiveness of the sustainability strategy.

Economic impact: This includes measuring the financial performance of the business, taking into account the costs and benefits associated with the sustainability strategy. Metrics such as return on investment, cost savings, and revenue growth can be used to assess the economic impact of the sustainability strategy.

Social impact:   This includes assessing the impact of the business on its employees, customers, suppliers, and the wider community. Metrics such as employee satisfaction, customer satisfaction, and community engagement can be used to measure the social impact of the sustainability strategy.

Stakeholder engagement:   This includes measuring the level of engagement and satisfaction of stakeholders with the sustainability strategy. This can include tracking the level of participation in sustainability initiatives, stakeholder feedback, and surveys.

Innovation: This includes measuring the level of innovation within the business, including the development and adoption of new sustainable practices and technologies.

Transparency:   This includes measuring the level of transparency in the business’s operations and practices, including the availability of sustainability reports, communication with stakeholders, and adherence to sustainability standards and certifications.

3- What areas of your sustainability strategy do you prioritise and why?

Tratos’ sustainability journey started decades ago. Since 1980, Tratos has used clean, renewable energy from its own hydroelectric plant. In 2001, the company started producing Tratos Green, a cable made using only hydroelectric energy.

In 2019, Tratos has launched its first integrated sustainability strategy. In implementing this strategy, Tratos has committed itself to adopting high standards, often going beyond legal requirements, on the sustainability issues that matter to our business, employees, the communities that host us and the customers that buy and use our products.

Our sustainable strategy is structured in three pillars:

Economic Pillar- is foundational to ensure running a safe, responsible, and prosperous business. 

Social Pillar-We care about the people we work with. Building on the first pillar, the second focuses on the success of our communities and our contribution to governments and partners, including local communities: collaborating to enable long-term benefits where we operate.

Environmental Pillar– We care about our planet. The third pillar is about protecting our shared future: pioneering human progress through sustainability, including the materials we produce and the innovations we bring to market, aligned with the priorities of the coming low-carbon economy.

As I mentioned the three pillars are equally important, but I would like to emphasize one: the social pillar. The reason is that Tratos is dedicated to delivering on its people-focused mission and has invested in economically deprived regions of Italy and the UK to create jobs and support local communities.

Tratos has a strong commitment to implementing its ambitious corporate social responsibility, including paying salaries and local taxes, which has proven to be a sustainable source of income and a catalyst for regional economic and social development.

Tratos is not just aligning with the UN’s 17 Sustainable Development Goals, it is actively working to achieve them on a daily basis. The company has integrated these goals into its own values and has incorporated them into its product development, operational practices, corporate social responsibility efforts, and overall corporate strategy. Additionally, the company strives to provide its customers with sustainable options, making it easier for them to make a positive impact as well.

Tratos works tirelessly to leave a lasting, positive legacy everywhere it is present. It does so in many ways; one is via an increased focus to invest in the most deprived areas and regions. Actively supporting local communities where it operates, Tratos never spared an effort to ensure that the money it pays via taxes and royalties to governments and local authorities is disclosed transparently. Tratos also recognises that its business is often the major source of jobs and livelihoods in the communities where it operates, which are often far from metropolitan centres. We take this responsibility seriously.

3- How have you managed to get all your various stakeholders aligned on your strategy?

From our experience, we can say getting all stakeholders aligned on a sustainability strategy can be challenging, as different stakeholders may have different priorities and perspectives.

Tratos has put in place the following measures to get stakeholders on board and aligned on a sustainability strategy:

Be vocal & Clear communication: Effective communication is essential to ensure that stakeholders understand the purpose and benefits of the sustainability strategy. This may involve using a variety of communication channels, such as emails, newsletters, meetings, and social media, to reach different stakeholders.

Effective Collaboration: Collaboration with stakeholders can help to build support and ensure that the sustainability strategy reflects the needs and expectations of all stakeholders. This may involve engaging stakeholders in the development of the strategy, seeking their input and feedback, and involving them in the implementation process.

In the beginning, Tratos felt alone in its sustainability journey. Now, more and more companies are becoming to operate according to sustainability principles. Tratos joined Green Growth Initiative- Made in Britain, participated in the COP26 in Glasgow and is actively engaging with the government /parliament officials on suitability issues, as well as to reform the carbon tax.

Education and training: Tratos firmly believes that providing education and training on sustainability can help to build awareness and understanding among stakeholders. This may involve providing training sessions or workshops to help stakeholders understand the benefits of sustainability and how they can contribute to the strategy.

5- What role do the Board and governance play in the company’s sustainability strategy?

At Tratos and in any other business, the board and governance play a critical role in sustainability strategy, as they are responsible for setting the strategic direction of the company and ensuring that it is aligned with the company’s values, mission, and purpose.

I can give some concrete examples in which the board and governance can support a company’s sustainability strategy:

Strategic direction: The board and governance are responsible for setting the strategic direction of the company, including its sustainability strategy. This involves establishing goals, targets, and performance indicators for sustainability, and ensuring that these are aligned with the company’s overall strategy and objectives.

Oversight and accountability:    The board and governance are responsible for overseeing the implementation of the sustainability strategy and ensuring that it is effectively managed and monitored. This involves setting policies and procedures for sustainability, reviewing progress reports, and holding management accountable for achieving sustainability targets.

Risk management:   The board and governance are responsible for identifying and managing risks related to sustainability, including environmental, social, and governance (ESG) risks. This involves assessing the impact of these risks on the company’s operations and reputation and developing strategies to mitigate them.

Stakeholder engagement: The board and governance are responsible for engaging with stakeholders, including investors, customers, employees, and the wider community, to understand their expectations and concerns regarding sustainability. This involves communicating the company’s sustainability strategy and progress, and seeking feedback and input from stakeholders.

Reporting and transparency:   The board and governance are responsible for ensuring that the company is transparent in its sustainability reporting and disclosure. This involves establishing reporting frameworks and standards, such as the Global Reporting Initiative (GRI) or Sustainability Accounting Standards Board (SASB), and disclosing relevant information to stakeholders.

6- Is achieving greater diversity overall good for your business? If so why?

At Tratos we have embraced diversity, as overall it is good for businesses. By embracing diversity, businesses can create a more dynamic and successful work environment that benefits everyone involved.

Through greater diversity, At Tratos we have seen improvement in the following areas

Improved decision-making:   A diverse team is more likely to consider a range of viewpoints, leading to better decision-making. Diverse teams bring different experiences, knowledge, and skills to the table, which can lead to more comprehensive and well-informed decisions.

Increased creativity:  Diverse teams often bring a wider range of skills and experiences, which can lead to more creative problem-solving. This can help businesses find unique solutions to challenges and create a more dynamic work environment.

Innovation:   Diverse teams are more likely to generate innovative ideas and solutions due to the variety of perspectives and experiences they bring. This can lead to the development of new products, services, and processes that give the business a competitive advantage.

Better customer service: Diverse teams are more likely to have a better understanding of the needs and preferences of a wider range of customers. This can help businesses create products and services that better meet the needs of diverse customer groups, which can lead to increased customer loyalty and retention.

Improved reputation:  Diverse businesses are often perceived as more socially responsible and ethical, which can lead to a better reputation in the market. This can attract customers, investors, and top talent who value diversity and inclusion.

7- What insights have you gained from your sustainability journey which you would share with others embarking on this journey?

Achieving sustainability is a long journey. As such, it can be a challenging and complex process. From my company’s perspective and experience, I can share some insights that can help others starting on this journey:

Start with a clear vision and strategy:    It’s important to have a clear understanding of what sustainability means for your business and how it aligns with your overall goals and values. Develop a clear sustainability strategy that includes goals, targets, and action plans that align with your business objectives.

Engage stakeholders:    Sustainability is a collective effort and requires the engagement of all stakeholders. Engage employees, customers, suppliers, and other stakeholders in the development and implementation of your sustainability strategy.

Measure and track progress:  Regularly measure and track progress against your sustainability goals and targets. This can help you identify areas where you are making progress and areas where you need to focus your efforts.

Embrace innovation:    Embrace innovation and explore new technologies and practices that can help you reduce your environmental impact, improve social outcomes, and enhance economic performance.

Collaborate with others:   Collaborate with other businesses, industry groups, and NGOs to share best practices, learn from others, and drive collective action on sustainability issues.

Communicate effectively:   Effective communication is essential to build support for your sustainability journey. Develop a communication plan that effectively communicates your sustainability goals and progress to all stakeholders.

8- What capabilities do you believe family businesses need in order to develop and implement a sustainability strategy?

As with any other business, family businesses need to develop and implement a sustainability strategy by building several capabilities, including

Leadership commitment: Leadership commitment is essential to driving a sustainability strategy in a family business. Leaders must prioritize sustainability and be willing to invest time and resources to develop and implement a sustainability strategy.

Governance and accountability: Family businesses need strong governance structures to ensure that sustainability is embedded into the business strategy and operations. This may involve setting up a sustainability committee or appointing a sustainability officer who is accountable for driving sustainability initiatives.

Stakeholder engagement:  Engaging with stakeholders is critical to developing a sustainability strategy that reflects the needs and expectations of all stakeholders. This may involve engaging with customers, employees, suppliers, and other stakeholders to understand their sustainability priorities and concerns.

Innovation and adaptation:  Family businesses need to be innovative and adaptable to drive sustainability initiatives. This may involve embracing new technologies and practices to reduce environmental impact, improve social outcomes, and enhance economic performance.

Effective communication:   Effective communication is essential to building support for a sustainability strategy. Family businesses need to communicate their sustainability strategy effectively to all stakeholders, including customers, employees, suppliers, and investors.

Monitoring capability:   Family businesses need to have access to reliable data to measure their sustainability performance and track progress against sustainability goals. This may involve investing in sustainability reporting systems or working with third-party sustainability experts.

Collaboration and partnerships:  Family businesses can leverage partnerships and collaborations to drive sustainability initiatives. This may involve collaborating with other businesses, industry groups, and NGOs to share best practices, learn from others, and drive collective action on sustainability issues.

9- What would you say to people who say sustainability is a “post-pandemic fad”?

Sustainability is not a “post-pandemic fad”, as it existed a long time ago. The concept of sustainable development, correct me if I am wrong, was originally brought forward by the Brundtland Report in 1987 in which it was simply defined as “ development that meets the needs of the present world without compromising the ability of future generations to meet their own needs”.

 In fact, sustainability has been a growing concern for businesses, governments, and individuals around the world for several years. The pandemic has only highlighted the importance of sustainability and accelerated the urgency to address environmental and social challenges.

Sustainability is a critical issue that requires urgent action from businesses, governments, and individuals around the world. By adopting more sustainable practices, companies can create value for their stakeholders, reduce their environmental impact, and contribute to a more sustainable future.

Here are some reasons why sustainability is not a fad:

Climate change: It’s a global challenge that requires urgent action. Climate change is one of the most pressing challenges facing the world today. It is causing significant environmental, economic, and social impacts, and urgent action is needed to mitigate its effects. Sustainability initiatives can help reduce greenhouse gas emissions and promote more sustainable practices.

Resource scarcity:  This is a growing concern. As the world’s population grows, there is a growing concern about resource scarcity. This includes concerns about water scarcity, deforestation, and declining biodiversity. Sustainability initiatives can help promote more responsible use of resources and reduce waste.

Consumer expectations:  Consumers are increasingly concerned about sustainability and are demanding more sustainable products and services. Businesses that fail to address these concerns risk losing market share to competitors that are more proactive on sustainability issues.

Regulatory pressures:  Governments around the world are introducing new regulations to address environmental and social challenges. Businesses that fail to comply with these regulations risk facing fines, reputational damage, and legal action.