Project Liberty launched in September 2014 with ambitions as lofty as its name. The project, a speck of industry just outside tiny Emmetsburg, Iowa, was to be the nation’s first-ever cellulosic ethanol plant to operate at commercial scale. Cellulosic ethanol—a biofuel produced not directly from corn, a food crop, but from its waste, like cobs and husks—had become a holy grail in the clean-fuel sector. Its potential for minimizing pollution was huge, but breakthroughs had been elusive: Many companies had quit the effort, or run out of money in the pursuit.
DSM, a Dutch nutrition and materials company, had cracked the bioengineering code. DSM developed the enzymes and yeasts that convert fibrous, woody biomass to fuel; its partner, Poet, a U.S. ethanol giant, had the production know-how. So momentous was their joint venture that the King of the Netherlands and then-U.S. Agriculture Secretary Tom Vilsack (as former governor, veritable Iowa royalty) came to Emmetsburg for the ribbon-cutting ceremony.
DSM is No. 2 on our 2017 Change the World list.
But DSM and its partners had overlooked one thing: rocks. When farmers swept up corn waste, it turned out they didn’t just get biomass; they also got debris—stones and pieces of farm equipment and other foreign objects. All that flotsam clogged the plant’s equipment, and for its first couple of years, Project Liberty was barely functional.
It could have been a deflating defeat—but like many leading-edge projects that DSM has tackled in recent years, it turned into a figurative win. The plant’s staff engineered a solution, using huge blowers to separate corn parts from debris. Project Liberty now produces tanker truckloads of cellulosic ethanol every week. The plant is short of the partners’ eventual goal of 20 million gallons per year. But it remains a successful prototype and another planet-conscious innovation from a little known but transformative company.
Though few recognize DSM by name, the global company’s traces are everywhere. It makes ingredients that go into scores of branded foods and beverages. Those same ingredients go into animal feed and a host of personal care products, from sunscreen to high-end cosmetics. (Thanks to the latter, DSM owns the world’s largest venomous-snake farm; the venom provides paralytic agents for Botox-like skin creams.) It makes the plastics that make your cars and electronics lighter; paints and coatings that cover your walls, floors, and solar panels; and just about every vitamin sold at GNC. Also in its trove: the first fully recyclable carpet, the world’s strongest fiber (used in bulletproof vests, ocean cleanup nets, and the uniforms of the Dutch cycling team); and a digestive aid that makes cows fart a lot less.
The portfolio may seem like a grab bag, but there is a common theme: DSM is in the business of improving the planet and the lives of people on it.
That’s the vision that CEO Feike Sijbesma set a decade ago, when DSM was in the bulk chemistry business and Sijbesma, a biologist by training, had just taken the helm. He looked at his company’s opportunities in the context of both succeeding financially and tackling pressing global problems. The world didn’t need another petrochemical “cracker.” What it did need were solutions to malnutrition and climate change. Accordingly, Sijbesma branded DSM’s playbook: “People. Planet. Profit.” And since then, the company has channeled its proficiency in applied sciences in novel, life-enhancing directions.
Sijbesma sees this as good strategy: Purpose draws and motivates talent, and adapting to a changing world (as Sijbesma calls it, “future proofing”) keeps the lights on. It’s in this spirit that the company has undergone a radical transformation—swapping out unsustainable businesses for more sustainable ones. Sijbesma took over in 2007: He soon sold DSM’s $2 billion industrial chemicals business and its pharmaceutical unit, while making 25 major acquisitions. Since then, the human and animal nutrition business, with sales of $5.7 billion, has nearly doubled. And by DSM’s measure, products that measurably improve either the environment or human health (compared with competing products) account for 63% of revenue, up from 34% in 2010.
Sijbesma says the world changed for him when he had children. He didn’t want his legacy defined by Ebitda and net profit, he says: “People will forget those numbers.” Instead, he wanted to be guided by principles that his coworkers could rally around. “They are proud if they can say, ‘Our company is changing the world, making the world cleaner, the food healthier.’ ”
As of right now, though, he’s succeeding on both fronts. While DSM’s $8.8 billion in annual revenues are slightly off where they were a decade ago, the stock is up 61% since Sijbesma became CEO—and profits have soared recently. Still, success hasn’t robbed Sijbesma of his humility: He knows that the path to success isn’t often a straight line.
It was intended to be a weapon to fight “hidden hunger” at the Kakuma Refugee Camp in Kenya. The product—a micronutrient powder called MixMe—was a simple, low-cost antidote to the malnutrition and anemia that afflicted the camp’s 50,000 residents. And yet, when the product arrived at the camp in February 2009, many residents wouldn’t touch the stuff.
The thing was, MixMe—which came in a small, foil sachet—looked a lot like a condom. And the sachets were packed in a box with an illustration of a man, woman, and child, a happy (Western-size) nuclear family. This packaging embarrassed some; it made others suspicious—and rumors spread—that MixMe was a sinister exercise in population control.
Needless to say, this was not what DSM was going for. MixMe was the fruit of an ambitious partnership with the World Food Programme and one of DSM’s first major forays into realizing Sijbesma’s vision. “We had to learn the hard way that maybe all of our Western norms and traditions and practices don’t have the same application in all geographies,” admits Hugh Welsh, DSM’s president in North America.
But DSM did learn. MixMe now comes in a larger, less prophylactic-like package. The WFP partnership blossomed: Over the past decade, products that DSM helped develop have fed an average of 31 million people per year in conjunction with the organization. And DSM’s Nutrition Improvement Program division, which supplies nutrients to aid agencies and governments, has become a profitable if low-margin business. “Without being profitable, it’s not sustainable,” says Welsh. “And if it’s not sustainable, it’s not ethical.”
DSM takes pains to reinforce that ethic internally. Since 2010 the company has rolled out a remuneration policy for all its 300-some executives, in which half of short- and long-term compensation, in the form of bonuses and stock options, is tied to sustainability goals. It took about three years for executives’ collective mindset to adjust (or for employees who weren’t on board to depart). But the progress the company has made would have been impossible otherwise. “For years, we tried to encourage plant operators to go to renewable energy,” says Welsh. “When we tied this rhetoric to remuneration, though—all of a sudden they’re very willing participants.” He points to the company’s vitamin facility in Belvidere, N.J., now powered, in part, by one of the largest solar fields in New Jersey.
Sijbesma was barely a year into his “People. Planet. Profit.” transformation when the financial crisis hit. The CEO remembers being at home one weekend and thinking, “Everyone has ‘values’ when things are good”; he didn’t want to abandon them just because times got tough. Sijbesma found himself fighting a similar battle with investors as well. At the annual shareholders’ meeting in 2010, one man questioned the resources DSM had dedicated to helping WFP. Sijbesma was appalled; many of WFP’s donors had already slashed their contributions, while needs had grown. He refused to spend a penny less on the work. After he said so, applause broke out, and one woman in the audience stood and cheered, “That’s the kind of company I want to invest in!”
Not that DSM is inflexible with shareholders. In 2014, shares took a beating from the depreciation of the Swiss franc and problems in the vitamin E market. Activist investors, including Dan Loeb, pounced, and some pressed the company to break up. While DSM resisted those pressures, it did spin off some businesses and implement a new cost-savings strategy. Loeb made a pile of money, and DSM grew more efficient—profits rose 604% year over year in 2016, and 2017 is shaping up to be strong as well—but the company never wavered philosophically.
Meanwhile, Sijbesma has emerged as an outspoken advocate of the power of business to do good. In recent years, he has mobilized the corporate community to fight malnutrition and climate change. He is the longest-serving member of Chinese premier Li Keqiang’s advisory body of global CEOs and sits on the board at Unilever, another company that puts a premium on eco-friendliness. “Many CEOs are so busy with their job problems and advancing themselves, they forget about the wider world and become myopically focused on shareholders,” says Paul Polman, Unilever’s like-minded CEO. “Feike is trying to drive broader change.”
In some cases, DSM’s innovations have outpaced the world’s readiness for such change. The company faces challenges, for example, in finding a market for Clean Cow, its bovine flatulence reliever. DSM developed the product in part on the premise that a tax on greenhouse-gas emissions is inevitable. (It’s estimated that cows produce as much
as cars.) But for now, the feed additive, which has to be given to cattle at every meal, is an added cost that farmers have little incentive to absorb. Governments have expressed enthusiasm, but so far shown no interest in purchasing it. DSM is now courting dairy companies like Danone, which with Clean Cow could tout
a more sustainable product and drastically reduce its own emissions.
After a decade at the helm, Sijbesma seems sanguine about such short-term frustrations. Experience suggests DSM will resolve them: His attitude is, they’re getting there. “I think his values are stronger than the setbacks he’s had along the journey,” says Polman.
A version of this article appears in the Sept. 15, 2017 issue of Fortune.