Redefiners Podcast | Svein Tore Holsether , CEO of Yara International

Sustainability cannot just be something that you're doing on the side to cover up for all the bad things you're doing or all the missions and so on. It has to be relevant, and I think it's important also that my colleagues in the organization understand that this is relevant for us as a company.

Honor to take part. It's a podcast that I listen to as I'm running, so now to be a part of it is something I've been looking forward to.

Well, that too. But this really started back in 1986. I was 14 years old and grew up in a rather small town in Norway, and that was my first trip to the United States. The difference between what I was used to and what I saw when I came to the US made such a huge impression on me, both from a cultural perspective but also the dynamism and how technologically advanced the US was compared to what I was used to at the time. So I decided I need to get back here as soon as possible. And as soon as possible for me was when I finished high school and I could start at university. Also, growing up not only in Norway but in Lillehammer, Norway, which is the Olympic city, and I skied 100 days a year, so of course that was also part of the equation. So I was right, it was the ski. You were right about that part. Yes, and so Utah, University of Utah, tied all these boxes.

Well, I was the first one to go to university as well in my family. So I was really fortunate to be given that opportunity compared to my father, who at age 15 went out to be a sailor, worked on a ship for three years straight, and then had to take his education part-time. He came back and did really well. But it is something that we shouldn't take for granted. Even if Norway today is a very wealthy country, we don't have to go far back in history where things were very different. So it's really fortunate.

I started at Yara in September 2015. At Yara, we produce a product, mineral fertilizer, which is responsible for half of the world's food production. With mineral fertilizer, we can help farmers to produce more food, and with that product comes a lot of responsibility as well. We need to deliver this because if we don't deliver on our purpose as a company, famine will be the result. I was able to go to the COP, the climate conference in Paris in December 2015, and we put together a quite interesting combination going into that: a think tank, Yara together with the Ministry of Foreign Affairs with our minister, Børge Brende, who is now the President at the World Economic Forum. We were going to go there and talk about food because we thought that would be interesting given the footprint of agriculture, 30% of greenhouse gas emissions from agriculture. When we had one of these sessions there to talk about food, no one came. But still, being in Paris and walking around the area of the negotiations, seeing the youth engagement, the demonstrations in front of the buildings, the fact that business was getting involved, it made a huge impression on me. I understood that everything I had thought about our strategy forward would change as a result of this. I also saw what it meant not to be prepared. At that point, the energy industry came into that, not prepared for what would hit them, and to try to have a reactive strategy on this isn't very helpful. I made the decision then that we need to think completely different, we need to be a step ahead of this. So I went back to the board and said, 'We have a strong foundation, but everything will change. We need to think about the climate in context of our business model.' That was the start of a journey for our company that lasted about a year to redefine everything. We ended up with a new mission, a new vision, new values, and a strategy built on the Sustainable Development Goals, with broad involvement in the organization and of course several discussions with the board as well. So it was truly a redefining moment for me as a leader.

Well, we had to spend time to fully understand what this meant for our industry and what it meant for us as a company, and how that would change how we produce our products and how we sell them. But also explain that sustainable development goals aren't a barrier to business, it's an enabler. For us as a company, we had actually come quite far already at that point to decarbonize our production, but we weren't really seeing the full business opportunities connected with this. Then I had the fortunate situation that I could pull on friends as well to help me. I started to look at which company has fully understood this, which business leader understands sustainability and how that can be embedded into the business model. That answer turned out to be much clearer and easier to find than I expected. It was Unilever and Paul Polman. So I contacted Paul, and he shared his experience on how he did this in Unilever. I mean, he's a great leader, so he shared willingly. Rather than reinventing the wheel, I took a lot of inspiration. So I joined them into the World Business Council for Sustainable Development, into the Business and Sustainable Development Commission, World Economic Forum CEO Climate Leaders, we did Food and Land Use Coalition together, now we're working together in the Imagine Food Collective. So it's gone from mentorship to now a friendship really. So it's about learning from others and just copying as well. You shouldn't be ashamed of copying what others have done, but also finding what works in our industry as well.

Absolutely. And unfortunately with a very tragic backdrop now, with world hunger moving in the wrong direction. Every four seconds, a human being dies from hunger. It is unacceptable, it's tragic, and also avoidable. That's something that we really need to work hard at solving. It is within our powers to do something about it, and everyone should do whatever they can to contribute. We just have to keep on pushing to take away that tragic suffering that is happening right now.

Yes, and this was an important part of it, Clark. How do we bring the entire organization with us on this journey? Because that's really the only way. If we have all our 18,000 employees supporting that mission, in order to get there, we went back in our history and asked ourselves the question: why do we exist as a company? That should be our purpose. The very start of our company was the modern production of fertilizer. That was 1905. Europe was facing famine, and science had to step up and figure out how to produce mineral fertilizer at scale. That was invented here in Oslo by our founder, Professor Birkeland. So part of what we're doing is to grow more food for a growing population. So first part of our mission is to responsibly feed the world, and then we added 'and protect the planet.' So it's about growing more food but doing that sustainably. But we have to explain how that is relevant for the core of what we're doing. That's where I thought it was very important that we bring in everyone on the shop floor as well, so this is relevant to what they do. They really felt that. Then we made a book with focus on our colleagues and how they work on this every day, explaining the stories around this. I wanted this to really be a personal thing. I couldn't meet all our 18,000 employees, but we put this together in a booklet, and as a sort of a handshake from me to every employee, I decided that I'm going to sign all of these 18,000 books myself. I didn't do the math on how big a task that was. I had a moment where I was thinking maybe I should shorten my name or something to make this easier, but I did it. It's not that it's such an impressive task to sign 18,000 books, but it's the impact that it had. Right now, I think we could challenge pretty much any company on our employees' ability to tell what our purpose is and the strength of that. When people know the purpose, that's how we got through COVID, that's how we're dealing with a very complex situation in the food system right now, because our employees understand why.

Well, Nani, how much time do I have to answer? I'll go for it. No problem, our listeners are all in a run right now, so they're just running, it's okay. No, I think it's incredibly important that you explain how this is relevant to the core. Sustainability cannot just be something that you're doing on the side to cover up for all the bad things you're doing or all the missions and so on. It has to be relevant. I think it's important also that my colleagues in the organization understand that this is relevant for us as a company, it is an area where we can influence as well. I think it's key both to retain talent and to recruit, but also going the extra mile when you have this clarity of purpose. Reality has changed a lot up through the years as well. People want to work in companies that are purpose-driven. Who goes to work just for a paycheck? Well, we actually do pay our employees at Yara as well, but it's more than that. The reality today is that we're connected almost all the time, whether it's through emails and mobile phones, where it's much more blurry what is work and what is free time now. So if you can only justify the work that you're doing because of the paycheck, I don't think you will be able to retain or recruit. But if it's meaningful, something where you see that you can have an impact, where your product is part of helping farmers to produce more food, to reduce famine, to reduce poverty, I think it's a very strong force.

Because we're getting around to making these changes way too late. In 1979, the so-called Charney Report actually explained with scientific proof that if we didn't change the trajectory on emissions, what is right now happening to the climate would be a reality. And yet, even with that report and with a lot of passionate people trying to convey this message, we haven't done much as a world in these last few decades. So what would have been possible in the early 1980s with a bit of tweaks here and there individually, we're long past that now. The only way to get this done is through a complete transformation of societies and industries. We need to do that in collaboration, full value chains. It doesn't help if only Yara reduces its emissions if you're not able to work through the value chain to help the farmers reduce their emissions, to work together with food companies and retailers and consumers. How do we think of this in totality? But then we're up against one huge challenge: how do we do that at scale and how do we do it in a way that isn't cost prohibitive? Then we need to have the value chain approach, making sure that we link consumers with the producers. In order to get there, we need trust. Unfortunately, we live in a world that is short of just that. So we need to find the coalition of the willing to get started somewhere, to show what is possible. But we're not going to be able to get this done at scale and fast enough unless we focus a lot on trust and building that.

You know, the food system has historically done a pretty good job at reducing hunger. If you look at the realities, at least up until 2020, over decades world hunger has been reduced significantly. But what we didn't take into account was the climate cost of this, the emissions. We didn't understand how vulnerable the supply chains were when they were tested during COVID, and we didn't understand how politically exposed these food systems were either. When you look at how much the world relies on Russia when it comes to food production, on inputs, raw materials to fertilizers, and when Russia goes to war on Ukraine, which is also a major food producer, it demonstrates how challenging this is. And it comes very close to us because on February 26, on day three of the war, a missile hit the building where our people were working in Kherson. So to see the Yara logo on a building that has a huge hole in it, it becomes very real. Fortunately, none of our employees were physically harmed because of this, but it made a huge impression. It's tragic and difficult to see. And at the same time, as our colleagues are sitting in makeshift bomb shelters in Ukraine, we also have to defend that we had significant sourcing in Russia. How do we do this? So what we chose to do is to be super transparent, same message internally as externally, trying to explain how global the food system is, the impact of disruptions there, but also openly discussing the dilemma. On one hand, we have employees in a desperate situation in Ukraine, we see the Ukrainian people what they're going through, all the implications of the war. And at the same time, we're buying raw materials from Russia. That's a very challenging dilemma. But we need to also think about the impact on famine across the world, but also let's think phase two, a phase two where we take away this weapon from Putin as well and build a more resilient food system. We've had to make huge changes to our supply sourcing from other places than Russia. And then back to our organization, what they have been able to do both in shifting raw material purchases but also with the energy situation in Europe. If I've been asked if it was even close to possible to do what they have been doing in terms of keeping production going in Europe, I never thought it would be possible. But yet they're stepping up, they're going the extra mile and are able to do this.

Sure. So it is important that we do whatever we can internally first. If I look at what we've been able to do in our company since 2005, we've already reduced emissions by about 50%. I said half-jokingly here that if Yara was a country, I could lean back and say that we've done our part of the Paris Agreement. But the thing is, we're not a country, and the world is not on track as we see from the United Nations as well. In a way, the first 50% are much easier than the next 50% because that requires change of technologies and also enabling farmers to get paid for sustainability as well. So then comes the phase where we need to think full value chains and show what we can do with our products and solutions to reduce emissions further. This is doable, but it requires a different way of working where we have to be much more externally oriented. But it also opens up opportunity. Who would have thought that five, six years ago that Yara would be stepping into the energy sector, which we can with utilizing green ammonia or blue ammonia that we can produce, and that that could be the zero-emission, fossil-free potentially fuel for the shipping sector as Maersk and other leaders in the industry are looking to decarbonize their value chains and their ships. We have an infrastructure built to serve the fertilizer industry, but it could take on a different role enabling the hydrogen economy. So this also opens up business opportunities, and then we need to recognize that and drive that with force. So you have to do everything you can internally, and then you turn around also and see what can we do in partnerships, and then that opens up new and exciting chapters for us as a company.

I'll do my best.

I'm reading one book several times, and that's 'Saving Earth,' which really is a story about the opportunity that we had back in 1979 with the Charney Report and some key learnings from that. And then I also read books about diversity and how to bring diversity into the workplace.

Well, I don't know if it's a talent, but I do enjoy running, and it turns out that I can run for extended periods of time more than I thought possible.

Well, actually, I've been on runs lasting up to 38 hours. But I participated in the Norwegian championship for a 24-hour running in November last year and actually won my class from age 45 to 49. Though in that, I'm happy that I'm in the men's class because if I'd been in the women's class, I would not have won.

Tokyo.

Coffee.

Well, the easy answer is spend more time with family.

Well, thank you so much for inviting me. Absolutely. And enjoy running while you listen to this podcast.