The transition to cradle-to-cradle is boosting profitability and inspiring product innovation at Dutch carpet manufacturer Desso

Following a management buy-out in 2008, Desso, the Dutch manufacturer of carpets and carpet tiles, set out an ambitious vision: to cradle-to-cradle certify 100% of its carpets by 2020.

Four years on from that commitment and Desso is enjoying record growth, improved market share and a steady pipeline of new product innovation. The success comes in spite of a 10% retraction in the European carpet tile market in 2012.

Chief executive Alexander Collot d’Escury directly attributes Desso’s success to its adoption of the cradle-to-cradle concept. The approach has, he says, required nothing less than a fundamental transformation in the way the business operates.

“Cradle-to-cradle is a holistic approach. It asks for a new supply chain, a new way of marketing, and a rigid overhaul of all your ingredients and the production process,” says d’Escury. “You need every discipline in the company to rethink the way you do business.”

Cradle-to-cradle is an approach for designing intelligent products, processes and systems that take into the account the entire lifecycle of a product. Unlike cradle-to-grave, cradle-to-cradle takes its inspiration from nature and entirely eliminates the concept of waste.

Since 2011, Desso’s cradle-to-cradle certification has been carried out by the California-based Cradle-to-Cradle Products Innovation Institute. The institute rates organisations against the cradle-to-cradle criteria as well as training and accrediting consultants and auditors to use the rating system. 

The cradle-to-cradle approach is now a pillar of Desso’s product innovation strategy, sitting alongside creativity and functionality. It also informs a health and wellness vision that is shaping new thinking and understanding about the role and function of carpets in the modern-day office environment.

Cradle-to-cradle

Michael Braungart is the founder and director of the Environmental Protection Encouragement Agency (EPEA) and the chair of cradle-to-cradle for innovation and quality at Erasmus University in Rotterdam. He has led the development of the cradle-to-cradle design concept for the past 25 years.

“Cradle-to-cradle is about innovation and quality. It goes beyond sustainability. It is about positively defining all the ingredients in a product,” says Braungart. The radical point of departure for cradle-to-cradle thinking is, he says, that humans and products should have a positive impact on the environment.

“It is not about eco-efficiency or minimising our footprint – people think it is environmental protection when they destroy less. We want to have a positive footprint. All other species on earth are beneficial, but instead we just want to be less bad?”

The EPEA, under Braungart, has been working with Desso on its cradle-to-cradle approach since 2008 when then Desso chief executive Stef Kranendijk saw, and became inspired by, a documentary on the concept. Kranendijk invited Braungart to present the cradle-to-cradle philosophy and principles to a meeting of senior company management. By the end of the year, Desso had made the commitment to become cradle-to-cradle certified by 2020.

“We put the BHAG [‘big hairy audacious goal’] out early,” reflects d’Escury, who took over the chief executive role from Kranendijk in October 2012. Formerly chief commercial officer, d’Escury was part of a senior management team brought in to lead Desso after a management buy-out from previous owner Armstrong World Industries in April 2007.

With the 2020 commitment in place, it was then a case of setting out a roadmap to guide the company towards full certification. Given the far-reaching requirements of the cradle-to-cradle approach, this required a management group of R&D, manufacturing, supply chain and marketing people from across the business.

Learning a new language

Like all companies that make bold, bar-raising commitments, Desso did not fully understand all the implications of the transformation, admits d’Escury. “You have a bit of an idea and then you start learning as you walk the route,” he says.

For Desso’s sustainability director, Rudi Daelmans, there has been a steep learning curve. “We have to rethink everything. There is no blueprint to refer to. Every step of the way … we have to ask new questions to ensure we achieve C2C standards and hit our targets. It is like learning a new language, except no one can teach us the language. We have to invent it ourselves.”

One of the biggest challenges the company has faced is defining all the ingredients used in its products. Cradle-to-cradle certification requires that Desso’s suppliers know every single ingredient in their materials so that the EPEA can rank those ingredients on the C2C material health scale (red = high risk, green = safe).

Daelmans says this has been difficult for some suppliers. Some felt it involved extra work and their compliance with the chemicals regulation system Reach was sufficient. Others did not want to give up sensitive information. In order to get around this, Desso had to develop tripartite agreements allowing the supplier to submit ingredient details to the EPEA, rather than submitting them to Desso.

This continues to pose a challenge, admits Daelmans. “The big problem of course is that suppliers can get different ingredients from a number of sources – often changing as markets and prices shift. If they don’t know what is in them, how can we?” he says.

In some instances, however, Desso’s move to cradle-to-cradle has helped to enhance its commercial relationship with like-minded suppliers. Aquafil Group – an Italian manufacturer of carpet yarn, textiles and engineering plastics – is one such supplier.

Aquafil has been supplying Desso with carpet yarnfor 20 years. In 2011, the company launched its Econyl regeneration system, an industrial system designed to produce the nylon-6 polymer (commonly used in carpet fibres) from 100% post- and pre-consumer waste.

According to Giulio Bonazzi, chief executive of Aquafil Group, the existing relationship between the two companies allowed Aquafil to consult with Desso in the design of Econyl. The objective, says Bonazzi, was to try to understand better which products should be substituted with Econyl yarn. Desso now buys about half of its yarn from Aquafil, of which 85% is currently Econyl-based.

While Bonazzi notes that Aquafil’s sustainability philosophy has been driven by market demand he is keen to point out that the business relationship is growing as a result.

He adds: “Both Aquafil and Desso developed their philosophy by themselves. It was not something that we forced on Desso, or Desso forced on us, but both companies believed that it was good and profitable and more sustainable in the long term to go in that direction.”

Product innovation

In 2010, Desso launched the Desso Airmaster: a carpet four times more effective at capturing and retaining hazardous particulate matter than standard carpeting. The development of the Airmaster was driven by Desso’s new innovation strategy and a desire to make corresponding improvements in “health and wellness”.

Both the health and commercial arguments supporting the Airmaster are clear, says d’Escury. Typically 90% of our time is spent indoors and the prevalence of fine dust and particulate matter in the air directly contributes to lung and respiratory problems.

For office-based businesses this incurs a significant human capital cost in the form of worker illness. The average worker spends 21% of his/her time in the office. Improve the office environment (and air quality) and you not only improve worker health and wellness, but you cut illness rates and cut costs.

According to d’Escury, business investment on indoor air quality can lead to considerable savings. “We have been told of examples of illness reductions of 3-3.5%. Half a percent is a lot when you are spending billions annually on employees.”

The Desso Airmaster is now the company’s second most valuable product by turnover and profitability with a profit margin of 20% – more than double the company average for individual products. “The added value is much more than the added cost,” adds d’Escury.

The carpet industry has long been sensitive to issues surrounding indoor air quality of course. The industry was one of the first to find itself the target of environmental activists in the 1980s as concerns surrounding indoor air quality and the presence of volatile organic compounds in carpets were debated.

Desso’s success has been to turn concerns surrounding indoor air quality into a source of product innovation and business opportunity using the principles and scientific rigour of cradle-to-cradle thinking.

“C2C has inspired us to think about how to make a floor work for health and wellbeing. It is a huge motivator for innovation,” says d’Escury.

Desso’s health and wellness vision has brought other benefits too, adds d’Escury. “Our sales people are no longer selling carpets. They are selling health and wellness. Before it was just a conversation on price with purchasing managers. Now it’s HR, sustainability, and the CEO. We explain we have a solution for health and wellness and for improving the return on your most important asset – human capital.”

90% there already  

Desso is well on its way to achieving its 2020 goal. Today 90% of its carpet tiles are cradle-to-cradle certified and the company has just certified its first artificial grass. It is currently working on its woven products business looking at the traceability of its Norwegian wool supply chain.

The company will also continue exploring the viability of carpet leasing as a solution to the issue of end-of-life take-back. Landfill continues to pose an obstacle to achieving a circular-model economy, says sustainability director Daelmans. The objective is to change the buyer’s relationship to a leasing model, rather than a purchasing one, thereby allowing Desso to automatically take back its carpets at the end of their life.

Ultimately Desso’s biggest success has been to demonstrate that the cradle-to-cradle approach can be profitable. Here d’Escury cites 2012 research demonstrating that the wider circular economy could deliver annual net material cost savings in Europe of between $380bn and $630bn. The economic case for cradle-to-cradle is, he says, obvious.

Braungart says Desso is one of a small handful of companies pioneering the cradle to cradle approach. “Desso is still not perfect, because they need to rebuild the entire industrial production process.” He adds: “Everybody who buys a Desso carpet, even if it’s not a perfect one, will help the company change faster.”

Desso facts

Turnover (2011): €222m

Number of employees: 900

Year of management buy-out: 2007

Growth in market share in carpet tiles (Europe): 15% in 2007 to 25% in 2012

Percentage of carpet tile products cradle-to-cradle certified in 2012: 90% at basic or silver level

Desso’s 2020 vision

• All Desso carpets developed and certified according to cradle-to-cradle design concepts.
• 50% use of post-customer products as process input for new carpets.
• All materials and process inputs come from renewable or recycled sources.
• 100% purchased renewable energy for processing and manufacturing.

 Source: Desso