Longevity of a business lies in sustainability: Interview with DNV GL CEO, Henrik Madsen

In this exclusive interview, Madsen shares his thoughts on how the company can contribute to a safe and sustainable future.

At 150 years old, multinational certification firm DNV GL has demonstrated its sustainability in the literal sense. Ask its group chief executive, Henrik O Madsen, the secret behind the company’s longevity and success, and he answers without missing a beat: integrity.

“For a business to live 150 years, we have to provide a value proposition. Our forefathers who first started the company had a lot of foresight. They recognised the importance of integrity and trust, and we have adopted it to the current setting over the years,” says Madsen.

This means setting high standards for the company and for the industries they operate in over the past century, and in more recent times, ensuring that their business operations are carried out with sustainability at its core – here, referring to the firm’s commitment to safeguarding life, property and the environment and to make a positive contribution to the world and the planet.

DNV GL, which celebrated 150 years with regional partners and stakeholders at a glitzy event at Gardens by the Bay on Friday, is a result of a merger in 2012 between two entities  – Norway’s Det Norske Veritas (DNV) and Germany’s Germanischer Lloyd (GL). Together, they are now one of the world’s leading ship classification societies and risk experts in the oil and gas, renewable energy and power sectors, and among the global top three within management system certification.

Madsen started working for DNV GL in 1982 and was a chief scientist in structural reliability analysis, introducing structural reliability methods in the standard setting work of the oil and gas industry. In recognition of his work, Dr Madsen was elected into the US Offshore Energy Center, Technology Hall of Fame as an Offshore Pioneer in 2002.

For DNV GL, Madsen has headed the maritime, energy and industry, and research business areas, as well as being regional manager in Japan and Denmark. In May 2006, he became president and CEO of DNV GL and introduced ambitious strategic goals for DNV GL to grow and focus its services towards selected industry sectors. He is also a member of the World Business Council for Sustainable Development.

Speaking to Eco-Business in an exclusive interview on the sidelines of the opening of DNV GL’s Asia Pacific headquarters in Singapore on Friday, Madsen shares his thoughts about his vision for the firm and how DNV GL can contribute to a safe and sustainable future.

Can you share your plans for DNV GL’s business in the years ahead?

We are focusing on four main areas – maritime, oil and gas, energy and renewables, and certification systems. We also have a large software business. These are the areas that we will concentrate on developing and each has their opportunities and challenges.

On shipping, there is so much potential in improving the efficiency and reducing the carbon emissions of the industry, especially in light of higher fuel prices. The technology is there and there are so many things we can do to make it more efficient such as moving all containers to run on cleaner gas and not on diesel.

In oil and gas, we can make a big difference even as the industry moves into harsher environments and more difficult areas to extract resources since we have the capabilities in deepwater work. We want to push the technological boundaries in a safe way and set new standards in ensuring that we do the extraction in the safest and most sustainable way possible.

I forsee that the transportation sector will move away from using oil to being powered by electricity, which can come from renewables. But we still need oil for other goods like plastics and will need it for many years ahead.

The biggest change we see now is in the electricity market and renewables. We have developed a strong renewables portfolio, especially in wind and solar; and we set standards and qualify the machines, onshore or offshore.

In business assurance, we help businesses manage the risks they have. We also help them focus on sustainability risks and help them prepare for the demands of the changing climate, governance and ethics. These risks are very important to organisations today and I’m not sure that it’s well understood yet. We focus on many sectors but particularly on food and beverage, and on healthcare.

What is your outlook on Asia and DNV GL’s potential for growth in this region?

China is a huge market and we can make an impact there given that it is plagued with environmental issues such as heavy pollution, traffic congestion, etc. If we can expand into the country, we know we can make a big difference. In Asia, shipping is very important and the centre of gravity for the shipping industry is moving to Asia.

This week, DNV GL opened its new Asia Pacific headquarters located at Science Park, consolidating more than 500 employees in Singapore. Why did the company choose the city-state as its Asian headquarters?

We’ve had Asian headquarters in other parts of the region previously, but in Singapore, we found that we got excellent support from the government, and also access to talent. About 90 per cent of our staff in Singapore are local and they have the right skill sets and language skills that we need.

Ten years ago, we had 400 staff in Asia, and today we have 4,000 – if we can achieve that again in the next ten years, that’d be good, and why not?

DNV GL positions itself as a leader in sustainability, but isn’t there a conflict of interest given its heavy footprint in the shipping and oil and gas sectors?

The shipping industry is where we came from, and it is very important for us. I don’t see it as a conflict of interest as we are constantly trying to push the industry to become safer, cleaner and faster.

For example, we set targets to reduce the fatality rates in shipping to reach the same as in land-based industries, and we also push for the sector to use clean fuels.

When it comes to oil and gas, I think gas is less controversial since it is the cleanest of hydrocarbons if you burn it right. And although we would all like the world to operate only on renewables, the reality is we need oil for many products that we use today including plastics and computers. I get challenged on this all the time. But the world cannot live without oil as we need it for these products and there are no substitutes for it yet.

How about the controversial moves of certain oil and gas industry players to drill in sensitive areas such as the Arctic?

We have a lot of internal debate about these issues too. There are many different parts of the Arctic, some parts the climate is more benign and it is possible to extract resources safely from these areas.  

There are other areas, such as Greenland, where others have started to go into, which we do not pursue because of risks to the environment and other factors. There are other areas we can operate in without going for the most difficult and risky ones.

What other factors do you think enabled the company to thrive for 150 years?

It comes down to investing in research. DNV has been an institution in Norway, and after World War II, we made an important decision to start a unit for research and development. The CEO then was a scientist and decided that if DNV were to globalise (it was mainly in shipping before that) it needed to innovate. To survive, we have to be the best in R&D and we’ve maintained this over the years. I came from a scientific background and also believe firmly in investing in innovation.

Of course, we have some sceptics, even among managers about climate change and the environmental risks we face. But it’s either you live by our values or you leave the company. There’s a lot of education going on within the company on sustainability all the time.

Henrik O Madsen, DNV GL Group CEO

Some 5 per cent of our revenue is spent on R&D every year and that’s a big commitment we make to advancing society. Over time, this also translates into other benefits for the company.  

The merger of DNV and GL must have been a large exercise. What challenges did you face? And how do you still instil the importance of sustainability in such a large organisation?

When we had the merger, we had to agree on the values of the company and when we looked at it, they were similar. The wording was different but the content was the same. That must be in place for the merger to take place.

We also emphasise the message of sustainability to all our managers, especially when they get together in each region. Of course, we have some sceptics, even among managers about climate change and the environmental risks we face. But it’s either you live by our values or you leave the company. There’s a lot of education going on within the company on sustainability all the time.

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