Sustainability Champions – Dr John Tros, Senior Vice President Operations and Environmental Taskforce Lead at BME Group
Welcome to the second instalment of our Sustainability Champions Series, where we speak to leading sustainability executives across a range of industrial and manufacturing businesses. Our goal is to understand what sustainability targets these organisations have in place, what they are doing to achieve them, and how companies can incentivise executives to achieve these targets.
In this interview, we speak to Dr John Tros. John is the Senior Vice President Operations and Environmental Taskforce Lead at BME Group. He is a highly experienced senior executive and entrepreneur with a broad international background in a range of management roles, sourcing and procurement.
Who is Dr John Tros?
John, building on his Master’s degree in Economics, PhD in Procurement, has developed extensive industry experience in creating teams that outperform the market.
For almost a decade John was Advisory Partner at KPMG, working with the world’s leading organisations to create and protect the sustainable value of their businesses.
Currently John is Senior Vice President Operations and Environmental Taskforce Lead at BME (a Blackstone portfolio company). BME is one of Europe’s leading and fast growing business-to-business distributors for building materials, operating across eight European countries, including over 18,000 suppliers and 275,000 customers.
We had the pleasure of speaking with him to gain more insight on his personal, in-depth experience regarding sustainability throughout the building industry.
Incentivising sustainability targets within the building industry
Hi John, thank you for joining us. For your initiative specifically, what are the key sustainability targets?
BME aims to be a leading distributor in building materials that helps customers build sustainable buildings through products with a positive impact on the environment and with a limited environmental footprint that come from suppliers that actively contribute towards a more sustainable supply chain. We do this through setting targets in three areas, (1) improving on the carbon footprint of our operations, (2) advising on customers how to build more sustainably – applying sustainable products – and advising suppliers how to improve on environmental footprint of building products, and (3) collaborating with suppliers to create a more sustainable value chain. We published our first Sustainability report last April on our 2022 performance. In that report we have included our ambition:
- 45% reduction in emissions in controlled operations by 2030 vs 2021
- 50% spend from sustainable products in complete BME’s product portfolio by 2030
- 90% ambition for supplier spend which has signed our Supplier Code of Conduct, meeting ESG assessments.
Based on this we are amongst others expanding our Greenworks concept. This concept, based on independent data of products, enables us to advice our customers which products are more sustainable. We are in the process of digitalizing this concept to increase the availability of data across Europe.
What are the biggest challenges an organisation faces on trying to reach those targets?
The primary challenges an organisation such as ours faces, is for the entire value chain to move into the same direction, with the same intent and speed. To give a concrete example: we want to be the leading B2B distributor of environmental friendly solutions for construction and renovation of buildings. To achieve this we need to have an independent methodology to determine which product or solution is most sustainable. The European Union has given a guidance for this in the NEN15804 which requires all companies to create Life Cycle Assessments (LCAs) or Environmental Product Declarations (EPDs). Although the legislators want every supplier to carry out a LCA they have not made the format of its delivery clear. The standards that apply to the sub-criteria on a LCA can vary depending on products and the countries in which the LCA is calculated. This makes it harder for organisations in our value chain to make accurate comparisons on how sustainable a product is. So you need to apply different calculation methods to understand the impact of the same product in different countries. As such, to improve on this, there is a higher level of standardisation required in legislation and implementation of LCA calculations. If legislation drives standardisation and transparency, the industry will follow. Companies will then have the incentive to create the most sustainable products that meet the environmental footprint to be able to compete effectively in order to sell their product.
Unfortunately, implementation of this has not been considered across the supply chain and as a result, you remain stuck in discussions about varied methodologies, not considering an end-to-end basis.
The problem we face is whether transparency within sustainability should be a competitive advantage or not. Governments and governing bodies should make the market transparent so that everyone knows what the basis is. Otherwise, we each need to agree to many varied standards and codes of conduct which in the end cannot be managed and only increase costs in the value chain.
When you look at the output of Carbon across the supply chain, what problems do you face?
Carbon is but one aspect in the considerations of how to build sustainably, with sustainable operations. At BME Group, we are committed to reducing the carbon footprint of our operations, for instance by optimising our transport, switching to renewable energy, reducing our need to heat branches and warehouses. At the same time, we play a key part in advising customers to use more sustainable products in their construction projects. That customer may have different expectations and needs beyond just Carbon optimisation. We increasingly see that customers optimise on other sustainability aspects, such as the use of bio-based materials, avoiding toxic materials and less use of fresh water. The challenge in the supply chain is to create transparency on all these aspects of sustainability and offer a fair comparison between achieving these different goals.
A simple example is the usage of trucks. Research of the European Agency for Statistics shows that on average 20% of all truck kilometres are driven with an empty truck. If we could, alongside suppliers, make agreements on distribution we already could reduce the overall Carbon footprint by a large amount in this area.
Who do you believe is responsible for owning sustainability targets and driving the sustainability agenda within large building materials organisations?
It is a combined responsibility. It is not one function such as Operations because Sales has to sell the most sustainable product. If they will not sell these products we will not reach our targets. I fundamentally believe in the fact that Leadership needs to be the role model, owning the overall targets, and a clear initiative roadmap that has ownership in the associated functions.
For example, Procurement and Facility management should collaborate to reduce carbon emissions from electricity in our branches, by installing smart meters, transitioning to LED lighting, putting in place pragmatic policies to limit electricity usage (e.g. lights off in the office after 18:00) and switching to and sourcing renewable energy.
When it comes to leadership, is there one individual who has more control over sustainability?
At BME Group we believe every person within the value chain should focus on sustainability as it is a joined responsibility. This includes the architect, the building owner, the constructer/construction company, the distributor, the suppliers, the legislator and the funder.
Currently we notice (with the exception of some entrepreneurial project developers) that with suppliers and construction companies, the change is mostly fuelled by governmental funded projects and projects where financial institutions provide lower interest rates for sustainable buildings. You notice in these projects a clear demand for sustainable building products and our Greenworks team advises our customers how they could build more sustainably to win a tender or to get building permits.
Greenworks, which currently operates in the Netherlands and which we have also started to roll out across Europe, advised more than 50 customers winning sustainable projects and trained more of 2,500 customers on this topic in 2022 in the Netherlands.
Should sustainability targets be incentivised, much like financial targets currently are?
In my opinion, sustainability targets should not be a discussion; they should be a given. However people tend to react to results which hit their pockets (remember the reduction in gas usage when the prices went through the roof?) So it does makes sense to do so.
This also applies to the tendering process of building projects. You still see tenders where the focus is on the lowest price. However, in my former role I supported projects where constructors were allowed to offer a higher quotation when the CO2 impact over the life cycle of a building or infrastructural project was higher. Often these projects weren’t much more expensive than the cheapest offer but the overall positive impact on sustainability was high.
Looking forward, what advice would you give to leaders who are looking to make more of a change and impact to ESG and achieving sustainability targets?
Transparency in the sustainability of products should be a given. However, there are currently all kinds of eco-labels or standards available, that sometimes don’t really tell if a product is truly sustainable. As such, the end-game is that architects, building owners, distributors, suppliers, legislators and funders don’t sing from the same hymn sheet. That is why the industry requires the same standards when they talk of sustainable buildings or products. That should be the end goal.
You can ask the industry to drive this (and we will try), but competitive forces may hinder progress. Therefore we need the European government to standardise the end-to-end process. For instance, one European standard to measure a LCA/EPD, one standard on reporting including the digital data. This will enable a harmonised data process which will drive transparency and the required change in the market as non-sustainable suppliers are not able anymore to hide behind eco-labels or non-specific standards.
Additionally, it could be beneficial for all value chains to establish a method in which specific ESG standards are confirmed by the external auditor of a company. This is not a full ESG report but a confirmation that certain basic ESG standards, which are often included in a Supplier Code of Conduct, are covered. Currently the whole value chain is clotted with Supplier Codes of Conduct, which all try to solve the same basics from a different angle and I think that a harmonisation, enforced by an external audit, might help to overcome this clotting.
That end-game ambition is a great way for us to finish, thank you very much for your insight.
No problem, it was good to talk to you.
If you would like to discuss any of the topics raised in this piece or if you need support with your leadership resourcing strategy, please get in touch with James Pope on: James.firstname.lastname@example.org