Interview René Kim and Wouter Scheepens
As we have hit the milestone of 25 years of Steward Redqueen, we sat down with two of the founders, René Kim and Wouter Scheepens, to hear the story about the establishment of the firm, the growth, the mission and spirit – and the future. It paints a picture of the company’s journey from an office with one window in 2000, to having offices across three continents. And it looks at the future, what a sustainability and impact consulting firm can do when the focus on sustainability appears to be in reverse.
Let’s take it back to the beginning. René, what sparked your interest to start a consulting firm dedicated to sustainability?
R: Well, I had always been interested in climate issues, so I did a PhD in hydrology and meteorology and worked in those fields at Massachusetts Institute of Technology (MIT). When I was in academia, I realised that we don’t necessarily need to know more about climate physics or how water runs. We more or less know how it works; we just have to organise ourselves. That’s why I went into business and joined the Boston Consulting Group (BCG). Three years in, we had a series of meetings in little groups with BCG’s CEO at that time. During one of those meetings, I asked the question “This upcoming area of sustainability, what do you think? Is it going to be something that BCG will be active in?”, and his response was: “Son, you’ve got to remember, we are a for-profit business.” I knew if I wanted to do something with this, I had to do it myself. At that time, I knew two persons who just started a consulting company focused on the topic – Erik van Dam and Stefan den Doelder. I said, “Well OK, I’ll join that, and we’ll see where it goes”.
“Essentially, I made the step because BCG did not see sustainability as a promising area.”
And was it promising?
R: In the first years, it really wasn’t – I didn’t think it was going anywhere. I firmly believed sustainability was relevant, but it was really difficult to get people interested. It simply wasn’t on their radar screen and people typically gave us business because they thought it was a sympathetic idea. Then, I got my first real project at the ABN AMRO Bank, and my direct client happened to be Wouter.
Wouter, what did you think when René stepped in?
W: I was directly triggered, and it happened at a specific moment in my career. To take one step back, at the end of 90s I was deputy secretary of the management board and the assistant to CEO at ABN AMRO, which means I was in the middle of where it happened at the Bank – obviously a pretty big player at that time. What kept nagging in my head was that it was very shareholder-oriented and one-dimensional. In my next job, I got the opportunity to focus on this and set up a new department called ‘Brand and Reputation Management’, which later on evolved into the current Sustainability Department. Leading this department, I started to focus on sustainability issues, for instance by initiating the bank’s membership of the World Business Council for Sustainable Development. Early into that role I was introduced to René, and we decided to run a scenario and model with all kinds of assumptions on how sustainability could impact the cost of capital. We thought it was a pretty thorough analysis.
How was it received?
W: We sat down with the then CFO, who is now the chair of the Bank’s Supervisory Board. He listened to us and then said: “Well it looks nice, but I don’t believe the assumptions, so thank you very much.” We were out the door within 5 minutes. Sometime after that meeting I called René into my office and said to him, “This may be the year that I’ll leave the Bank. I’m only going to say this once, but if you are ever considering onboarding a guy like me in your firm, then give me a call. Now, the ball is in your court.” Saying this was quite a step as I had a very comfortable life there: I had a good salary, my own office, my own secretary, my own parking spot in the garage underneath the building – and a young family. I would have to replace that for a tiny office that had only one window looking out at a garage, and a business of which I already sensed was not going very well. But still, I believed in the purpose so I took a leap of faith, and I went.
So how were the first years, what was the market like?
R: Sustainability was by no means completely new; it had been there since the Club of Rome in 1972, but it had not yet found its way into companies. In the early 2000s, it was really about making the business case for specific organisations and linking that to strategy. We managed to generate media attention, and we worked with some of the big players, such as the Dutch Ministry of Economic Affairs, DSM, Akzo Nobel, Heineken, and others. Business-wise it was still not very successful, as we had a very fragmented portfolio of projects and were pioneering new things all the time.
W: We would take on any project, as long as it had to do with sustainability, and we were eager to go the next mile for every client. We always wanted to solve the problem and ensure we exceeded expectations, also when we were spending much more time than agreed in our fixed contracts. That often didn’t make much sense economically but did build a good reputation and relationships.
“They sometimes say a good consultant is an insecure overachiever – well, we certainly were that.”
What were the pivotal projects in those early years that have really stuck with you?
R: To me that’s a study on the socio-economic impact of Heineken in an African market in 2006. They asked whether we were interested in exploring how they contributed to society and the economy. I secluded myself like a monk to develop a sound approach, which was based on input-output modelling developed by Nobel prize winner Vassily Leontief. We must have spent ten times the amount of time compared to competitors for that bid. But it laid the groundwork for some of our work on socio-economic impact studies up until this day, and it probably was our first assignment that held the potential to be replicable.
W: Another one was a training on sustainability for clients from the Dutch Development Bank, FMO, in Latin America. This was also around 2006, which essentially started our work with development banks and on ESG. At that time, Willem Vosmer (currently a Partner at Steward Redqueen) had also joined and since he speaks Spanish, he delivered a series of sustainability trainings. First in Latin America, and after also in other African and Asian markets. As the concept of ESG just came about in the mid-2000s, these trainings provided an opportunity to pioneer and develop the first basic ESG management systems with banks.
“This meant we were truly at the very forefront of ESG risk management, and I think we still are these days.”
R: A third one was with CDC Group (the British Development Bank, now BII), where we won a contract to conduct performance evaluations of a sample of the private equity funds they had invested in. We did about seven per year or so. We took a holistic approach to performance, focusing on the financial, economic, ESG, and impact of these funds. Given that the term ‘impact investing’ was just coined in 2007, and CDC can probably be regarded as one of the first true impact investors, it was really interesting to run these evaluations. They were the start of our work with impact investors on impact management and evaluations – which became a thriving business focus for us.
It seems you were among the pioneers of major concepts like ESG and impact investing. What do you think enabled you to be such an early mover in these areas?
W: I think the key to that is that we were agile, opportunistic, idealistic, and always ready to take on a project that we were actually not sure about whether we could do it. We invested time, and we managed to do it. We always focused not just on a project but building a true relationship with the client. They knew they could always call us if they had a strange question – and we would dig into it.
“They say luck favours the prepared mind. And we made sure to be ready.”
Around that time, you also rebranded the firm to Steward Redqueen. Can you share the story and meaning behind this name change?
R: In 2010, we had our other founder split off and he had the rights to our then name, Triple Value. We needed a new name literally over the weekend; me and Wouter both came up with a part of it. I had always been fascinated with the Red Queen Hypothesis in biology, which is a coevolutionary concept where species must continually evolve new adaptations in response to evolutionary changes in other organisms to avoid extinction. It was my personal view on what a successful business should also do.
W: My personal driver was to move businesses from a full focus on shareholder value to also include stakeholder value and be stewards of their surroundings. I felt we should do something with stewardship, so I said “Why not combine it and make it Steward Redqueen?” It sounded a bit weird, but we felt it would also stick with people.
“The name also embodied our mission and spirit, as it countered the notion that responsible business operations and competitiveness would conflict. Our name combined the two.”
During the 2010s, Steward Redqueen experienced further growth. What do you believe were the key factors behind this success?
W: There probably are a few. The most important one was our focus on exceeding expectations and building trusted relationships as mentioned earlier. This meant we had a loyal returning client base, but also one that was gradually expanding. We always grew our team responsibly – never too fast. To me it’s really about getting the right people on the bus, and I think we were quite frugal and kept costs down. We never had expensive offices. When we were at larger peers we always wondered about the big screens and marble on the floor, thinking “You have your clients paying for all of this stuff?”
R: We have always tried to be good for our team, create a culture where it’s fun to work, and offer them trust, personal growth, and travel opportunities. We never fired anybody, even in the toughest time, where we as partners cut down our salaries.
Reflecting on your journey, which projects stand out to you as sources of pride?
W: I really liked an assignment on bringing sustainability in the Corporate Governance Code, as leadership and governance structures are fundamental parts of advancing sustainability. It also started something larger, as a few years later I wrote a book called ‘Sustainability in the Boardroom’, which essentially flowed out of that. We also got to review and advise the United Nations Principles for Responsible Investment (UNPRI) 10 years after their establishment. This was exciting as it brought together so many of their members and our clients.
R: To me, it was doing the first series on the impact of independent power producer (IPPs) on behalf of IFC, the private sector arm of the World Bank. It was important, as understanding the jobs aspect of investing in renewable energy, which obviously is crucial for climate change mitigation, meant that development financiers could better understand and explain these investments.
“When we presented the findings in Washington, an IFC banker teared up. He said that he knew he was making a difference with what he did, but now he could finally fully understand that. That was nice.”
W: Beyond projects, we are proud of the journey that colleagues who left us at some point have taken. It feels good to see that we have been able to support and educate people in their first job who became great professionals in other firms, some of them also becoming clients. We really see that as a dividend.
As we navigate through times of major global challenges and potential turning points, I’m curious to hear from you, self-proclaimed ‘rational optimists’. What fuels your hope for the future?
W: Well, I used to be an optimist and now I feel like I have to be an optimist. At the same time, there always have been challenges. When I look at my own children or others in the younger generation, I think there is a spirit and willingness to act. What I hate most is people who complain a lot about a situation, but don’t act.
“You can identify a problem, but if you don’t want to contribute to a solution, it’s pretty useless, right? And I think that a lot of young people want to contribute to solutions.”
R: Two things. First, I see reasons for pessimism as I see the attention for sustainability going in reverse, particularly in some places. But you can’t fool all people all the time, and you definitely can’t fool nature. The issues are not simply going away, the focus will come back. Second, you have to take a long-term perspective and recognise that we can act. Think of the Aral Sea, where water shrank dramatically and had lost nearly 90% of its water by the early 2000s. The Kazakh government and the World Bank worked on it, and since 2005, water levels have risen, salinity has decreased, and fish populations have started returning. We can fix difficult things if we want.
Talking about the younger generation, how can emerging business leaders innovate and set themselves apart from their predecessors?
W: Internalising externalities in business and pricing is definitely crucial. I’m not overly fond of too much of a focus on extensive sustainability reporting, as it can divert resources away from true innovation, but the stronger and much broader focus on double materiality in reporting is a first step in recognising this.
R: Leaders should be open about that transition is not going to be a walk in the park. Let’s be honest; it can be a painful process. Particularly big companies have to be more open about trade-offs. Leaders should recognise this, but still have the inspiration and attitude to take the company – as well as its shareholders and stakeholders – along on that walk.
“You don’t have to save the world, but you do have to find out and explain how sustainability can be supportive to your value creation process.”
W: What’s worrying is that while we need a longer-term agenda, the time that CEOs have is getting shorter. Look at Hein Schumacher at Unilever; he got one and a half years. The focus on shareholders was always large and has gotten even larger. I think this is a mistake. My hope is more on smaller companies that have the agility to change the game. I wrote a book on this called ‘Bloed, Zweet, maar Samen’ (‘Blood, Sweat, but Together’), discussing that sustainable innovation often comes from start-ups and social enterprises, such as The Vegetarian Butcher or Seepje. Change is happening.
“There is a difference between owning a share and owning the company. A lot of shareholders are actually shareflippers.”
As a final question, how does Steward Redqueen continue to play a pivotal role in addressing societal challenges?
R: It’s about making the trade-offs clear and putting them on the agenda for better decision-making. Someone once said to me: “You guys at Steward Redqueen are good at training the lazy eye of our company”, and I think that’s it. You have to run good analysis, ask the right questions, and challenge companies on their next step. Only the paranoid survives, it’s in our company name with the Red Queen Principle. Think of nature; every day a lion and an impala wake up at the savannah. The lion knows he has got to run faster than the slowest impala and the impala knows it has to run faster than the fastest lion, or it will be eaten. They both wake up, and they only know one thing for sure: we’re gonna run today. We can’t be lazy.
W: We have to keep focus on what we are good at despite headwinds. Look at the US; major asset managers can cancel their ESG funds due to external pressure, but those billions find a way to asset managers that keep their focus on ESG. Talking about that, look at last night; we organised a young professional’s event in our Amsterdam office. We found out it clashed with an event Blackrock organised, where several people had a double invitation. You know where they decided to go? Yes, the firm with the purpose. Or perhaps it were the vegetarian oven bitterballs that did it. I don’t know, but they were here!
