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Koda: The hard lesson S'pore firm behind furniture brand Commune learnt to become eco leader

First published in The Straits Times on 7 November 2023.

The home-grown furniture maker knows the importance of working with the right partners such as Enterprise Singapore and is now making sustainability a big part of its business.

Koda’s executive director Ernie Koh says that joining Enterprise Singapore’s Scale-Up Programme has enabled the firm to refine its sustainable practices. PHOTO: SPH MEDIA

Today, home-grown furniture maker Koda is known in the industry as a front runner in sustainability. But what many may not know is that its journey towards adopting eco-friendly practices first started out as compliance.

Since 2017, the Singapore Exchange (SGX) has made it mandatory for listed businesses such as Koda – the parent company behind retail brand Commune – to report their environmental, social and governance (ESG) practices.

Meanwhile, the furniture industry was starting to face pressure from stakeholders to integrate sustainability into business practices.

Customers in international markets such as Europe and the United States were also increasingly seeking compliance with sustainability requirements, as well as health and safety-related information, while regulators in some countries have also imposed limits on toxic substances in furniture and furnishing products.

Koda went with the flow – until it realised one day that the consultant it had hired to work on its sustainability reports had been “taking the easy way” by over-inflating facts and figures in the reports.

Fearing that the firm had become a proponent of greenwashing, Koda’s executive director Ernie Koh, 58, decided to terminate the services of the consultant and work with another company.

The turning point for its sustainability journey came when Koda joined Enterprise Singapore’s (EnterpriseSG) Scale-Up Programme in 2019. During the 12- to 18-month programme, executives from fast-growing local companies collaborate with consultancies to develop and refine their growth strategies while networking with one another.

“My thinking was, if we don’t get more serious about sustainability when we have all these help available, then when are we going to do it?” says Mr Koh, who is part of the second generation leading the 51-year-old business. “We are a mature company with stable operations. We have the capabilities to invest in sustainability, corporate social responsibility, and more.”

Through the programme, Koda took a hard look at its current business operations and mapped out a plan to provide clearer direction for the company’s future. This included short-, medium- and long-term plans that would make it more sustainable and attract eco-conscious customers. The visionary exercise brought clarity to the firm, which currently has some 2,000 staff and earned about US$79 million (about S$104 million) in revenue in its 2022 fiscal year.

With newfound determination, Koda began reframing the way it reported on efforts by “focusing on what we’re doing instead of how good we are”.

“Working with the right people is the right way to stay true to yourself,” says Mr Koh.

Starting slow and small

Implementing sustainability practices was not without its challenges, however. To change Koda’s culture and practices, Mr Koh knew he had to do so incrementally. He also realised that one of the keys to attaining sustainability successfully is first getting staff and management on board.

“People are the biggest challenge,” says Mr Koh. “If you go too fast, your employees might get overwhelmed and become resistant. Then whatever you set out to do will never get accomplished.

 Mr Koh (right) learns that it takes time for a company to shift to more sustainable practices. PHOTO: SPH MEDIA

For example, when he initially proposed buying a US$40,000 per year software to improve the firm’s quality control and reduce rejection rates, the rest of the management team baulked at the price, leading him to shelve the idea until recently. Presently, the firm is evaluating whether to purchase it.

Koda began by reminding staff to switch the lights and the air-conditioning off at the end of the day – a cost-cutting measure that was an easy win. Soon, employees themselves were suggesting and carrying out other ideas, such as replacing the firm’s plastic water bottles with water dispensers and paper cups.

It also partnered a solar service company to install solar panels on the rooftops of its factories in Vietnam. The company put in the panels for free and gave Koda a discount for the solar power.

Koda also started to use straw board (comprising straw waste that would have been burned otherwise) as an alternative to virgin wood, honeycomb paper packaging instead of styrofoam packaging, water-based coatings in lieu of pollutive solvent-based ones, and more.

Its ESG practices extend to supporting its workers. In Vietnam, its HERproject has educated female workers on proper nutrition, personal health – including birth control and menstrual cycles – and their basic rights as employees. Another project called Vision Spring identified workers who needed spectacles and provided them with the appropriate eyewear, boosting the efficiency and quality of their life and work.

Koda employs over 1,500 workers in Vietnam, and has ESG programmes in place to enhance the well-being and professional development of its workers. PHOTO: KODA

To ramp up its momentum, Koda has enrolled an employee in Workforce Singapore’s Career Conversion Programme for Sustainability Professionals, so he can eventually serve as its chief sustainability officer. “The Scale-Up Programme gave us a roadmap, but we need a driver to keep us on track and help us move forward,” explains Mr Koh.

Inspiring change

He expects the next stage in Koda’s green evolution to be harder as the firm reaches out to clients and suppliers to persuade them to collaborate in its journey. “It’s not easy because what they do is beyond our company and our control,” he says. In the 2022 financial year, only a small portion of its new suppliers met its sustainability criteria.

However, the company wants to get subcontractors and suppliers thinking, starting with basic questions on whether they have a formal sustainability policy, what they do to measure and monitor their energy use, and how they educate and engage employees on sustainability. “Many of our suppliers are small and we do not want to scare them off,” says Mr Koh.

Among the steps Koda has taken to promote sustainability include using sustainable timber for its products and introducing a programme to get customers to recycle old furniture. PHOTO: KODA

For its part, Koda has a list of about 20 types of timber, including teak and mahogany, that it does not use because of difficulties in verifying their sources. It is also collaborating with customers in Germany and the US to incorporate sustainability earlier in their production methods, such as at the design stage. This includes eliminating the use of chrome plating, which harms the environment.

Following EnterpriseSG’s advice, the company is considering hiring an industry-specific sustainability professional from overseas to help it implement more advanced initiatives, such as Scope 3 emissions reporting. These are emissions that a company is indirectly responsible for through its value chain, such as those that result from its purchased goods and business travel.

Mr Koh highlights EnterpriseSG’s support in facilitating its ongoing transformation. “The agency is like a nerve centre for connections. It has linked us up with many contacts and given us many recommendations,” he says. These include an introduction to the Enterprise Sustainability Programme, a link-up with Workforce Singapore for the training programme, and more.

Looking ahead, Koda has its heart set on a plan to tackle a critical sustainability concern: What happens to products at the end of their use and life cycle. One solution might be offering shoppers discounts when they buy new furniture from Commune and if they sell their old ones back to the firm at a fraction of the original price.

Although established in 1972, Koda, which is behind retail brand Commune (pictured) only began getting serious about sustainability in 2019 after joining EnterpriseSG's Scale-Up programme. PHOTO: SPH MEDIA

He stresses that companies in the industry need to work together too, with customers playing a vital role. “As a client, if you can get your non-competing vendors, such as fabric mills, lighting manufacturers and others, to share information about what green materials to use, where to buy recyclables cheaply, and more, we can all move faster on sustainability,” he explains.

To companies that are doubtful about the impact that they can make in sustainability, Mr Koh says: “You may think that you are just one company, but just like it takes many grains of rice to fill up a bowl, we can all contribute to a better future.”

Driving green goals

The Enterprise Sustainability Programme offers a range of support that enables Singapore companies to build capabilities for sustainable practices and capture opportunities in the green economy.

This includes courses to equip companies with skills and knowledge to navigate sustainability, sector-specific initiatives, financing for sustainability projects, and more.

This is part of a series on how home-grown companies are making an impact on global markets, showcasing how they scale up with sustainability, technology and innovation as core aspects of their business, with the support of Enterprise Singapore. Find out more here.