Insights

Sustainability – Now More Than Ever

The Covid-19 pandemic sent shock waves through businesses and the economy. In consequence, sustainability could fade into the background—or become an even more important factor for success.

09/2020

Sustainability presents major challenges to the economy and society at large. How can we ensure a livable world for both people and nature? Artist Manolo Paz prompts us to reflect on this question with his stacked blocks of colorful fishing nets. The installation entitled The Seas of the World was exhibited on Fefiñáns Square in the town of Cambados on the west coast of Spain. Xurxo Lobato/Getty

“These are extra­or­di­nary times. And we face an extra­or­di­nary chal­lenge.” This is how John F. Kennedy start­ed his spe­cial mes­sage to Con­gress in May of 1961, in which he announced the goal of send­ing a human being to the moon before the end of the decade. The idea seemed impos­si­ble at first, yet it touched off a con­test that achieved the seem­ing­ly impos­si­ble just eight years later, and demon­strat­ed that human­i­ty is quite able to take giant leaps.

For the Swedish Earth sys­tem sci­en­tist Pro­fes­sor Johan Rock­ström – Direc­tor of the Pots­dam Insti­tute for Cli­mate, which is based in Brandenburg’s cap­i­tal and inves­ti­gates sci­en­tif­i­cal­ly and social­ly sig­nif­i­cant issues in the areas of glob­al change, cli­mate impact, and sus­tain­able devel­op­ment – the year 1961 is com­pa­ra­ble to the cur­rent sit­u­a­tion: “Now we are announc­ing our goal to cut emis­sions and reduce green­house gases in Europe by at least 50 per­cent in ten years.” And even if so far no nation has start­ed to take on this “moon shot” in terms of sus­tain­abil­i­ty and estab­lished suf­fi­cient­ly com­pre­hen­sive poli­cies, the coro­na pan­dem­ic at the lat­est sets us the deci­sive ulti­ma­tum: “This ter­ri­ble pan­dem­ic comes with an impor­tant sig­nal: for bet­ter or worse, we are not so much caught in the sta­tus quo as we often believe.”

Crises as opportunities for sustainable action

The cli­mate expert, who is in great demand world­wide, takes a crit­i­cal view of the cur­rent sit­u­a­tion: “We cur­rent­ly do not see the changes that sci­ence shows we need to make to sta­bi­lize the cli­mate – and avoid fur­ther dan­ger­ous impacts with irre­versible dam­age to our life-sup­port sys­tem: our plan­et.” But at the same time, he said, a sig­nif­i­cant shift has taken place over the last five years. Sus­tain­abil­i­ty is increas­ing­ly per­ceived by com­pa­nies as a strate­gic core task and estab­lished as a suc­cess fac­tor in com­pe­ti­tion: “These two trends must be com­bined. We are cur­rent­ly at a trans­for­ma­tion point. Some busi­ness­es are seiz­ing the oppor­tu­ni­ty and pio­neer­ing, while oth­ers keep on tip­toe­ing and will soon be lag­gards.”

Governments, business, and the public are all called upon to apply new approaches and solutions.

Professor Lucia ReischProfessor Lucia Reisch
Professor of Consumer Behavior and Consumer Policy at Copenhagen Business School and spokesperson for the Porsche Sustainability Council

A world­wide cri­sis like the Covid-19 pan­dem­ic could launch a devel­op­ment that enables this trans­for­ma­tion to suc­ceed, and thus lay the ground­work for greater sus­tain­abil­i­ty. “Gov­ern­ments, busi­ness, and the pub­lic are all called upon to apply new approach­es and solu­tions,” says Pro­fes­sor Lucia Reisch, the spokesper­son for the Porsche Sus­tain­abil­i­ty Coun­cil. “Yes, we should be devot­ing all the nec­es­sary resources to beat­ing the virus right now. Yet it would be neg­li­gent if we ignored long-term and more fun­da­men­tal threats like cli­mate change and there­by hin­dered mea­sures need­ed to avert them.” A pro­fes­sor of con­sumer behav­ior and con­sumer pol­i­cy at Copen­hagen Busi­ness School, she notes the need to learn from the past. As recent­ly as 2008, mile­stones long since achieved were set back by years as a result of the finan­cial cri­sis.

Thorsten Greb/PIK

Precisely because the pandemic, while rooted in environmental issues, now affects human health and security issues, it might accelerate change.

Professor Johan Rockström
Director, Potsdam Institute for Climate Impact Research

Despite this risk, sci­en­tists like Rock­ström have a hope­ful view: “I’m quite opti­mistic here, actu­al­ly. This dev­as­tat­ing shake-up caused by the coro­na virus is grad­u­al­ly open­ing up the oppor­tu­ni­ty to recov­er in a way that builds more sus­tain­able and resilient soci­eties in the future.” That is because Covid-19 has made one thing clear: there is a link between human inter­ven­tion in nat­ur­al habi­tats and glob­al crises like this. Accord­ing to Rock­ström, the pos­i­tive impulse lies in this under­stand­ing: “Pre­cise­ly because the pan­dem­ic, while root­ed in envi­ron­men­tal issues, now affects human health and secu­ri­ty issues, it might accel­er­ate change.” In con­crete terms, this means that more than ever, com­pa­nies are now called upon to devel­op solu­tions for cli­mate-neu­tral mobil­i­ty or to estab­lish use of resources in bal­ance with nature that will also pre­serve a live­able world for future gen­er­a­tions.

Clear action instead of lip service

At the moment, how­ev­er, the pan­dem­ic and the asso­ci­at­ed eco­nom­ic dam­age have com­pelled many com­pa­nies to focus pri­mar­i­ly on cost reduc­tion and liq­uid­i­ty. Sus­tain­abil­i­ty is often rel­e­gat­ed to a sec­ondary role. Yet Bir­git Engler, a part­ner at the Porsche Con­sult­ing man­age­ment con­sul­tan­cy, says now is pre­cise­ly the time to put sus­tain­abil­i­ty at the top of the agen­da as a key to suc­cess. “In the future, com­mer­cial suc­cess will depend not only on eco­nom­ic fac­tors but also on respon­si­ble social and eco­log­i­cal action. Now is the time for com­pa­nies to set this course and to strong­ly inte­grate sus­tain­abil­i­ty.” Pri­or­i­ties should be placed on fore­sight and value-adding growth instead of short-term opti­miza­tion of the bot­tom line. Flow­ery words and lip ser­vice will not do the job. “Clear actions and rec­og­niz­able results are need­ed in order to build trust,” she says.

Now we’re getting down to essentials.

Dr. René BackesDr. René Backes
Business Development Specialist BASF

This is con­firmed by experts on renew­able ener­gy such as Dr. René Back­es from BASF, the world’s largest chem­i­cal cor­po­ra­tion by sales. A chemist and spe­cial­ist in busi­ness devel­op­ment, Back­es works as a scout at the Swedish office of the Ger­man cor­po­ra­tion. For him, the main prob­lem is eco­log­i­cal. “We already need huge amounts of ener­gy and resources. And to meet these needs, fos­sil fuels are vir­tu­al­ly the only resource we’ve been find­ing.” Although BASF has man­aged to cut its total green­house gas emis­sions in half since the 1990s while also dou­bling its pro­duc­tion, the com­pa­ny is now at a point where it’s no longer as easy to go on reduc­ing. “But because we want to con­tin­ue mak­ing sub­stan­tial improve­ments, we’re now get­ting down to essen­tials.”

This pol­i­cy forms the basis for Back­es’ work. He is active in BASF’s Nordic region—covering Swe­den, Nor­way, Den­mark, and Finland—where he scouts for value-adding sequences that are quite lit­er­al­ly new. “I try to iden­ti­fy ways of achiev­ing the raw mate­r­i­al transition—like how to replace petro­le­um with recy­clables or renew­able bio­fu­els.” With the help of a long-term sus­tain­abil­i­ty strat­e­gy, BASF has estab­lished itself as the num­ber one part­ner for sus­tain­able chem­i­cal pro­duc­tion in the Nordic coun­tries. Accord­ing to Back­es, the region is five to ten years ahead of other areas and is serv­ing as a type of “petri dish” for the future. It, and there­by also the chem­i­cal indus­try world­wide, are devel­op­ing solu­tions that could play a pio­neer­ing role in ener­gy pro­duc­tion over the long term. But this takes time, and also the insight required to place sus­tain­abil­i­ty at the core of all busi­ness deci­sions.


Best practices

Sus­tain­abil­i­ty is no easy busi­ness? These com­pa­nies beg to differ—and are blaz­ing new trails.

Comprehensive
Award for Fischerwerke

Fischer received the 2020 German Sustainability Award in the “large businesses” category for its comprehensive approach and for integrating sustainability into its corporate strategy.

Comprehensive

From toys to screw anchors, Fischer incorporates sustainability into all of its products with the help of clean power, resource-saving raw materials, and biofuels where possible. It focuses not only on profitability but also on social issues such as work quality and safety. It uses a sustainability compass to monitor the compatibility of its strategies and aims.

Renewable
Stora Enso Goes for Growth

This Finnish-Swedish forestry product company is considered a pioneer in bioeconomics, and is one of the world’s leading providers of renewable solutions.

Renewable

Packaging, biomaterials, timber structures, paper—Stora Enso develops products and technologies based on renewable materials. A sustainable approach dominates its entire commercial chain, including how it selects its suppliers, advises its clients, and reports to investors.

Purity
Frosta—Natural inside and out

This German frozen goods producer is a master of simplicity. Its in-house “purity command” prohibits all additives.

Purity

In 2003 Frosta adopted an uncompromising strategy. Its products would be 100% free of additives and 100% honest—and would list the exact origin of every ingredient. And outside the products? Since 2016 all of Frosta’s plastic packaging has been made from a material that is easier to recycle. In 2020 the company introduced the first paper-bag packaging for frozen goods.

Recycling
Adidas Makes Plastic Fashionable

Adidas is known the world over for its sportswear, sports equipment, and shoes. The first completely recyclable shoes should be available by 2021.

Recycling

More than half of all Adidas products already contain recycled plastic from reprocessed waste retrieved from beaches and coastal regions. A new running shoe made of 100% recyclable material should now enable a closed loop. It can be produced again and again—without waste.

Circulation
SKF—Everything Flows

By remanufacturing its products instead of replacing them, the Swedish company SKF (Svenska Kullagerfabriken) has become a model for sustainable recycling management.

Circulation

Advanced condition-monitoring techniques for rolling bearings, lubrication systems, and seals enable prompt repairs instead of disposal. Remanufacturing bearings takes 80 percent less energy than making new ones, and brings 20 to 50 percent reductions in costs, time, and materials.

We want to make the world’s most environmentally friendly batteries.

Emma NehrenheimEmma Nehrenheim
Chief Environmental Officer, Northvolt

Employees as the most powerful factor

The impor­tance of sus­tain­abil­i­ty as a com­pet­i­tive edge can become espe­cial­ly evi­dent when anchored in a cor­po­rate strat­e­gy. North­volt is a good exam­ple. This Swedish start-up seeks to become Europe’s largest man­u­fac­tur­er of bat­tery cells and sys­tems, and there­by facil­i­tate the tran­si­tion to elec­tro­mo­bil­i­ty. “We want to make the world’s most envi­ron­men­tal­ly friend­ly bat­ter­ies,” explains Emma Nehren­heim, Northvolt’s chief envi­ron­men­tal offi­cer. The com­pa­ny has there­fore devel­oped an over­all strat­e­gy that incor­po­rates the key role of sus­tain­abil­i­ty in a vari­ety of ways. Devel­op­ing a recy­cling man­age­ment sys­tem by which most of the raw mate­ri­als come from dis­card­ed bat­ter­ies is just one part of that strat­e­gy. With the help of sus­tain­abil­i­ty teams in all of its divi­sions, North­volt wants to min­i­mize the envi­ron­men­tal foot­print of not only all its prod­ucts but also its fac­to­ries and the com­pa­ny as a whole. Mea­sures include using only clean power to acquire its raw mate­ri­als. More­over, all of the company’s 700 employ­ees have rec­og­nized the value of sus­tain­abil­i­ty and made it a nat­ur­al part of their daily rou­tines. That, says Nehren­heim, is the most pow­er­ful fac­tor. “All of us take a long-term view of every­thing we do, in order to pre­vent our actions today from caus­ing prob­lems for the envi­ron­ment in the future.”

Porsche Consulting/Marco Prosch

Sustainability has to be part of corporate strategies. It needs to be visible in targets and effective initiatives, and anchored in company structures, processes, and cultures.

Birgit Engler
Partner, Porsche Consulting management consultancy

The suc­cess of indi­vid­ual com­pa­nies can serve as bea­cons of progress, but to achieve deci­sive results every­body has to get involved, says sus­tain­abil­i­ty expert Bir­git Engler. Despite the cur­rent cli­mate of uncer­tain­ty, the con­sul­tant empha­sizes the need to con­tin­ue res­olute­ly pro­mot­ing sus­tain­abil­i­ty, incor­po­rat­ing it into all aspects of eco­nom­ic life, and moti­vat­ing peo­ple to change their out­looks. The cur­rent dis­rup­tion in our usual pat­terns of behav­ior offers a good oppor­tu­ni­ty to exam­ine and realign exist­ing sys­tems and habit­u­al prac­tices. “Sus­tain­abil­i­ty has to be part of cor­po­rate strate­gies. It needs to be vis­i­ble in tar­gets and effec­tive ini­tia­tives, and anchored in com­pa­ny struc­tures, process­es, and cul­tures. If com­pa­nies can con­vinc­ing­ly com­bine high eco­nom­ic per­for­mance, social respon­si­bil­i­ty, and sub­stan­tial­ly lower envi­ron­men­tal impact, that will give them real added value,” she explains. High­er lev­els of employ­ee and cus­tomer loy­al­ty, bet­ter access to out­side financ­ing, eas­i­er acqui­si­tion of new busi­ness fields, and long-term increas­es in com­pa­ny value as well as cri­sis resilience are exam­ples of the com­pet­i­tive advan­tages offered by sus­tain­abil­i­ty.

Rock­ström is also crit­i­cal of view­ing sus­tain­abil­i­ty in too nar­row terms. It is time to rec­og­nize how social, eco­nom­ic, and eco­log­i­cal phe­nom­e­na are inter­de­pen­dent. Covid-19 has shown exact­ly that. Now is the time to act accord­ing­ly and take anoth­er big step for human­i­ty.

In a Nutshell

Sustainability Standards

Standards help to link sustainability with clear and concrete goals, and to make results measurable and comparable in an international context. Some standards are already well established:
Goals: The United Nations’ Seventeen Sustainable Development Goals (SDG) were adopted by all the UN member countries, and they run from 2016 to 2030. The agenda comprises work on economic, social, and environmental levels. Goals such as gender equality, decent work, and protecting life on land can also be used by companies as guides for action. Reports: The purpose of the Global Reporting Initiative (GRI) is to promote standardization and comparability of sustainability reports. With the help of specific metrics and indices on economic, environmental, and social aspects, the GRI’s guidelines are intended to provide orientation and bases for comparisons and decisions. Investment criteria: The three ESG criteria (environmental, social, governance) are designed to measure sustainability for business screening and valuation purposes. This standard is used primarily by capital investors and often plays a key role in decisions on whether to include shares in sustainable investment portfolios. Impact valuation: The goal of the Value Balancing Alliance, a non-profit organization based in Frankfurt am Main, is to provide companies with an impact measurement and valuation standard covering environmental, human, social, and financial components. Companies like Volkswagen, BASF, Bosch, Deutsche Bank, and SAP, as well as auditing firms and the OECD, have all joined this trans-industry alliance to draw up standardized and comparable indices.
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