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06/08/2020

Becoming climate positive by 2040

Patrick Bungard
Prof. René Schmidpeter

Original source: https://www.faz-institut.de/wp-content/uploads/sites/2/2020/07/09-LOW-WEB-INTERVIEW-KNOBEL-GESCHUETZT-V-03-2020.pdf

Becoming climate positive by 2040
How important will sustainability be in Henkel’s future strategic orientation? The issue of sustainability is important, including to me personally. Climate change, plastic waste, sustainable consumption - these are all major issues that not only we as a company are concerned with, but that are also very important to many of our stakeholders. Especially for younger generations. I am convinced that only those companies that take a holistic approach to sustainability will be successful in the long term. That is why sustainability is also a central element of our strategic framework. It is a competitive advantage. We have a strong foundation and a leading position. But here, too, we have the ambition to continue to improve.

What past successes can we build on, and where do you see potential for improvement in the future? We have been pushing this topic for decades - not just since it became a “trend”. With our long tradition as a family business, acting with a view to responsibility towards future generations is part of our DNA, so to speak. Sustainability is one of our five corporate values and we pursue a long-term sustainability strategy with concrete, ambitious goals. We have already achieved a great deal in a wide range of areas such as resource efficiency, sustainable procurement and recycling management. But there is also much to do in the future. That is why we have ambitious goals.

Do you have a concrete example? Henkel has reduced its CO2 emissions per tonne of product by around a third compared with 2010. This is good progress, but at the same time only one step towards an even greater goal: By 2040 we want to become a climate-friendly company.

What do you understand by “climate-positive”? We want to make a significant contribution to climate protection. That is why we are taking a clear step towards becoming “climate-neutral”. We start with our own production. By 2025 we will reduce the CO2 footprint of our production by 65 percent. This is all about energy efficiency and the conversion to renewable energies. At the same time we want to obtain 100 percent of the electricity we use from renewable sources. By 2040, all remaining fossil fuels used in production will be converted to climate-neutral alternatives. And surplus climate-neutral energy will be supplied to third parties. We also want to use our brands and technologies to help customers, consumers and suppliers save a total of 100 million tonnes of CO2 by 2025. For example, through technologies for improved building insulation or products that require less water and energy to use.

According to a quote from your inauguration as CEO, your motto is: “If I’m going to do something, I’m going to do it right”. How does that relate to sustainability?

I think that is how we all see it here at Henkel. Also when it comes to sustainability. Because this is precisely where it is important to act consistently, strategically and holistically. Setting ambitious goals, then implementing them with commitment and reporting transparently on progress. It must not just be a matter of a few lighthouse projects, but of driving the issue forward throughout the company and in all processes along the value chain.

Many companies seem compelled to stick to strategies that are purely geared towards efficiency and profit maximisation. They have recently explained that this focus no longer has a positive effect on companies.

I am convinced that focusing on efficiency alone will not lead to sustainable success in the long run. From today’s perspective, we at Henkel have focused more on efficiency than on strengthening growth dynamics. We are changing this with our new strategic alignment. However, it is also clear that if we want to grow faster than the markets that are driving innovation and digitization within the company and in our brands and products, we will first need to invest. This year we want to invest 350 million euros more than in 2018. In our brands, in innovation and digitisation.

How do you define sustainable growth in this context? Our focus is on holistic growth or “Purposeful Growth”. This means that we want to create value for our customers and consumers, outperform the growth of our markets, strengthen our leading role in sustainability and give our employees the opportunity to develop professionally and personally at Henkel. We want to be successful in all these dimensions. This is our understanding of holistic growth.

If you embed sustainability in all your activities and ensure that it is a central pillar in the innovation strategies of all our business sectors, this will certainly entail significant changes for key stakeholders. How do you intend to ensure acceptance?

For us - and also for our stakeholders - sustainability is not a new topic. But it is becoming more important than we could have imagined just a few years ago. I am not going to make any assumptions about that. As a prerequisite for achieving our ambitious goal, everyone must understand that sustainability is not an “add on”, an addition or a “fig leaf” in an otherwise unsustainable portfolio. Sustainability must be a driver of competitiveness and value creation. With our products and technologies, for example, we help our customers to promote sustainability and adapt to market changes. For example, our technologies can help customers in the automotive industry to develop important future trends such as e-mobility or lightweight construction. And our solutions also play a decisive role for the packaging industry - for the protection of valuable foodstuffs and for the development of a closed loop recycling management system in which packaging can be reused or recycled.

Many companies encounter massive implementation problems when implementing sustainability strategies. How would you like to proceed at Henkel? The prerequisites for successful implementation are a clear strategy, concrete goals and a well thought-out plan for how to achieve them. <Every new product that comes onto the market must offer a clear improvement in at least one sustainability dimension along the value chain - for example, in raw materials or in the application phase. In addition, we at Henkel have a central steering and decision-making body for our global sustainability activities. Members of all our business sectors and corporate functions are represented in this Sustainability Council. However, our employees play a very decisive role: In the implementation of our sustainability strategy, they make the difference - through their personal commitment, their skills and their knowledge. They are actively involved in ensuring that our brands and technologies make significant positive contributions to environmental and social challenges. They are the interface to our customers and consumers. They are active in areas such as purchasing, production and marketing and thus work along our value chain in cooperation with our partners. Each one of them is an ambassador for more sustainability.

With its products and packaging, companies like Henkel also contribute to the problem of plastic and microplastic contamination. How does this fit in with your commitment to sustainability?

In fact, packaging and microplastics are right at the top of our agenda. We are committed to ensuring that no microplastics are released into the environment through our consumer products. In concrete terms, this means that we do not use so-called “microbeads” in our cosmetic products or detergents and cleaning agents worldwide, which were previously contained in individual products as peeling or abrasive particles. We launched this initiative in 2014 for all newly launched cosmetic products in Europe and implemented it worldwide by 2016. In a second step, we have started to dispense with solid synthetic plastics.

And what about plastic packaging?

Here, too, we are pursuing ambitious goals. By 2025 all consumer packaging will be recyclable or reusable. We want to reduce the amount of new fossil-based plastics by 50 percent. By using more recycled plastic and reducing the volume of plastic. Bio-based plastics are also an important issue. The aim is to create a functioning recycling economy. Because plastics alone are not the problem. It offers many advantages over other packaging materials and is often the more sustainable solution overall. The problem lies in how to handle waste, especially in regions of the world where there is no recycling infrastructure. We all know and are touched by the images of plastic waste in the seas and the environment. This is one of the biggest global challenges. We must and will change this! But this can only be done together with partners.

Especially younger generations are looking for glimmers of hope and reasons to look optimistically into the future. Many are concerned with the question of whether companies can succeed in moving from being part of the problem to part of the solution to central problems such as climate change.

I am the father of two children and I also wonder what kind of world we will hand over to the next generation. And what influence I can have on it. So I think it is good and important that more and more people are looking at what we can do to combat climate change and make it more sustainable. And then to critically examine whether what we are doing is enough. Every individual for himself, as a company, but also as a society. I am convinced that we can make progress together. We want to contribute to a positive and sustainable future for future generations and to protecting our planet. And we also want to win over the next generation. Because to successfully tackle the tasks that lie ahead, we need the best talents - from product developers and engineers to marketing and digital experts.

How important will sustainability be in Henkel’s future strategic orientation? The topic of sustainability is important, including to me personally. Climate change, plastic waste, sustainable consumption - these are all major issues that not only we as a company are concerned with, but that are also very important to many of our stakeholders. Especially for younger generations. I am convinced that only those companies that take a holistic approach to sustainability will be successful in the long term. That is why sustainability is also a central element of our strategic framework. It is a competitive advantage. We have a strong foundation and a leading position. But here, too, we have the ambition to continue to improve.

What past successes can be built on, and where do you see potential for improvement in the future? We have been pushing this topic for decades - not just since it became a “trend”. With our long tradition as a family business, acting with a view to responsibility towards future generations is part of our DNA, so to speak. Sustainability is one of our five corporate values and we pursue a long-term sustainability strategy with concrete, ambitious goals. We have already achieved a great deal in a wide range of areas such as resource efficiency, sustainable procurement and recycling management. But there is also much to do in the future. That is why we have ambitious goals.

Do you have a concrete example? Henkel has reduced its CO2 emissions per tonne of product by around a third compared with 2010. This is good progress, but at the same time only one step towards an even greater goal: By 2040 we want to become a climate-friendly company.

What do you understand by “climate-positive”? We want to make a significant contribution to climate protection. That is why we are taking a significant step beyond “climate-neutral”. We start with our own production. By 2025 we will reduce the CO2 footprint of our production by 65 percent. This is all about energy efficiency and the switch to renewable energies. At the same time, we want to obtain 100 percent of the electricity we use from renewable sources. By 2040, all remaining fossil fuels used in production will be converted to climate-neutral alternatives. And surplus climate-neutral energy will be supplied to third parties. We also want to use our brands and technologies to help customers, consumers and suppliers save a total of 100 million tonnes of CO2 by 2025. For example, through technologies for improved building insulation or products that require less water and energy to use.

According to a quote from your inauguration as CEO, your motto is: “If I’m going to do something, I’m going to do it right”. How does that relate to sustainability?

I think that is how we all see it here at Henkel. Also when it comes to sustainability. Because this is precisely where it is important to act consistently, strategically and holistically. Setting ambitious goals, then implementing them with commitment and reporting transparently on progress. It must not just be a matter of a few lighthouse projects, but of driving the issue forward throughout the company and in all processes along the value chain.

Many companies seem compelled to adhere to strategies that are purely geared towards efficiency and profit maximisation. You recently explained that this focus no longer has a positive effect on companies.

I am convinced that focusing on efficiency alone will not lead to sustainable success in the long run. From today’s perspective, we at Henkel have focused more on efficiency than on strengthening growth dynamics. We are changing this with our new strategic alignment. However, it is also clear that if we want to grow faster than the markets that are driving innovation and digitization within the company and in our brands and products, we will first need to invest. This year we want to invest 350 million euros more than in 2018. In our brands, in innovation and digitisation.

How do you define sustainable growth in this context? Our focus is on holistic growth or “Purposeful Growth”. This means that we want to create value for our customers and consumers, outperform the growth of our markets, strengthen our leading role in sustainability and give our employees the opportunity to develop professionally and personally at Henkel. We want to be successful in all these dimensions. That is our understanding of holistic growth.

If you embed sustainability in all your activities and ensure that it is a central pillar in the innovation strategies of all our business sectors, this will certainly entail significant changes for key stakeholders. How do you intend to ensure acceptance?

For us - and also for our stakeholders - sustainability is not a new topic. But it is becoming more important than we could have imagined just a few years ago. I am not taking any of this for granted. As a prerequisite for us to achieve our ambitious goal, everyone must understand that sustainability is not an “add on”, an addition or a “fig leaf” in an otherwise unsustainable portfolio. Sustainability must be a driver of competitiveness and value creation. With our products and technologies, for example, we help our customers to promote sustainability and adapt to market changes. For example, with our technologies we can support customers in the automotive industry in developing important future trends such as e-mobility or lightweight construction. And our solutions also play a decisive role for the packaging industry - for the protection of valuable foodstuffs and for the development of a closed loop recycling management system in which packaging can be reused or recycled.

Many companies encounter massive implementation problems when implementing sustainability strategies. How would you like to proceed at Henkel? The prerequisites for successful implementation are a clear strategy, concrete goals and a well thought-out plan for how to achieve them. <Every new product that comes onto the market must offer a clear improvement in at least one sustainability dimension along the value chain - for example, in raw materials or in the application phase. In addition, we at Henkel have a central steering and decision-making body for our global sustainability activities. Members of all our business sectors and corporate functions are represented in this Sustainability Council. But our employees play a very decisive role: In implementing our sustainability strategy, they make the difference - through their personal commitment, their skills and their knowledge. They are actively involved in ensuring that our brands and technologies make significant positive contributions to environmental and social challenges. They are the interface to our customers and consumers. They are active in areas such as purchasing, production and marketing and thus work along our value chain in cooperation with our partners. Each one of them is an ambassador for more sustainability.

With their products and packaging, companies like Henkel also contribute to the problem of plastic and microplastic contamination. How does this fit in with your commitment to sustainability?

In fact, packaging and microplastics are right at the top of our agenda. We are committed to ensuring that no microplastics are released into the environment through our consumer products. In concrete terms, this means that we do not use so-called “microbeads” in our cosmetic products or detergents and cleaning agents worldwide, which were previously contained in individual products as peeling or abrasive particles. We launched this initiative in 2014 for all newly launched cosmetic products in Europe and implemented it worldwide by 2016. In a second step, we have started to dispense with solid synthetic plastics.

And what about plastic packaging?

Here too, we are pursuing ambitious goals. By 2025 all consumer packaging will be recyclable or reusable. We want to reduce the amount of new fossil-based plastics by 50 percent. By using more recycled plastic and reducing the volume of plastic. Bio-based plastics are also an important issue. The aim is to create a functioning recycling economy. Because plastics alone are not the problem. It offers many advantages over other packaging materials and is often the more sustainable solution overall. The problem lies in how to handle waste, especially in regions of the world where there is no recycling infrastructure. We all know and are touched by the images of plastic waste in the seas and the environment. This is one of the biggest global challenges. We must and will change this! But this can only be done together with partners.

Especially younger generations are looking for glimmers of hope and reasons to look optimistically into the future. Many are concerned with the question of whether companies can succeed in moving from being part of the problem to part of the solution to central problems such as climate change.

I am the father of two children and I also wonder what kind of world we will hand over to the next generation. And what influence I can have on it. So I think it is good and important that more and more people are looking at what we can do to combat climate change and make it more sustainable. And then to critically examine whether what we are doing is enough. Every individual for himself, as a company, but also as a society. I am convinced that we can make progress together. We want to contribute to a positive and sustainable future for future generations and to protecting our planet. And we also want to win over the next generation. Because to successfully tackle the tasks that lie ahead, we need the best talents - from product developers and engineers to marketing and digital experts.

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