First steps towards sustainability - Interview with Bessie Fischer-Bohn
Interview by Despina Borelidis
November 3, 2022
Is it a deceptive impression or are the energy crisis and recession currently having a negative impact on sustainability goals? Are they increasingly taking a back seat among German entrepreneurs, or are they becoming even more popular now?
We put these questions to economist and executive consultant Bessie Fischer-Bohn in our current interview. She says: "Economic and conscious management have a far-reaching impact. And a radiant effect - also on financiers."
In the turnaround and restructuring business in particular, more than just the classic hard facts are now important.
What are investors paying more attention to now? What role does generational change play in terms of meeting ESG targets? And what do the first measures for a sustainable strategy and safeguarding the future look like?
It is possible that sustainability goals are moving into the background as a result of the current reporting. And perhaps also in the initially superficial awareness of entrepreneurs and CEOs. That's human. But the point is: certain targets are simply set by the EU. And likewise by German law. I observe that that conscious management of energy and conscious economic activity are the topics of the hour and they are triggered by the energy crisis.
There are a few. To name one measure that costs nothing: the attitude of a company towards environmental and social issues and also corporate and human resources management. These are values that should be developed and communicated to the outside world. Many of them have already found a place in companies, but are not yet part of a transparent corporate philosophy. As a result, they remain invisible in the external presentation. Conducting an as-is analysis for this is a first measure that does not cost much.
In the worst case, their customers. Suppliers and supply chains are one example. ESG requirements increasingly define which criteria must be met along supply chains. But if environmental protection and human rights are disregarded, if suppliers repeatedly fall through the register of supplier ratings, they are no longer contracted.
Shifting tasks abroad now may be part of a contingency plan. In my view, however, this is too short-sighted. In the long run, this decision can fall flat on its face. After all, what kind of external impact does it create? The positive image of a company increasingly depends on whether companies rethink their core values and this is especially important for the younger generation. And don't fall back into old patterns as soon as things get tight. We are on the verge of an important generation change - both in management and in the workforce. The next generation of talent will also focus on how sustainably a company acts in times of crisis. Does it act in a holistically sustainable manner? Are its supply chains clean? Increasingly, the question that looms over everything is, "Who am I working for or with?"
It is. And it could also be located only at a certain corporate level. But the fact is that companies acting sustainably is not a trend. Sustainability is a perennial issue and will become increasingly important for everyone involved. I recently made an interesting observation - and saw it confirmed in an article in WiWo. It was about the buying behaviour of higher-priced organic foods. Would consumers continue to buy them despite rising inflation? It showed: Yes, they would. The consumers did not want to deviate from organic food. But they wanted to spend less on it. As a result organic food is now increasingly bought in discounters instead of in organic stores. This is called the "trading down effect”. And it sometimes shows: Organic is not a fashion. It is a fundamental development that will continue to prevail. I think it will be the same with meeting sustainability goals and valuing companies.
I don't think German SMEs have any choice at all. The Green Deal formulates and demands the fulfilment of ESG targets. The EU taxonomy is supposed to evaluate them. But even beyond that, I think: the urgency to take ESG measures has definitely arrived in the German SME sector. Currently, I see the "E" - i.e. the ecological pillar, climate protection - very far ahead. This is where the least has been done so far, and the standard must continue to rise. I believe that the social pillar, the "S", is better fulfilled in Germany than in other EU countries. Among other things, this is due to many collective agreements and equality targets. However, these still need to be better achieved.
There are certain templates, a code, for sustainability reporting on the area of " governance" in Germany. But I see the far greater opportunity for the German SME sector, which has largely grown out of entrepreneurship, in the current, massive generational change that is taking place. The next generation of managers is taking a very different approach to ESG issues, and there is much more movement.
Very differently. The next generation is re-evaluating the benefits of ESG and they are also applying it in a very natural way. As I see it, they are much more self-reflective with an open, internationally focused view. Example: Take sustainable supply chain mandates. I observe that younger generations see more potential in them: Sustainable supply chains form the basis for good stakeholder management. This, in turn, involves all stakeholders of a company. And this is how modern entrepreneurship and leadership can be lived: with openness, transparency and sustainability. These are the new values. And if I may return to the current crisis at this point, companies of this kind are both very attractive and highly interesting for credit institutions. For banks, venture capitalists and other investors.
Exactly this. I've noticed that financiers have long since started to rethink their approach. Whether or not a company is fit for the future is no longer determined solely by the hard facts - i.e. figures, finances and costs. In the turnaround and restructuring business, expert opinions also assess a company's future viability in terms of its sustainability goals. ESG criteria have become a yardstick. For example, the area of technology: How prepared is the company for the future? Is it keeping pace with the digital transformation? Diversity measures also flank the future viability of a company. Studies have long shown that diverse teams perform better. For investors, this inevitably leads to questions: How heterogeneous is the company's workforce? Is equal opportunity a reality? Is there a balanced gender and age diversity? Only when the assessment of a company is sustainably positive will financing channels be pursued.
They will hardly be able to retain or gain talents, target groups, and business partners. Let's take the example of the shortage of skilled workers: It was announced a long time ago. Now it is here. German SMEs in particular, most of which are not located in major cities, have a hard time retaining skilled workers and recruiting new ones. Developing planned and existing ESG measures, communicating them transparently and authentically to the outside world, is a huge opportunity for companies. In this way, they make themselves and their positioning visible. They show their intentions and invite talents to accompany them on their way to more climate protection, more social action and good leadership. This is very attractive for talented people who want to shape things and get involved. And - not to be forgotten - such companies act as role models. They encourage others to follow suit. Companies should not miss out on these advantages, this dynamism and this charisma.
I first recommend recording the status quo: How sustainable is the company already acting? To what extent is it ready and willing to talk about this now? And where is the next stage? For this first low-threshold as-is analysis, there are good, freely accessible fact sheets and checklists available at this moment. By the way, the results of this analysis are a good starting point for your own quality management. It may then become clear that the necessary processes are already anchored in the company. The next step is to compare the results of the analysis with the applicable ESG requirements. Which processes already match them? Which ones need to be redefined? With these first steps, companies can develop a good starting point without much effort - which they should also communicate to the outside world. Because the most important thing is to get started. And the next thing is to show you are doing it!
How can ESG criteria help your company strategically? What questions are you concerned with around the topic of ESG? Not sure where to start? We recommend an initial analysis and a free consultation. Request now!
