"Sustainability must be a matter for the boss!"

"Sustainability must be a matter for the boss!".

Werner Schnappauf is equally at home in politics, business and consulting. What characterizes his curriculum vitae like no other subject is his commitment to sustainability issues. He currently advises the German government as Chairman of the German Council for Sustainable Development. A conversation with someone who never shied away from a change of perspective.

Dr. Schnappauf, in your professional career, you have dealt with sustainable development from very different perspectives - as a politician, as CEO of the BDI (Federation of German Industries), and today as a lawyer and consultant. Is there a "common denominator" between all these different points of view?

I would say that sustainability must be a matter for the boss! As long as sustainability is delegated along the lines of "Create a sustainability report for us and print it on recycled paper", then the issue hasn't really been understood. It is important that sustainability reaches the decision-maker level. And that the CEOs or other board members take responsibility for the topic and really look at sustainability holistically. It is important that all three pillars of sustainability, i.e. economy, ecology and the social dimension, are thought of and managed together. Only in this way can sustainable development really succeed. For me, that is the central insight from my experience so far.

How has the role of sustainability changed in recent years?

20 to 30 years ago, terms such as sustainability or sustainable development were present in the political arena, but were often ridiculed as empty words. In recent years, and now even more so as a consequence of the Corona pandemic, we are experiencing a momentum for sustainability unlike anything I have seen in all my decades in the business. And that applies in politics, business and finance, as well as across society as a whole.

What exactly is the role of business?

Politicians can set goals and make regulations. But if the commitment of industry with its technologies and innovations is not forthcoming, then none of this will work. For the first time in decades, this whole issue has now really taken off. Now you can feel that not only industry but also the financial sector is increasingly investing in low-CO₂ and CO₂-neutral technologies. This is crucial, because sustainable transformation can only succeed if we work together.

How can such a sustainable transformation be realized?

This is indeed one of the central questions where we are, so to speak, doing open-heart surgery. Your industry represents a good example of the challenges faced: In order to deliver the low-CO₂ or CO₂-neutral mobility of tomorrow, the automotive industry, in which many global market leaders work, must transform itself. In other words, from conventional drive systems based on gasoline and diesel to alternative forms of drive. And all this during ongoing operations. So while conventional engines will continue to be produced for some time to come, new drive forms are being researched, developed and built at the same time. This, of course, requires enormous investment. And that is why I believe that today more than ever we need close cooperation between politics and business if we are to successfully master this difficult transitional phase. Because, of course, we want to be global market leaders tomorrow as well. This means that we must combine our global competitiveness in the various industries with climate protection and climate neutrality. And I am convinced that the European Green Deal provides a good framework for this, because it is committed to economic growth, but growth that is decoupled from resource consumption and ever-increasing environmental impacts.

Another economic growth is only possible as sustainable economic growth.

Do you really believe that further economic growth and sustainability are compatible?

Yes, absolutely! Economic growth can only be sustained in the long term if we do not exceed the earth's natural stress limits. Further economic growth is therefore only possible as sustainable economic growth. Citizens and consumers have also recognized this. Here, I see an ever-increasing need for products that are produced in an environmentally and socially responsible manner. This is not just about production in Germany or Europe, but around the globe. This all-encompassing sense of responsibility is evident, for example, in the current discussions on the subject of the Supply Chain Act.

What contribution must policymakers make in order to ensure that such a transformation can actually be realized?

Firstly, the principles laid down in the European Green Deal must be implemented in national law. The upcoming German government will have the key task of creating the right regulatory framework in Germany to achieve the European Union's climate neutrality targets. In addition to regulation, however, there must of course also be a corresponding transformation of the entire infrastructure. In terms of electric mobility, for example, this means that the expansion of the charging infrastructure must be systematically driven forward so that more and more customers can switch to electric drives. We need to be much faster in expanding these infrastructures so that new technologies can also be demanded and implemented. This also includes the entire network expansion and the development of a suitable infrastructure for the use of hydrogen.

And where do you see room for improvement on the part of policymakers?

We need to make significant improvements in the interconnectedness of policy areas. For example, we are working on a law to expand the rail infrastructure, one to expand the highway network, and one to expand the energy industry. However, these are not necessarily coordinated with one another, for example with regard to deadlines or procedures for citizen participation. For sustainable transformation, we need much more coordination and networking within politics, in order to ensure that we become coherent. In the transport sector in particular, it is quite clear that air traffic, rail traffic, individual mobility by car and even by bicycle must be much more closely coordinated. Achieving greater networking in this area is a key issue for the coming years. Another area for improvement is faster digitalization. After all, digitalization will also play a key role in climate neutrality and sustainability as a whole. To summarize in one sentence: We need to network even more and become faster.

Do you still think we can achieve the Paris climate protection targets?

Absolutely. Yes, the targets are ambitious and the timeframe is short. But the fact that there is a sense everywhere that these targets now really need to be implemented makes me confident that we will be able to achieve them. This decade is the crucial decade for actually achieving the ambitious goal of climate neutrality within 30 years. And I am convinced that this can only be achieved if policymakers and industry work ambitiously together, shoulder to shoulder, to achieve this goal. Everyone must make their contribution to this: The policymakers therefore need to define the framework and, for example, appropriate incentives for infrastructure investment, while industry needs to develop and implement innovations.

"For me, transformation and thus sustainability is something that we should pursue with anticipation for the coming and the power of enthusiasm." Photos: Viviane Wild © Council for Sustainable Development (RNE)

In your opinion, what are the most important measures that policymakers can take to promote this development?

For me, that's primarily the market-based CO₂ price. It is therefore clear that wherever CO₂ is present, things will get more and more expensive in the coming years. This will have a huge impact on investors and lead to the reorientation of capital flows. And, of course, it will impact companies whose research and development departments are clearly focused on low-CO₂ and CO₂-neutral innovations. Because anything that emits greenhouse gases no longer has a long-term future. Another important lever is the political framework. The long-term climate protection laws can provide companies with planning and investment security. This will be a decisive plus, because with this, you clearly know the direction in which the journey is going.

Do you see any other prerequisites for sustainable transformation?

It is important that we do not fritter away the next 30 years by doing "business as usual", in other words, working with procedures and processes that we have been practicing for decades. We need to speed up and set about the task of change with a positive attitude and real pleasure. For me, transformation and therefore sustainability is something we should pursue with excited anticipation and the power of enthusiasm. There is a nice saying: "Wherever an enthusiast stands is the top of the world." I see this enthusiasm for sustainable development as an important prerequisite for sustainable transformation. And I would like us, as Germany, to be at the forefront of this movement. And that we, as Europe, become the continent where business and environmental protection live side by side, in other words, "Sustainability made in Europe".

What contribution would you like to see from companies like Daimler in this regard?

It is crucial that industry takes a proactive approach to the issue and helps to achieve the political goals. For example, to reduce CO₂ emissions by 55 percent by 2030, as envisaged by the European Green Deal. For this, it is necessary that everyone, from their own particular position, sees beyond their immediate area of responsibility: That is, the policymakers regulate and the economy develops and produces and generates profits. Instead, companies must also assume responsibility for the environment and social issues - such as their employees - and take into account what impact their economic activities have on these areas. If we want to achieve the transformation together, this requirement also applies to politicians and environmental organizations, for example, which also need a basic understanding of the requirements and challenges faced by the economy.

And in terms of the sustainable mobility of the future?

There is such a strong awareness of the issue of sustainable mobility today that the changeover is sure to continue vigorously. I can still hear your CEO Ola Källenius in this respect. When he took office, he made a very clear commitment to sustainability - both in terms of the company itself and of the suppliers in the supply chain. Of course, in addition to CO₂ reduction, the responsible design of supply chains and the use of resources also play an important role in making mobility sustainable. But I think that overall we are on the right track here. What I would like to see, however, is to de-ideologize the mobility debate. And overall to be a little more relaxed with the topic, so we don't argue about the wrong things. There should not be a cultural war between individual and public mobility. In the future, there will be a wider range of mobility options and greater intermodality anyway. The challenge is to make this offer sustainable through innovations and new technologies and to combine it with attractive urban development measures. This change of perspective would do the discussion in Germany a lot of good.

Dr. Werner Schnappauf has been Chairman of the German Council for Sustainable Development since January 2020 and a member since 2016, and works as a lawyer. Prior to that, the doctor of law was Chief Executive Officer and a Member of the Presidium of the Federation of the German Industries (BDI e.V.). Dr. Schnappauf has many years of experience in politics, including as State Minister for Environmental Protection for the Free State of Bavaria, chairman of the conference of environmental ministers in Germany, and as a member of the Federal Council and the Federal Assemblies.